Personal Finance Blog

Tips And Stories To Help You With Managing Money

Budgeting Mistakes That Can Cost You Hundreds

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Budgeting TipsIf you do not have a household budget or have one that isn’t helping you save money, you can be throwing hundreds of dollars away every year. Start with a clean slate by creating or revamping your budget to avoid fees and unnecessary costs. After a few months with a working budget, you will have a better idea of your expenses, and you can adjust it at any point in time. Here are some of the most common mistakes people make when creating or revising a budget:

Forgetting spending areas. You probably remembered to include the electric and cable bills in your budget, but what about the payment for quarterly trash collection? Many people forget to include certain spending areas in their budgets. To create the most comprehensive and accurate budget, add all of your costs and investments, such as college fund payments. This will allow you to cover all of your bases and avoid surprises in the mail.

Foregoing an emergency fund. It is unwise to spend every penny in your bank account, because many costs can catch you off guard. If your car breaks down or you miss a scheduled dentist appointment, you will have unexpected expenses and no cushion in your budget. To avoid overdraft fees and anxiety about unforeseen costs, set aside some money every month for an emergency fund. Since it is built into your budget, it won’t seem like a burden and you will have peace of mind when it comes to your finances.

Under-budgeting. If you do not allocate enough money to each area of the budget, you are destined to spend more than you intended. For instance, you might spend $300 on gas every month but only budget $175. Under-budgeting (and therefore, overspending) for gas leaves less money for other areas of your budget, such as food, clothing, or bills. You are better off over-budgeting and having money to spare at the end of the month than under-budgeting.

Adding potential income. In your budget, you should only account for certain income like your paycheck. Adding possible performance bonuses and other tentative income is a common budgeting mistake. Sometimes pay increases and bonuses do not work out in the end so you should not include them when making a budget. Only account for your regular income. If you have a job with irregular earnings, such as selling candles online, you should make a reasonable estimate of your income. This will allow you to live within your means every month.

These common budgeting mistakes can cost you hundreds of dollars over the course of a year. You should plan well and make a complete budget to start saving money on a regular basis. With a comprehensive budget, you will have more money in your bank account and be able to pay for any unexpected costs. This will create financial stability in your life and make you feel good about how you spend your hard-earned cash. Good luck!

5 Tips to Travel on a Dime

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family-vacationsA weekend getaway or a family trip is a fun way to spend your vacation, but you don’t want to worry about money the whole time. Whether you are visiting a relaxing resort or Disney World with the kids, you want to get the most out of your trip without breaking the bank. Save money by following these suggestions.

Be aware of your spending limits and you can still have a blast! For you and your family, here are five ways to travel on a dime:

  1. Think about alternative transportation. Most families pack up the car to drive to their destinations, but one way to cut costs is to travel by train, bus, or even a cruise ship! Airplanes are generally the most expensive way to get from one place to another, and it can be a hassle with baggage and little ones. For cost-effective travel, consider Amtrak, the nation’s train system, or a week-long vacation on a cruise ship. With these modes of transportation, you can see several different places and save money at the same time.
  2. Compare. Check several travel websites and call individual airlines and hotels to shop around for the best deals. Some sites offer travel packages so you can save on flights, hotels, rental cars, and more. Don’t rule out all-inclusive stays, either. Depending on your vacation plans and goals, these deals can actually keep more money in your pocket.
  3. Take an adventure. Everyone knows that eating at a hotel restaurant or one catered to tourists can cost a pretty penny. Instead, join the locals in town, where you can find cheaper and tastier food. Bonus: they can offer some insight into what you should see and do while you are visiting the area.
  4. Utilize your discounts. With certain memberships, like AAA and hotel chain rewards programs, you can save money on hotels, rental cars, flights, and vacation activities. Make sure you save money when you order your personal checks before leaving town. If you like a specific airline, try to book with them often so you can earn Frequent Flyer miles and points. Find out if your hotel or rental car company offer savings for senior citizens, students, young children, and safe drivers. Make discounts work for you – it doesn’t hurt to ask!
  5. Discover the beauty of last-minute deals. If you have a flexible schedule and want to take a weekend trip alone or with your family, you should check last-minute travel websites for big savings. Airlines, hotels, and cruises discount their prices deeply at the last second in order to fill their rooms and seats. Note: try not to wait for last-minute deals for hot spots during peak seasons, or you might miss out.

With these five travel tips, you can enjoy your stay and come home with money in your pocket. Make the most of your vacation without stressing over how much you’re spending. Plan effectively before you leave, and you will have a trip (souvenirs, pictures, and a full belly) to remember!

Buy Cheap Checks To Help With Family Budgeting

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In these days of austerity, we are all looking to save money. Many families and businesses are now turning to alternate sources to buy cheap checks . Ordering them from your bank is costly and may take a long time to arrive. Banks seemed to have a monopoly on this business, however check printers are leveling the playing field.

Today, with so many online check printers offering pre-built templates for check designs, you can customize and personalize your checks in a variety of ways. Add personal messages. Put in a picture or photograph. Set up your own background. But before you do, here are some tips that you need to keep in mind when ordering your cheap checks online.

It’s true what they say about electronic payment systems – that they are fast catching on to replace paper checks. However, many families still use paper checks, some because people don’t trust debit cards and technology. But many of us stick with the trusty old check by choice. It gives us a paper record of our transactions and to be able to write a check is quick and easy.

Cheap Checks

  1. Start out by searching for “cheap checks” online using your browser or any other search engine tool. If possible, use search criteria that will narrow the search for you. For instance, look for “cheap checks” in or near “your home town.”
  2. Check out the quality of the website. You will need to spend some time browsing throughout the site to make sure you are comfortable with what the website says about the company, their products and their service. If you aren’t satisfied, skip this vendor and move on to the next!
  3. Consider only companies that have been in the  check printing business for many years. The longer the better.
  4. Make sure there is a phone number available on the website. Even if you are not sure that you will be using them, call the number – several times if you must – just so you get a “warm and fuzzy” about the vendor.
  5. Before calling, be prepared with a series of questions: Who are they? How long have they been in business? What areas do they service? Where are they located? What products and services do they provide? What are their charges? What are their delivery and return policies? Even if this information is available on the website, it doesn’t hurt to clarify them in person on the phone.
  6. Usually, companies offering  checks have a certain set-up cost associated with each order. If you order in bulk, then they may be able to give you added discounts.
  7. Make sure you inquire about shipping policies. What carrier do they use? How long will it take to deliver? What if you are not home when the package arrives? Also, if you order in bulk you may qualify for free shipping.
  8. Before you order, have your checking account number and your bank/branch routing number ready.

Cheap checks are no longer cheap looking checks.  Go ahead and order your checks now and save up to 50% off your bank’s rate!

Characteristics of the Main Types of Mutual Funds

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When reviewing your personal finances, be sure to let your saved money work for you and increase your assets. Follow along with Richard Cox’s investment guides.

For new investors looking at mutual funds, it is important to know that not all of these funds are exposed to the same markets or the same asset types.  Typically, a mutual fund will fall into one of three categories – Bond funds, Money Market funds, or Stock funds.  In order to increase diversification exposure, many investors will split their resources and buy into a portion of all three.  Here, we look at the characteristics of each of these Mutual Fund types.

Stock Funds

The most volatile of these funds is the Stock fund, which is sometimes called an Equity fund.  In these cases, the value of the fund might fluctuate sharply in small periods of time.  On the positive side, stocks perform better on a historical basis when compared to other asset classes.  This is generally due to the expectation that companies will later command a greater market share and improve on revenues and profit outlooks.  These factors tend to create increases in stock value for shareholders.

When gauging potential stock performance, it is important to consider the changing economic conditions which might affect corporate earnings, or risks such as upcoming lawsuits or possible restrictions in future product releases.  Stock funds have sub-divisions as well, which feature different types of assets:

  • Income Funds:  Focus on stocks with high dividend yields
  • Index Funds:  Attempt to match the performance of a major stock index (such as the Dow or S&P 500)
  • Sector Funds:  Specialize in industry sectors (such as technology, finance or healthcare)
  • Growth Funds:   Attempt to create substantial capital appreciation (but are less likely to pay dividends regularly)

Bond Funds

Bond funds will generally buy government or corporate debt, and are sometimes referred to as Fixed Income funds.  This is because Bond funds look to provide consistent investment income with regular dividend payments.  These funds are included in many investment portfolios because they tend to perform well when stock markets are losing value.  This helps to provide balance and risk protection for investors.

Bond funds are organized by sector (just like Stock Funds), and can vary in terms of potential risk.  Low risk funds invest in stable assets like US Treasury Bonds, while riskier funds invest in very high-yield bonds or those associated with corporations with low credit ratings.  Risk for bond funds can come from these areas:

  • Instances where bond issuers (either a government or a company) is unable to repay its debts
  • The bond is paid off prematurely, preventing a bond fund manager from re-investing profits in a higher return asset
  • Interest rates rise, bringing value declines to the purchased bonds

Money Market Funds

Money Market funds are typically associated with lower risk, relative to many other fund types and asset classes.  These funds have legal requirements which limit their investments to selected high quality investments over short time periods.  These assets are issued by the federal government, local municipalities, or stable US companies.  In exchange for this security, historical returns tend to be lower (when compared to stock or bond funds), and these lower rates of return make these funds vulnerable to value declines in periods of high inflation.

Choosing Your Mutual Fund

When choosing your mutual fund investments, it is important to keep all of these factors in mind.  Different fund types will perform better in certain economic environments and the total level of risk associated with each fund type will differ from investor to investor.

Reducing Fees in Mutual Fund Investments

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Investing money is one way that Coolchecks.net recommends you use to enhance your personal finance strategies. Here is a short guide to mutual funds.

Mutual Fund Investment Guide

Selecting a winning mutual fund can seem like a daunting task, so whether you are looking to invest in a managed fund based on your own interest or if you are forced to do this because index funds are not provided by your 401(k), it pays to have an understanding of the basic workings of these instruments and the ways mutual funds tend to behave in relation to the broader market. First, it is important to understand that many mutual funds underperform the many benchmark stock indices because of the fees that are associated with these investments.

As client investors, our primary task is to ensure that these fee charges are low, as this gives us a better chance to achieve returns that beat the rest of the market. To do this, we will summarize the major terms that you will inevitably encounter when buying into a mutual fund and then give a short checklist that should be followed before any real investments are made.

Expense Ratios

Expense ratios are created by the annual fees that are charged by all mutual funds. These fees combine administrative costs, distribution fees, management fees, and operating costs. These costs are combined and calculated as a percentage to total assets. Actively managed mutual funds usually have expense ratios in the neighborhood of 1.5% per year. Ideally, look for expense ratios of 1% or less, but this might take some work since average fees have been rising in recent years.

Understanding Turnover

The next essential element to understand is “turnover,” which measures the length of time a mutual hold will hold a stock. Funds incur expenses whenever a fund is bought or sold, so if a fund holds onto a stock for a longer period of time, there will be fewer trading expenses. Additionally, capital gains taxes will also be lower when turnover rates are correctly managed.

If, for example, a fund has a turnover rate of 100%, that fund will buy an entirely new collection of stocks each year. Mutual funds average turnover rates of 80% but it is possible to find funds with substantially lower rates (sometimes even as low as 5%). The lower the rate, the lower the charges that will be later transferred to the investor.

A Checklist for Mutual Fund Investors

A summary checklist to use when looking for winning mutual funds should look like this:

1.  No sales charges for clients (this includes level loads, front loads, and sales loads that are contingent deferred)
2.  An expense ratio that is lower than its peers (usually below 1%)
3.  Low turnover relative to the competition, (generally lower than 50% a year, a number closer to 20% is preferred).
4.  Fund policy that remains fully invested. (Cash reserves of something close to 0%.)

Understanding these aspects of mutual fund investing can be important in ensuring we achieve returns that beat the wider market. In short, we are looking to keep our fees low and to choose low turnover funds, as these tend to give us the best chance enhancing returns.