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7 Online Tools to Optimize Your Budget
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The number of Web sites and online applications available for you to manage your money and improve your finances keeps growing all the time.
CNNMoney.com has put together a slideshow of 7 technologies for optimizing your budget.
These are targeted at small businesses, but are certainly applicable to many home users.
They include:
The only one of these I can highly recommend is Yodlee, which I've been using for over a year.
Have you used any of these services? What do you think of them?
Let us know in a comment.
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4 Tips for Shopping at Thrift Stores (Or How Not to Spend Like Sarah Palin)
The Washington Post ran an article on Vice Presidential candidate Sarah Palin titled After a $150,000 Makeover, Sarah Palin Has an Image Problem.
The article reports $75,000 bills at Neiman Marcus and $50,000 bills at Saks Fifth Avenue along with a $10,000 handbag among recent purchases, none of which goes well with her efforts to have an "Ah shucks," hockey mom image.
I think it's fair to assume savers on this blog share at least some of my annoyance, but I decided to curb that and let her excess be an opportunity to report a modest but pleasing savings I made just three days before on a pair of $175 Nunn-Bush shoes. I got them for $7.99 at a Goodwill thrift shop.
Better yet they were absolutely 100 percent new; not a scratch, not a scuff, on the tops, on the soles, anywhere.
Finding a brand new pair of shoes at Goodwill is lucky, but there is more to it than luck. Savings at thrift stores comes with strategy and patience. Never shop at a thrift store if you need something right away.
If it's Friday afternoon and you have to get new and respectable shoes for your sister's wedding, then it's not the time to go to Goodwill or any thrift.
Savings at thrift stores is a long-term process requiring regular, but short visits. At Goodwill stores and Salvation Army stores, especially in big metropolitan areas, the good stuff turns over very fast. That is important because infrequent visits mean lots of good stuff will come and go and you'll never see it.
- Frequent visits make it easier to spot the good stuff.
- Plan to stay twenty minutes to a half an hour, but never longer.
- Have a departmental route: pants, shirts, shoes, furniture, electronics, sporting goods, books and so on.
- Don't linger. If the bargain is there, you will see it. If you stay too long you'll get depressed looking at worn out stuff and begin thinking thrift shops are hopeless when they are not.
Thrift shops are a special preserve for those who like a challenge, but they pay off, especially when you find something you might not buy otherwise. The above mentioned shoes are only one of many fun buys.
Include new to nearly new Ralph Lauren, Tommy Hilfiger, Bill Blass and Brooks Brothers shirts, Jos. A Banks pants, 3 all leather belts, New & Lingwood sweaters, a Harris Tweed sports coat, all bought for a song. Take that Sarah Palin.
Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
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FNBO Direct Drops Rates to 3.25% APY
FNBO Direct has dropped the rate of their online savings account to 3.25% APY (previously at 3.50%).
The bank, which is currently running a "Pay Yourself First" contest, shot on to the scene with a 6.00% APY account in May of 2007 (those were the days).
The account has no fees and requires only $1 to open.
Despite the falling rate, I'm tempted to close my E-Loan account and switch to FNBO. E-Loan has been pretty annoying to deal with — not telling anyone about their falling rates and implementing unnecessary rules.
The rate drop follows ING Direct's decision to lower its APY to 2.75%. Dollar Savings Direct, however, has recently gone the other way, upping its rate to 4.00% APY. Other options include WT Direct (3.31% APY) and HSBC Direct.
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1929 and 2008: Why Distribution of Wealth Matters
There are many comparisons in recent newspapers between the crash of 1929 and the crisis of 2008. The media of today has not settled on a consistent title for America's current events but "crisis" appears to be the most common caption among the newspapers I see.
Many books and articles have been published on the stock market crash of 1929, but one book in particular stands out as short, only 197 pages, readable and relevant for today's debacle. It is The Great Crash by John Kenneth Galbraith.
After using newspaper and other accounts, he describes what happened in journalistic fashion with a final chapter titled Causes and Consequence. The first cause on his numbered list is "The Bad Distribution of Income."
Allow me a brief quote.
In 1929 the rich were indubitably rich. … The proportion of personal income received in the form of interest, dividends and rent – the income broadly speaking of the well-to-do – was about twice as great as in the years following the Second World War.
This high unequal distribution of income meant that the economy was dependent on a high level of investment or a high level of luxury spending or both. The rich cannot buy great quantities of bread. If they are to dispose of what they receive it must be on luxuries or by way of investment in new plants and new projects.
Mr. Galbraith was writing 50 years ago about events of nearly 80 years ago, but it is helpful for man of his distinction to confirm what is the underlying cause of America's crash of 2008: the bad distribution of income.
The growing inequality of income is well documented in the Federal government's publication of the Current Population Survey.
In their table of Selected Measures of Household Income Dispersion the highest 10 Percent of household income continue to gain income share year by year on the bottom 10 percent, but also the bottom 20, 50 and 80 percent of households.
The wealthy pay the same price for bread, eggs and milk as everybody else which is why they have extra money to speculate in Wall Street's new and exotic investment derivatives: hedge funds, collateralized debt obligations, mortgage and asset backed securities, principal only strips, credit default swaps and so on.
In the mean time, heavily taxed wages are going up slowly — but not as fast as prices, a reality documented by the Bureau of Labor Statistics. More of us are reaching credit card limits and home equity loan limits.
Refinancing mortgages for cash, or lower interest rates, did provide a boast to buying power, but these too are running low.
A mass society needs mass participation, which the unequal distribution of income limits. The crisis of 2008 tells us the wealthy have failed to return their savings and tax cuts back into the economy in a constructive way to create long lived assets and jobs. They have failed themselves and the country.
It is time for the wealthy to pay more tax.
Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
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Dollar Savings Direct Ups Online Savings Account to 4.00% APY
While ING Direct and Washington Mutual are dropping the interest rates on their online savings accounts, the Dollar Savings Direct account from Emigrant is going up (via Interesting Money).
The account now has a 4.00% APY (up from 3.75%), putting it at the top of highest online savings accounts.
When we first heard about Dollar Saving Direct, we wondered why Emigrant Bank was introducing a new account to compete with its own EmigrantDirect.
Bank Deals has a theory behind why Emigrant offers both:
Why does Emigrant Bank have two different online savings accounts? This seems to be a common technique for banks. They can use the new account to bring in money from new customers but they don't have to pay the high interest to existing customers who don't take the time to sign up for the new savings account.
It's always a good idea to keep your eyes on the best available rates. In addition to Dollar Savings Direct, check out FNBO Direct (3.50% APY), WT Direct (3.26% APY) HSBC Direct (3.25% APY), or ING Direct (2.75% APY).
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How to Easily Overcome Your Bad Financial Choices
Personal finance is about 95 percent mental and 5 percent physical. Once you've put the right system into place, you just have to block out all the noise and plow ahead.
So as much as you may have been led to believe otherwise, the biggest thing blocking your success is you.
You are your biggest investment — and sometimes you make the wrong decisions. That's simply human nature.
The 7 Psychological Money Traps
Bankrate has a great story about 7 'psycho' money traps and how to beat them, highlighting how we cause ourselves problems.
Their seven mental money traps:
1. The lure of 'free'
2. The 'anchor-price' persuasion
3. The instant-gratification attraction
4. The dollars-to-donuts decoy
5. The separate-buckets blunder
6. The 'sacred-fund' slip-up
7. The lost-money fallacyThese are all great examples of how we naturally make poor financial decisions. You're not the only person who's ever made these mistakes. But you can easily overcome them.
Use Automation to Remove the Human Element
If you want to ensure that you aren't blocking your own financial success, automate the processes.
Want to save for a new car? Set it and forget it.
Leave your paycheck sitting around instead of cashing it? Get direct deposit.
Working hard to time the stock market? Automate your investments and you'll benefit from dollar-cost averaging.
When you take the 5 percent action required, you've set yourself up for financial success. Turn around your bad habits and start to feel comfortable with your decisions.
When Technology Can't Help You
Online banking and the Internet can do a lot to improve your money management shortcomings, but they can't do it all.
No one's going to stop you from buying that videogame you don't really need.
No one's going to stop you from living beyond your means (except maybe the bank, and you don't want to go there).
No one's going to stop you from being lazy and putting off the process to your financial freedom.
You've got to be the one who steps in and makes smart decisions. The tools are all there, but you need to make it happen.
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3 Things the Presidential Candidates Can't Say About the Economy (But Should)
Without getting too deep into politics, I must say that I'm more disappointed than ever about the current state of the election.
Both candidates are running on a platform of change, but the more you listen to them and watch how they act, the more you realize that it's all politics as usual.
It's depressing to think that, despite what the candidates say, we're more out here on our own than ever. (Don't take this to mean I'm in favor of government meddling in our lives. I'm in favor of government helping us out by getting out of our way.)
When it comes the economy, the candidates are trying to solve problems — that's understandable. But they're not looking long-term; they're saying whatever they need to in order to get elected.
Here's what they should be saying.
I Can't Really Do Much to Help You
While the president certainly has the power to sign bills into law and pressure Congress to pass legislation, he can't affect the stock market.
The president can't do much to lower gas prices. And he can't put food on your table.
Stop thinking that either Obama or McCain will make a radical difference to your bottom line.
You Shouldn't Have Gotten That Sub-Prime Mortgage
The candidates aren't going to tell you that the sub-prime mortgage you got was a dumb idea. But guess what? It was.
If you can't afford a mortgage, you shouldn't get one.
For sure, there were some stupid lenders out there looking to make a quick buck. But they didn't make you sign on the dotted line, did they?
You have to take some personal responsibility for what has happened.
Why Weren't You Prepared?
It's not the government's job to take care of you.
We just ended a time with a record-breaking stock market, a ridiculously high real estate market, and you even got a stimulus check.
You're right, gas prices did get pretty high pretty quickly, but sometimes those things happen. It's not like gas guzzler is a new term — did you consider it might cost you more one day?
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3 Reasons the Economy Isn't Worrying Me
Every time you turn on the news, you hear it:
CRISIS! RECESSION! DEPRESSION!
You can't seem to go anywhere without someone talking about the flailing economy, high gas prices, and their retirement savings causing them worry.
It's the reality of the situation today — but it doesn't need to be.
While Wall Street's problems have turned into Main Street's (who do you think is funding that $700 billion bailout?), the current economy doesn't need to worry you. It isn't worrying me.
Here are three reasons the economy isn't worrying me.
I'm Investing For the Long Run
My retirement accounts have dropped significantly over the past year, especially from their recent highs. But I'm not worried. That money isn't going to be touched for another 40 years or so.
But what if you're nearing retirement? You don't have as much time for the market to rebound — that's for sure. But if you're close to cashing out, you should have a very conservative asset allocation. If you're 58 and you're 100% in stocks, you're in trouble.
Make it a priority to evaluate and adjust your asset allocation once a year. Don't try and time the market — pick a day (April 15 is an easy one to remember) and do it no matter what's happening.
I Have Money Saved Up
One of the most important things to have in an unsteady economy is a strong cash position. No, that doesn't mean you should sell your stock and buy gold (in fact, don't do that). It means you need to have the leverage to avoid depending on financial institutions and credit cards when everyone is tightening their belts.
Look at a guy like Warren Buffet — when everyone is panicking, he goes and invests $5 billion into Goldman Sachs. Having the cash when no one else does gets you the best deals.
If you've got cash, you don't have to worry about everyone else's financials.
I've Got a Few Income Streams
In a market where the unemployment rate is at 6.1%, it's more important than ever to have a few different sources of income.
While an emergency fund prepares you for the uncertainties of the future, having more than one way to make money softens any potential job hazards. In addition to my day job, I do some consulting work and own a number of Web sites.
You don't put all of your eggs into one basket when you're investing in the stock market, right? It makes as much sense to only depend on one source of income.
(For the entrepreneurial types, this is the perfect time to start a business. You're required to depend on what you have — no small business loans, etc — and are forced to focus on the fundamentals.)
Why isn't the economy worrying you? Let us know in a comment below.
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