5 Things You Should Do To Avoid Financial Difficulties

Getting into financial difficulties is never fun, but it happens to many people. A job loss, a health problem, and numerous other issues can be going on in your life that contribute to these problems. During these times, you’ll need to have good money management strategies in place to help you get through the storm.

1 – No Debt No Matter What

Never believe that a little debt is o.k. even though it may seem manageable at the time. Debt is like cancer. It’s not life threatening at first because it’s small and only involves a few cells. Over time though it can rapidly multiply until it takes over. You become a slave to your debt. It rules your life.

2 – Avoid cosigning on a loan

No matter how easy this can be, you’ll be better off if you don’t do this. Think of the worst case scenario and that is how you may suffer. Don’t loan others money. You are not helping them by letting them avoid responsibility for themselves.

3 – Learn About Financial Products

Prudential Financial did a study about women and finances. Three quarters of the 1,088 women interviewed feel they need help in making financial decisions. Two thirds of the Baby Boomers are behind when it comes to saving for retirement. Six in ten women prefer learning about financial products through family and friends. Women who get a good financial advisor, find extra help in getting on the right track to preparing for retirement.

4 – Avoid Impulse Buying

If you are tempted to purchase things that you hadn’t planned on, give yourself some time to think about the purchase, especially if it is a large purchase.  Go home and think about it overnight. You’ll make better buying choices.

5 – Avoid The Sales Rationale

Some people purchase things just because they are on sale. They tell themselves that they are saving money. If you buy a $500 item on sale for $400 you aren’t saving $100 if you didn’t need it in the first place. You are just spending $400 unnecessarily. This rationale can happen at any level of spending, whether it’s a $10 item or a $1,000 item.

If you find that you are experiencing any of these danger signals, do something different today.

Danger Signals To Watch For

• Is an increasing percentage of your income going to pay off debts?
• Are you near or at the limit on your lines of credit?
• Do you worry a lot about money?
• Are you tapping your savings to pay current bills?
• Is your savings inadequate or nonexistent?
• Do you put off medical or dental visits because you can afford them?
• Are you working overtime to make ends meet?
• Has your car been repossessed?
• Are you unsure about how much you owe?

Your financial future is up to you. What you do with your time and money is going to affect you and everyone who depends on you. Use the resources available to you to help you make better financial decisions.

An investment in knowledge pays the best interest. ~ Benjamin Franklin

Free Personal Finance Tools Create Smart Data

Gathering data and making meaningful use of it has made 30 year-old Aaron Patzer, a rich man. Aaron Patzer is the founder of the website, Mint.com which is a free personal finance site that has over 1.5 million users. It allows people to track bank transactions, credit card transactions, investments, and loan transactions online.

The site helps you find better prices on things you buy, guides you to the best credit card rewards and minimizes finance charges. It has helped people find $300 million in savings, managed $50 billion in assets and helped track $200 billion in purchases.

Security for this type of financial analysis is of utmost importance to  Mint.com. They have bank level security. They also have a “read-only” connection to financial institutions so no money can be moved and no one can drain your accounts. They have low-balance and spending alerts to help you manage your accounts and prevent identity theft or fraud.

What inspired him to create this type of site?

He found that he was spending most of his time working and had little time to track his own finances. Frustrated with how Quicken, Intuit’s financial software, worked, he decided to create his own program. He designed a way to make tracking his finances easier, quicker, and more automated. He created a business model that allowed people free use of the money management tools. From the data aggregated, they could offer suggestions on ways to save money, lower interest rates on credit cards and make better financial decisions

How did he fund the website?

Aaron had to raise venture capital money to fund the project and it was not always easy. He experienced highs and lows. Sometimes he thought his idea was the greatest thing since sliced bread and other times he questioned himself with his attempt at tackling such a big project and competing with Intuit, a $10B company. For comfort in the low phases, he often thought of a quote “Our doubts are traitors, and make us lose the good we might oft win, by fearing to attempt.” Shakespeare

How does the software work?

Aaron Patzer received a license from the company, Yodlee, to use the technology that powers 85% to 90% of all the online consumer finance sites. The communication between you and your bank uses this technology.

Then, he did what he is good at. He began to work on algorithms that would take the financial data and make it useful. One algorithm was patented and contains 105 steps to have transactions labeled with appropriate categories. Other algorithms helped to make recommendations on ways that the user could save money. He now holds 11 patents on algorithms.

How did the site become so popular and successful?

When the site was first launched it won awards from The Motley Fool for the best money management tool. TechCrunch40 awarded them the hottest start up company of the year and they really began to take off. Over the next few years they received 47 awards from well know companies like, CNNmoney.com, Time.com, PC magazine, Kiplinger, the World Economic Fund, LifeHacker.com and Business Week.

What does Intuit think of Mint.com?

Intuit’s executives watched Mint.com for over a year. They became so impressed with the features of the site that the CEO of Intuit, Brad Smith approached Aaron and offered to buy the company. On November 2, 2009, Intuit purchased Mint.com for $140 million, offering Aaron the chance to be in charge of Mint.com and all Quicken online, desktop and mobile offerings, which he agreed to do.

Aaron Patzer, earned his bachelor’s degree in computer engineering, and computer science, and electrical engineering, at Duke University as well as a master’s degree in electrical engineering and algorithms from Princeton University. Some of his first work after graduation was working on a cell microprocessor, used in the PlayStation 3 and it uses three of his patents.

What is Aaron Patzer’s advice to entrepreneurs?

His best advice to other entrepreneurs is to “observe the world around you – everything you do, and especially everything you hate to do – solve a real problem and the world is yours.”

30 Personal Finance Tips To Use Now

Personal finance tips can come in handy when you are trying to improve your financial situation.  Economic struggles in the past several years have really turned some people’s lives upside down.

In March, 2010, the number of long-term unemployed people (those without a job for over 27 weeks) was a staggering 6.5 million. There were 15 million unemployed people. That’s a lot of people struggling to make ends meet any way they can.

To help you through this tough economic time, make sure that you help yourself by doing some of these practical things.

Protect yourself

• 1. Get a credit report every year so that you can make sure your credit is in good standing.
• 2. Scan everything in your wallet. In case of theft, you’ll have all your account numbers and contact information available.
• 3. Stop overdraft fees by going online and hooking up your checking account with a savings account.
• 4. Sign up for an alert that warns you when your account reaches whatever amount you choose.
• 5. Keep well organized financial documents for tax purposes
• 6. Diversify your sources of income.

Setting Goals

• 7. Decide what you want to do with your money.
• 8. Cover the necessities first
• 9. Use free websites for tracking goal setting
• 10. Choose some new starting points to hope for the best but plan for the worst.

Savings Strategies

• 11. Start saving at an early age.
• 12. Save money on a weekly basis and leave it alone for a while.
• 13. Order free information for your vacation planning.
• 14. For older folks, estimate your retirement benefits online at www.ssa.gov where you can put in your social security number and estimate your retirement benefits.

Debt Management

• 15. Use your tax refund to pay off high interest credit card debt.
• 16. Go to the websites where you have credit card accounts and sign up for an alert to remind you 10 days prior to the due date.
• 17. Request a reduction in your credit card interest rates.
• 18. Be grateful that your debt is not as big as the country’s debt.

Daily Living

• 19. Take an oath of financial honesty, with yourself and with others.
• 20. Use your local library instead of purchasing books.
• 21. Eat at home. Avoid restaurants to limit calories and cash expenses.
• 22. Reassess your possessions and see what you can live without.
• 23. Tell a friend what you are saving for and ask for emotional support.
• 24. Practice self-monitoring. Track spending using software like quicken or see if your online banking has a budgeting feature and track it for free.
• 25. Beware of advertising campaigns to entice you to spend more on house-hold goods. Proctor & Gamble, will increase advertising expenses by 20% in 2010.
• 26. Shop at cheaper stores. You can get Egyptian cotton sheets at discount stores.
• 27. Recognize buying mistakes and vow not to make them again.
• 28. Give away things you don’t need to make room for your new life.
• 29. If you are suffering from depression about your finances, discuss it with your doctor.
• 30. Learn to live with less – do you really need everything you have stashed away?

Your net worth to the world is usually determined by what remains after your bad habits are subtracted from your good ones.

Behavioral Finance Experts Share Tips

Are you one of the 50% of Americans that don’t expect your personal finances to improve in the next six months? According to a recent Harris Poll 30% of Americans feel that their finances will worsen. Fear of losing your job or losing money influences us tremendously.

Emotional Financial Decisions

There have been studies done by behavioral finance experts that say by nature we seem to look at our own situations as worse than they actually are. Is that true for you? One solution to this problem is to figure out how to conquer the emotions that stop you from making the best financial decisions you can.

Psychologists often use the phrase, “The emotional tail wags the rational dog.” The same is true for us in managing our personal finances. So what can you do to help yourself?

The first thing to do is to save money and save money early. A gentleman was discharged from the Army in 1958 with a check for $3,500. He got some advice from the head of research at Smith Barney about what to do with his money. He was advised to save it and invest it. He ended up investing the entire amount in IBM stock because he was familiar with the company. That stock is now worth over a quarter of a million dollars.

Why Is It Hard  To Save Money?

Richard Thaler, author of the bestselling book,”Nudge,” and professor at the University of Chicago, School of Business, says that the biggest problem Americans have is just not saving enough money. It is recommended that you save ten percent of your income, but many people fall far short of that. He says that people are not perfect. We all make mistakes. Figuring out how your emotions are getting in your way of saving will go a long ways in helping you get your finances back on track.

David Laibson, an economics professor at Harvard reports that the reason that people don’t save is primarily due to procrastination. They don’t want to fill out the paperwork that would make automatic payments into a savings plan. They decide that they’ll do it next week. It’s very similar to putting off a diet. It’s much easier to start on Monday. Do something about putting a savings plan in place. Use a strategy like saving ten percent of your income and put it on auto pilot.

Can you imagine how it would feel to have done this consistently throughout your life time? Warren Buffet, the third richest person in the world, worth $47 billion dollars, keeps $20 billion dollars in cash on hand. It helps him sleep at night.

Steps You Can Take Now

Your area of focus should be on building an emergency fund that will carry you through three to six months of unemployment. Try to eliminate big money expenses that may be unnecessary. Start networking with others before you lose your job. Find organizations to join where you can network at least once a week. Seventy-three percent of six-figure earners landed their current positions through personal contacts.

Get your finances back on track by saving on a regular basis, making good financial decisions without undue emotional factors and do yourself a favor by networking with others like-minded business people on a regular basis.

Overdraft Bank Fees Limited

Overdraft bank fees are frustrating, annoying and can make you feel like you’ve been robbed. In one incident, a New Hampshire man, Josh Muszynski bought a pack of cigarettes from a local gas station. Later that day, he logged on to his bank account and was shocked to see a 23 quadrillion dollar overdraft ($23,148,855,308,184,500)! Josh thought that his account had been comprised and that someone had bought Europe with his card! He didn’t know what could cause that to happen. The bank, unable to account for the error, fortunately reversed the huge charge within 24 hours.

During 2009,  abusive overdraft and insufficient-funds fees brought banks more than $38 billion dollars. The new credit card regulations have been helping to bring that number down. The new law protects consumers from abusive fees, penalties, interest rate increases.

With statements sent out in March of 2010, you might see additional information printed on your credit card statements. The new credit card statements include an easy to see LATE PAYMENT WARNING which tells you what your late fee is going to be if you don’t make a payment by the date printed. This is easy to see and is not buried in fine print on the back of your statement.

Then you’ll see the sobering statistics that will come to reality if you continue making the minimum payments. If you continue on your merry way, it may take you 20 years, 25 years or 30 years to get rid of this debt.

Followed by that horrifying news, it tells you how long it would take you to pay off your debt if you just made a larger payment every month.

Then you are asked if you would like  an aspirin or a drink. Not really, but it does offer you credit counseling services and gives you a number to call besides 1-800-IAM-DUMB.

In early March, 2010, Bank of America came to our financial rescue by deciding to help us avoid overdraft fees. Now they are actually going to decline your debit transaction at the point of sale if there are insufficient funds, instead of letting it go through and charging you fees.

Although there are new protections for consumers to avoid overdraft fees, you can still be charged fees if you are late on your payments. Do yourself a favor and keep your payments current if you have any credit card debt.

The best way for you to manage your money is to buy things that you can pay for with the money you have. Sounds pretty simple. Why has credit card debt quadrupled between 1992 and 2008 to $853 billion dollars? -  Because many don’t follow this advice.

Joshua Kennon, a person who saved 90% of his income for a very long time, reminds us that “there are tens of millions of Americans who live free from the burden of credit card debt and there is absolutely no reason you can’t be one of them. ”

If you have suffered from overdraft fees  and it has negatively affected your finances, you will most likely be very happy that the credit card rules and regulations will help you end this destructive force.

Organize Your Financial Life

Keeping your financial life in order is one way to get yourself on the pathway to being wealthy. When you have a pile of  bills and paper work cluttering up your office, it is likely that you don’t know what is coming in and going out. You have relinquished control when you are in that state. If you have one huge plastic bin that you throw all your mail in you’ll want to update your system.

If someone needed your tax returns for the past year, could you locate them easily? If you needed your social security card, birth certificate or will, would you know where they are?

Have you left instructions for your family members to retrieve important financial information in case you passed away? Do they know where your life insurance policies, bank accounts or your property deeds are located? Dealing with the death of a loved one is difficult enough without putting the burden of locating your important information on the shoulders of your children, relatives or friends.

Create a filing system that will be easy for you to use and tell your family  where you’ve put your important papers. A filing system is important for keeping tabs on your investments, your tax returns, your will, your insurance information and other legal documents. Is your system going to help you locate the important papers when they are needed? Most people understand how helpful a filing system is once they have it working for them.

What do you do with your mail? There are so many advertisements and junk mail that accumulate. It’s best to deal with this trash on a daily basis. If you have mail that you want to get rid of, be sure to use a shredding machine. Important information can be on unwanted mail. There are people who make a point of rummaging through trash to get this information and that can put you in serious risk for identity fraud. You don’t want that to happen to you.

What about bills that come in? Where do you put them before you pay them? With the online banking services available you can simply take the bill and set up a scheduled payment for it that will be sent out when you choose it to be sent. Then destroy the bill if you don’t need it for any record keeping. If you can keep up with the mail and bills coming in  with a system that is orderly, you’ll avoid a lot of late payment fees and be able to use the money you earn more effectively.

No plan is going to work for you if you don’t actually do it and with money matters, some people just hate dealing with organizing this information. Even looking at a credit card bill can feel devastating. If you’ve had spending sprees that you regret, you won’t even want to open your credit card bills.

It may be difficult for you to imagine what is going to get you back in control of your financial life. The most important thing to do is to have the courage to create a good system that works for you. Get rid of the large bin that you toss your mail into and forget about for weeks on end. Get back on the pathway to wealth by creating a system that works for you. You’ve done much harder things in the past. Organizing your finances is one way to treat yourself well and gain back a feeling of peace in your life.

The Pursuit of Happiness Through Difficult Financial Times

In the pursuit of happiness, many of us believe that having lots of money will make us happy. According to Jean Chatzky, the author of the book “The Difference,” this is not always true because once you have money, more money won’t buy more happiness. The happier you are, the more money will come in.

Some of us have been through bad financial situations. With bills piling up, creditors calling, and the household income barely enough, life still goes on.  You can make the best of it or just plain give up and lose hope. Financial problems can  be  very stressful  for anyone but there is always room to make a change in your attitude. In such difficult times, what are the critical factors that can make a difference in your life? Jean Chatzky tells us all about the main traits that you have to be successful.

Happiness and optimism are two of the keys in making more money because these two traits help you solve problems and come up with great ideas. Even if you fail the first time, being optimistic will help you try again, and again.

Having resilience means you can overcome anything and that includes financial problems. These people never denied that their finances were suffering. They were able to concentrate on how to take control of the things that they could change and let go of the things that they could not.

Having passion to lift yourself up from your financial struggles is another key element to financial success. Loving what you do is very important and when you love what you do for a job then you are on the road to financial stability.

Social capital is acquired by seeking out advice from people who can help you get to the next level of income. Value the relationships you have and reach out to people that you can help and those who can help you. Take time nurturing these relationships.

Wealthy people have the funds to spend lots of money but most of them are not foolish spenders at all. In fact, they save money on a regular basis. This is a fundamental goal for anyone wanting to improve their personal finances.

We usually have hunches about what might happen next. These intuitions will help you make decisions about spending and investing your money. Most wealthy people have developed  good intuition and this gives  them a big advantage. Learn to listen to your intuition when you are making financial decisions.

Taking calculated risks in the market is a good way to make money whether in good times or in bad. Those that lost thousands in their investments are slowly beginning to see those dollars come back. Let your money work hard for you.

Being grateful for your particular situation is key to being able to move on and learn from the past. People who get rich and stay rich, express their gratitude by contributing to organizations and communities that they care about.

Use these principals of gratitude, passion, resilience and optimism to change your attitudes, set realistic goals and return to your path of financial prosperity.

Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful. ~Albert Schweitzer

Personal Finance Give Up-Itis

Personal Finance Plans

Have you given up trying to succeed with your financial plan? Have you gone through personal finance disasters? Do you suffer from give up-itis?

You may be wondering what give up-itis is. To explain that, let me share with you a story from Donald O. Clifton’s book, “How Full Is Your Bucket?”

U.S. Army chief psychiatrist, Major  (Dr.) William E. Mayer,  did a study of the lives of soldiers who were held as prisoners in the Korean War. He studied 1,000 cases of soldiers who suffered extreme psychological depravement as POWs.  These people didn’t suffer physically as in being tortured, but they were systematically deprived of the normal benefits one can receive from friendship and support.  They caught a deadly disease:  extreme hopelessness.

The methods used to cause this hopelessness were conniving and deceitful. The death rate in the POW camps there rose to 38%, the largest in military history. Half of those soldiers died because they had given up.

To break down the spirits of the soldiers, they were offered small rewards for ratting out their fellow inmates. Nothing happened to the inmates as a result of the news, but alienation soon crept into the camp. The North Koreans in charge held mandatory group meetings where the prisoners were forced to tell of all of the bad things they had done and any instances of good that could have been done, but failed to be done.  Without emotional support, the prisoners soon began to give up.  Some would go into their huts, sit in a corner, pull a blanket over their heads and were dead within two days.

You may have suffered from a recent financial loss of some kind, perhaps a loss of a spouse, a job or your personal health.  If you can learn from the hopelessness the soldiers  suffered as prisoners of war, you can start getting your financial life back on the right track.

Don’t give up and pull the covers over your head preparing to die. Seek out friendships that are emotionally supportive. Support other people in their struggles with life and you will fill that emotional bucket you need to avoid give up-itis.

With emotional support, you will be able to face things in your personal financial life that you never thought you could face.

Five Personal Finance Tips

1. Be honest with yourself about what has happened to you. Find out where you are right now with your money.
2. Re-examine your living expenses and what you actually need to survive. Is there any place that you can cut back on spending? Where can you most effectively decrease spending?
3. Evaluate your income as it is now and make plans to increase it. There are many ways you might be able to earn extra income to help you through. Odd jobs and piece work types of jobs are plentiful.
4. Start tracking your expenditures if you don’t already do so. Tracking what you do is the best way to help you pinpoint the problem areas that you may be causing.
5. Set goals that you would like to reach and tell a friend about them. Emotional support from friends is really invaluable to you.

What is your plan to improve your financial situation?

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