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4 Super ideas for successful investing

Start saving now!

The saying “there’s no time like the present” is particularly meaningful when it comes to saving and investing. That’s because of the magic of compound interest, sometimes referred to as the ‘rule of 72’.

Save your next pay rise

When you receive a pay raise, think about saving the extra money you receive each fortnight. You can do this by reducing any non-deductible debt you might have, such as credit cards or your mortgage. Or you could make extra contributions to your super, or other forms of saving. You probably won’t even notice it’s gone, and you will be surprised how quickly this money can grow.

Keep track of your money

Keep receipts for all of your purchases during a week, then add them up. You’ll be surprised how much money you spend on smaller impulse items – money you could be investing instead!

Set goals

Choose your investment goals and a timeframe in which you will aim to reach that goal. Your timeframe will help you decide where to invest your money.

For example, for a short-term goal like an overseas holiday, you might choose a more conservative investment such as a managed fund or other cash based investments, so you can access your money at any time. For longer-term goals like retirement, you might look to invest in growth assets, such as shares, through your superannuation account.

Tackling Some Smaller Bills Reduces Debt

Let’s face it; a lot of people are having trouble with their debt load these days. If you are having trouble with mounds of debt, obviously the best thing to do is to get rid of it. Ignoring your debt will quite literally only make it worse, potentially much worse. Here are some simple ideas to help you get out of debt. Some of them might be common sense, but you may very have spending habits that are making your problem much worse.

First, and this could be a tough one for most people, look at how you eat and entertain yourself. These two factors are of massive importance, in part because you can make changes to these two categories quickly. If you are in serious financial trouble, you should probably skip going out to eat (no matter how addicted you might be to going out). This includes paying too much for coffee drinks or going out to a bar. Until you get your debt paid down, your drinks should be those you have at home. Eating out means tipping as well, this just adds to the cost of your overall food bill. If you shop wisely and buy foods that are nutritious and cost effective, you will save money. The “lowly” bean is what helped many people through the Great Depression. The same can be said of all root vegetables, like sweet potatoes and potatoes. Stay away from the overpriced processed food, and your wallet will be heavier and you will likely be lighter.

The second step may also seem obvious, but it is so important that it should be greatly emphasized- stop spending. If your car breaks down, your roof starts leaking or you need to go to the doctor, that is an exception. A new set of golf clubs isn’t an exception, nor is buying something strictly to “keep up with the Jones’.”

Information is key. You should know exactly where your money is going. However, just as important as where your money is going, you should know where and how to eliminate expenses. For example, if you are almost never home, why bother having cable television? In fact, there are a surprising amount of shows now available for free directly from the websites of the networks that produce them. This is just one small example of how you can reduce your debt and the stress it puts on your life.

Sometimes Debt Makes Sense

Though we are often taught that debt is bad, even on this website, in some cases, it may actually make sense to retain a debt, especially if the alternative costs more. For example, it does not make sense to drain all of your financial resources paying your mortgage off, if you know that if anything goes wrong, you will incur high interest credit card debt.

In other cases, it simply isn’t feasible to pay cash for large purchases, like a home or college. In fact, in these situations, debt may actually be beneficial to your financial picture.

In the majority of cases, you will not have the cash to purchase your home outright. You have to carefully consider how much money you can afford to put down and also how much home you can comfortably pay for. Obviously, the more money that you put down upfront, the less you will pay in interest and for your home.

But before you rush to drain your cash reserves and put down every available cent to cut the interest payments on your mortgage, you will need to consider other financial issues. Since mortgage rates are typically a lot lower than interest rates on other debt, using all of your available cash towards purchasing your home is not always a wise decision.

Traditionally prospective homeowners put down a 20 percent down payment in order to get the best mortgage deals. However, in a booming housing market, prospective homeowners are wooed by low down payment and no down payment home loans. It is important to remember, though, that the less you put down the higher your monthly mortgage payment will be and he more you will pay in PMI.

So it makes sense to not pour all of your cash into a home, especially if you will end up with credit card or other personal debt, because the interest payments on mortgages tend to be lower than the interest payments on other debts. Plus, you can deduct the interest on your mortgage when you file your yearly taxes.

When it comes to paying for you child’s college education, it makes more financial sense to allow your children to borrow for college rather than to borrow against your retirement. In this case, your children have numerous financial resources available to pay for college, such as student loans and scholarships, often at discounted rates. However, when your retirement funds are gone, they are gone.

Also, your retirement funds are not considered when applying for financial aid for your child’s education. This is why using federal loan programs for your child’s education makes better financial sense than borrowing against your retirement.

Many people consider borrowing against the equity in their homes to pay for college. This is not recommended, because you risk losing your home if you run into financial difficulties.

It is always best, of course, to try to save for your child’s education. Then your child can borrow the portion that you cannot pay. Student loans have guaranteed low interest rates and no payments are due until after graduation, which a big plus when considering financing options for college.

Depending on the situation, sometimes debt makes sense financially. Debt such as mortgages and educational loans often cost less than other financial debt. In these cases, it may be wiser to borrow than to drain all of your financial resources. Becoming debt free is an admirable goal, but not at the cost of all of your resources.

Budgets and Setting Financial Goals

When you are planning a budget, it is necessary to analyze how you are spending your money, so that you can see where you need to make adjustments in your spending habits. The first thing that you will need to do is take a look at the budget that you have created and figure out where you can cut expenses.

This is especially important if you are spending more than you earn. If you are in this position, you are not alone. As a matter of fact, statistics show that many families who bring in Rs. 5,00,000 or less each year are spending more than they earn. This data seems to back up the assertion that people are in the habit of spending more than they have, thereby creating debt and placing themselves in a precarious situation.

If you are in this situation, then it will definitely benefit you to construct a budget that helps you to minimize your spending immediately.

However, if you are not spending more than you earn, you may still want to evaluate how you are spending. By doing this, you are able to identify areas in which you may be overspending. For example, if your family is dining out every night, you might want to consider cooking at home more often.

When you are planning a budget, you should only include income that you are certain of receiving. This means that you should not include bonuses from your job or tax refunds as income. These things should be considered extras. When you receive this extra cash, it makes sense financially to save or invest this bonus income for the future.

When setting your financial goals using your budget, you should aim to spend only about 90 percent of your income. The remaining 10 percent of your income should be set aside for the financial objectives that you have relegated as the most important.

In order for your budget to be successful and to meet your financial goals, you need to track your expenses on an ongoing basis so that you can eliminate cash leaks. One of the simplest methods to track your expenses is to use some sort of personal financial software. Many computers these days include versions of basic financial software, such as Microsoft Money. By tracking your spending on an ongoing basis, you are able to maintain the spending levels that you have set as goals.

By tracking your expenses, you may also realize that some of the goals that you have set in accordance with your budget are not very realistic. If this is the case you will need to adjust your budget. It does not make sense to set financial goals that unattainable. You also should not set goals that are not very challenging.

Most likely you will make several revisions to your budget before you actually achieve one that is reasonable for your financial situation. Once you become used to using your budget to help you achieve your financial goals, you will find that managing your money is not as difficult as it may have first seemed.

Finance Guru: Dealing With Medical Bills

Even with health insurance, all it takes is one major illness or injury to be stuck with overwhelming medical bills. When this happens, you might feel like there’s nothing you can do but pay the entire amount owed or file for bankruptcy. In most cases, however, there are several measures you can take to whittle down medical debts both big and small.

1. Check any medical bills you receive carefully. You should receive a detailed statement for any services or procedures you receive. Make sure that you have actually received what you’re being billed for. Did you receive each medication and service listed? Do the dates of service listed on the bill match up with your records? Are you being billed more than once for the same service or supply? The easiest way to check your bills for accuracy is to keep a record of what treatments your receiving and when you’re receiving them.

2. You’ll also need to check your insurance policy and make sure that the insurance is paying for what it’s supposed to. If they have denied payment for treatment or services that you think should be covered, ask for the matter to be reviewed.

3. Try to settle the debt for less than the amount owed by negotiating with providers. If you know in advance you’ll need treatment, negotiate beforehand. Offer to pay a discounted amount upfront, for example. This tact can work with emergency or unplanned treatment after the fact. If you simply can’t pay the whole amount, most providers would have something rather than nothing and will work with you.

4. Get help to pay the bills. There are programs available for people who can’t pay their medical bills. Ask your provider.

Don’t sacrifice your own future to pay for Your Child’s Education

Of course you want to be able to pay for your child’s college education. Who doesn’t? It’s every parent’s dream, right? For those who can afford it, paying for college for the kids outright is a great thing. For most middle-class people however, the thought of paying the bill for four years of higher education or taking on more student loan debt can be downright nightmare-inducing.

Here are some things to remember when planning for your children’s college education:

1. Start setting aside money when they are young if you can, but it’s never too late to start.

2. Apply for every scholarship you can find. Start researching scholarships and involve your college-bound child in the process. As soon as your child is a junior in college, start looking for scholarships. Make it your child’s job to apply for any scholarship you can find, no matter how big or how small. Those small scholarships can add up quickly!

3. Don’t sacrifice your own future to pay for college. Don’t forego funding your own retirement account in order to pay for your child’s college. Think of it this way. Your child can get loans to pay for college and then work for years to pay them off, but you can’t get a loan for retirement and work to pay it off.

Get Your Financial Affairs in Order

You can work on getting your credit card debt, student loan debt, and other financial troubles under control, but until you get organized with your finances, you’ll never be able to fully achieve financial freedom. Here are some tips to get organized with your finances.

1. Prepare a budget and stick to it. You should know exactly how much money is coming in and how much money is going out. These amounts need to be balanced.

2. Make a list of all debts and total amounts owed. Seeing it in black and white might surprise you but you need to know the bottom line.

3. Set aside a time each month to pay bills. Whether you choose to pay bills online or through the mail, it helps to have a set time to pay bills.

4. Keep a calendar, either hard copy or on your computer, with bill due dates clearly marked. Decide when you need to pay these bills in order for them to be on time and record these dates as well.

5. Keep bills and bill-paying supplies in one place.

6. If your stack of bills seems like it’s a mile high, consider consolidating some of your bills to take some of the pressure off.

7. Don’t pile up unopened bills on the kitchen counter or elsewhere. Go through your mail every day. Throw away junk mail, open bills, and record their due dates immediately. Billing cycles vary and even though your Visa bill was due on the 5th last month, don’t count on the fact it will always be due on the 5th. Opening your bills will help you avoid unpleasant surprises and late payment fees.

8. While there are certain records you’ll need to keep for a long time, like tax returns and proof of paid off accounts, you can shred utility bills once the payment has gone through.

9. Just as you are being diligent to ensure you’re paying all your bills and you’re paying them on time, make sure you’re getting paid as well. Check direct deposits for accuracy and monitor savings and investment accounts.

10. Keep a file with separate file folders for paycheck stubs, tax returns, sales contracts, and anything else related to your finances.

10 tips to earn $625 a month extra!

What would you do with an extra $625 a month? You could put that money towards credit card debt or build up your savings account. We’re talking $7,500 a year, and you don’t need to get a raise or start saving dryer lint–you just need to cut back in little ways that add up. Try these ten tips for saving up to $625 a month.

1. Make fewer trips to the store. If you are going to the grocery store more than twice a week, chances are you’re spending too much. By only going to the grocery store once a week, with a list, you could save $50 a week (cut out those little $25 trips).

2. When making your grocery list, refer to the store’s circular and plan your weekly meals around what’s on sale. You could save another $25 a week.

3. Cut back on eating out. If you cut out one meal out a week, you can save at least $25 a week.

4. Drive less, plan your trips wisely. You could save a tank of gas a month, or at least $10 a week.

5. Cut back on cable. Chances are there are plenty of channels you aren’t watching. You could cut another $25 a month from your budget.

6. Shop around for car, home, and life insurance. If you cut $10 a month off each of these, that’s $30 a month.

7. Eating lunch out more than once a week? Cut out even two times of eating out a week and you’ll save $50 a month.

8. Instead of going out for drinks once a week with your friends, host a wine night at your house once a month. You can still have your nights out the other three weeks of the month, but save at least $25 a month by having a BYOB get-together on that fourth week.

9. Bypass the coffee store. Treat yourself once a week rather than three or five times a week. Cut out two lattes a week and save $25 a month.

10. Try to shave $10 a month off of your water, electric, gas, phone, and other utility bills that fluctuate month to month. You’ll save at least $30.

If you follow all of these tips, you can save $625 without changing your life all that much. Even if you followed some of these tips, imagine what $500 a month could do. The little things add up.

10 Habits You Can Change to Save Money in the New Year

As a new year begins, and you consider what you can do to make this coming year better than the last year, it’s a good idea to look at your habits. Many of our habits contribute to money leaks in our lives.

It might take some time to eradicate a habit in your life, but you can work on one at a time. Work on developing good habit from this list each month, and in 10 months you could have a new you that is also more financially sound:

Brew your own coffee: Instead of buying coffee, brew your own and bring it along. At the very least, you could brew your own coffee three days a week, and only buy it two mornings a week. With the cost of coffee rising, you really could save a bundle over time.
Brown bag it: This is everyone’s frugal living tip — because it works. Not only can you save money on your lunch each day, but you can also live healthier. Healthier lunches prepared at home and brought to work will save you money on health care costs down the road.
Carpool: Save money by spreading out the cost of gas with your co-workers, or with neighbors who work near your location. There are a number of web sites — and even a Facebook app — that can help you find people to share rides with. You’ll spend less in gas and maybe even make new friends.
Walk more: Instead of driving everywhere, consider how you might walk more. I’ve stopped driving around my neighborhood, opting to walk or ride my bike. This saves money on gas, prevents idling, and improves my health. Even if you do drive, consider parking further away from your destination. A little more exercise — leading to better health — will help you save money in the long run.
Work out at home: Make an effort to work out at home. The gas costs related to going to the gym only add to the cost of the membership. There are plenty of ways to get in good shape without going to the gym.
Grow your own food: You don’t need a big garden. Even if you have a small space, you can grow tomatoes in a container, and keep an herb garden in your window. Of course, if you have the space for it a bigger garden can be great. Save money on food and eat healthier.
Plan your meals: Part of the big costs associated with meal time is often because we don’t plan ahead. Make a menu, and plan out what you need. You can also plan your meals around what’s on sale, and what you have coupons for. Use the crock pot, or get a 30-minute meal cookbook to ensure that you have time to create healthy, low cost meals for your family.
Cut the soda: Instead of drinking soda, switch to water. You’ll be drinking fewer calories, and water costs much less — especially out of the tap. You can invest a little in a water filter if you feel it necessary. Over time, the filter will more than pay for itself.
Institute a waiting period before making a purchase: Before you buy something, institute a waiting period. You might be surprised to discover that what you “want” changes when you think about it for 10 to 20 days. This can be a good way to curb impulse spending.
Stop smoking: This is listed last because it might take more than a month to kick this habit. However, the rewards in terms of saving money as well as improved health, might be well worth it.

What new habits do you want to develop in order to save money?

My Horrible Habit of Eating Out

I must confess my sins. I have a terrible habit of eating out whenever possible. Uncontrolled, I can eat out or take out three or more times a week. That of course is one of the primary reasons I got into debt in the first place.

For the last year, I fell back into that old habit. Yuck! I felt that my life had gotten so busy, what with my career, my family business, my extracurricular activities, I couldn’t possibly have time to cook. Besides, I enjoy eating out and why shouldn’t I? I wasn’t getting into debt for it this time! I paid with money that I had!

So, yeah, I ate out too much last year. While I didn’t get into debt this time around, I sure wasted thousands of dollars.

This month, I recommitted myself to cooking at home, eating at home, and saving the extra cash for more important things…like maybe a vacation with my husband.

I started using the tricks I learned while getting out of debt. I cooked extra food and froze or refrigerated the leftovers for later. I used easy recipes that don’t take time away from my important activities so I can cook AND work at the same time. I also have the added bonus of having a husband who reminds me of my savings goal whenever I get a craving.

While I’m not happy with the fact that I can’t go dining like I want to, I sure do look forward to having money around again!

Last night, without spending too much effort, I made two boxes worth of macaroni and cheese. I already have a pot of brown rice in the refrigerator from the previous evening. I have porkchops marinading in the refrigerator. I have barbecue ribs from three nights ago. I have my usual spaghetti and meatballs in the freezer from a week ago. I have carrot sticks and cleaned brocoli ready to be eaten raw. I’m set!

My trick is to cook one item every night or every other night. Make sure I cook plenty. After a week of doing this, my refrigerator constantly has delicious food … which makes it really hard to justify eating out.