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Two of my personal finance blogging friends have recently introduced a new site and Ebook that are absolutely worth checking out. The first is a new site called Personal Finance Buzz, or PF Buzz for short. The second is an Ebook called the College Grad Money Guide.
PF Buzz
PF Buzz was created by a guy I’m convinced never sleeps, Pinyo of Moolanomy. PF Buzz enables readers to submit and vote for their favorite PF blog articles. It’s also a great place to see what PF blog posts others enjoyed and have voted up. You can read Pinyo’s article giving more details about PF Buzz, and then head over to PF Buzz to check it out (and submit a DR post).
College Grad Money Guide
How you handle your money in the first few years following high school or college will in large part determine your future financial destiny. That is why an Ebook such as College Grad Money Guide is so important. And best of all, it’s free. It was written by Jim over at Blueprint for Financial Prosperity, one of the “old-timers” when it comes to personal financial blogs. He’s done a great job putting this book together, and it’s definitely worth reading.
“Success is not final, failure is not fatal: it is the courage to continue that counts.”
–Winston Churchill
Gaining control of your finances and moving toward financial freedom requires motivation. Motivation is that burning desire in some of us to better our lives and to achieve more than we have achieved thus far. Motivation may flow from a dissatisfaction with who we are or what we have, but that’s not always the case. Some people are motivated to improve their finances by the birth of their first child. Others are motivated to get out of debt when they’ve hit rock bottom.
Some, like me, are motivated to achieve some reasonable level of financial freedom so we don’t repeat the financial mistakes my parents made. I know all too well the sick feeling in the pit of your stomach when your family fears they may lose their home. I don’t want that for me or my family, and that’s in part what drives my motivation. But the key is that we need something to motivate us. And once we’ve found that something, we need to hold onto it like gold.
A few years ago, I joined Jenny Craig to try and lose some weight. At the first meeting, I completed an application form that asked me, on a scale from 1 to 10, how motivated I was to lose weight. I penciled in an 8 because I was highly motivated. The intake person reviewing my application, however, asked me what it would take for me to be even more motivated to lose weight. I thought about it for a moment and replied, “I guess I’d have to be fatter.”
Losing weight and keeping it off are hard for at least two reasons. First, good and bad decisions about what we eat do not have immediate, visible consequences. I can make a “good” decision by avoiding a candy bar in the afternoon, but I won’t lose ten pounds from that one decision. Likewise, eating the candy bar won’t cause me to gain ten pounds, either. I have to string together hundreds of healthy eating choices to see positive results. Second, once I’ve lost a certain amount of weight, my motivation to make healthy choices tends to wane. Like I told the intake person at Jenny Craig, to be more motivated, I need to be fatter. And so it is with money.
Living below our means, paying down debt, and investing require us to make many individually insignificant decisions that don’t have an immediate, major financial consequence. Do we save $100 a month that in 20 years at 10% interest appreciates to $76,000, or do we spend that money for immediate gratification? And how do we stay motivated once we start to see positive results? So often, folks get motivated to pay down debt, but as their debt gets paid off, lose the motivation, and go out and borrow again. I’ve seen this cycle repeat itself over and over again.
So I’ve assembled eight articles that each describe a tip on how to get and stay motivated about money. I hope they will help you find your motivation, cultivate it, and then use it to achieve your financial goals.
Welcome to the Best of January and February 2008. Here you’ll find the best articles, posts, tools, resources and news about money, finance and investing from the past two months.
News and Analysis
Are payday loans actually good for us? An Experimental Analysis of the Demand for Payday Loans (45 page pdf file) written by a team of researchers from George Mason University takes an eye-opening perspective on the subject:
Abstract: The payday loan industry is one of the fastest growing segments of the consumer financial services market in the United States. The purpose of our study is to design an environment similar to the one that payday loan customers face. We then conduct a laboratory experiment to examine what effect, if any, the existence of payday loans has on individuals’ abilities to manage and to survive financial setbacks. Our primary objective is to examine whether access to payday loans improves or worsens the likelihood of financial survival in our experiment. We also test the degree to which people’s use of payday loans affects their ability to survive financially. We find that payday loans help the subjects to absorb expenditure shocks and, therefore, survive financially. However, subjects whose demand for payday loans exceeds a certain threshold level are at a greater risk than a corresponding subject in the treatment in which payday loans do not exist.
Experian, one of the big three credit bureaus, sued LifeLock in the U.S. District Court for the Central District of California. LifeLock is a company that promises, for a fee, to guard you against identity theft. One of the things it does to accomplish this is to place a fraud alert on your credit files every 90 days. Experian claims this constitutes false and misleading advertising and fraud, presumably because fraud alerts were intended to protect consumers who believed their identity had been stolen, not to protect against future possible identity theft.
Fannie Mae recently announced a new program to assist at-risk borrowers with refinancing and loan workout assistance. “HomeSaver Advance is designed to help qualified borrowers bring delinquent mortgages current and keep their homes. With HomeSaver Advance, servicers can now offer an unsecured, personal loan that will enable a qualified borrower to cure the payment default on a mortgage loan that Fannie Mae owns or has securitized, with fewer up-front costs and generally in less time.” Loans are for 15 years a 5%, with a 6 month no interest/no payment period. You can download a pdf version of Fannie Mae’s HomeSaver Advance Fact Sheet
This is a list of lists from Moolanomy! Fifty-two links to articles with ideas on how spend your money wisely. Some of the great ways to save money include:
If a picture is worth a thousand words, then the U.S. Census Bureau’s new Census Atlas of the United States speaks volumes about how the nation’s population and housing characteristics have changed over the years. The atlas, with more than 700 full-color maps, is the first general population and housing statistical atlas published by the Census Bureau since 1925.
“Years ago, the head of the IRS told Kiplinger’s Personal Finance magazine that he figured millions of taxpayers overpaid their taxes every year by overlooking just one of the money-savers listed [in the article]. Claim them if you deserve them … and cut your tax bill to the bone.”
This publication by the U.S. Department of Labor is a step by step plan to retirement. It includes interactive worksheets that cover such topics as current assets and savings, projected asset and savings, and expenses in retirement. You can also download the fully illustrated 62-page Adobe PDF narrative.
The Economic Mobility report , “authored by a team of scholars at the Brookings Institution, is one in a series of major research products that aims to further enlighten the public dialogue on economic opportunity. While it offers reassuring findings in some areas, in many others there is room for concern. By arming the public and policy makers with facts about the status of opportunity in America today, this volume seeks to stimulate and frame the debate about which policies are likely to be most effective in ensuring that the American Dream endures for the next century.”
This article looks at traditional indexes, including the S&P 500, and considers whether they remain a relevant benchmark against which to compare investment returns.
Divorce is painful, emotional, financial and otherwise. I now that having lived through two divorces by the time I was 12. This article looks at some of the financial issues that arise during a divorce.
“Let’s start with one basic but often misunderstood fact. Although they’re effectively mirror images of each other -with a regular 401(k) you invest pre-tax dollars and pay taxes at withdrawal, while with a Roth 401(k) you invest after-tax dollars and pay no tax at the end -in a pure economic sense there’s really no difference between the two.”
Voyant @Home helps people understand the big-picture impact of life-changing events and their long-term financial implications - from the birth of a child to the early retirement of a spouse.
“The Investor Awareness Index is the only resource that rates the comprehensiveness & effectiveness of a company’s initiatives to generate awareness for its stock within the investment community. The 0-10 rating scale is designed to assist in the investment research process by providing investors with unique insight into a critical element for a successful investment: understanding if a company is doing the right things to generate broad awareness among investors, portfolio managers, and stock analysts.”
Google Sites: “Google Sites is the easiest way to make information accessible to people who need quick, up-to-date access. People can work together on a Site to add file attachments, information from other Google applications (like Google Docs, Google Calendar, YouTube and Picasa), and new free-form content.”
A community has grown up around personal finance blogs. As a librarian-type, I felt compelled to organize it into a useful resource. Obviously, no one site will ever capture the multiplicity of viewpoints and experiences found in the individual sites. However, I hope that this one will be valuable for bloggers and for those looking for information.
For example, each blog page links to tables of blogs—such as Personal Finance Bloggers, Tax Bloggers, or Frugality Bloggers. These tables allow you to discover other blogs with similar interests, to learn a little bit about them by visiting their Finwikian pages and then to visit the blogs themselves if you’re interested.
That makes it an excellent tool for writers and readers, you can share your blog with others, you can contribute to pages on other blogs you read, and hopefully you will discover new blogs in the process.
There will be a number of pages on various topics from Dave Ramsey and his Debt Snowball to Credit Card Arbitrage and Peer To Peer Lending. I can’t create them alone; I hope that the personal finance community will join together in making this not just one person’s site and idea, but our site full of our ideas.
I thought I’d end this Best of with a Lending Club commercial I found on YouTube. This goes back to the days when Lending Club was on Facebook only. Trust me, they’ve come a long way. . .
Sound personal finance and investing decisions flow from two things: (1) knowing the numbers and knowing ourselves. If we know the numbers but not ourselves, our decisions will look good on a spreadsheet, until our real world decisions deviate from the plan. If we know ourselves but not the numbers, our decisions may feel right, but lead us down the wrong path. So what’s the answer? We need to think like Mr. Spock, but act like Captain Kirk. Allow me to explain. Read the rest
“Books are the quietest and most constant of friends; they are the most accessible and wisest of counselors, and the most patient of teachers.”–Charles W. Eliot. As the holiday buying season gets underway, I thought I’d share those personal finance and investing books that have been my best “friends,” “counselors,” and “teachers.” If followed, these books have the power to change your financial life and the financial life of somebody you know.
For the young or new investor, I cannot recommend a better book. The Bogleheads’ Guide to Investing explains in an easy to understand way investing, mutual funds, bond funds, asset allocation, taxes and more. I bought this book for my sister earlier this year. With no investing experience, she said the book was very easy to read. She’s also now regularly investing in her 401(k)!
If you or somebody you know are raising children, this book is a must. I struggle to find the best approach to teaching my children about money. Do you pay an allowance, or not? Do you tie allowance to chores? How do you teach your children to be responsible with money? Raising Money Smart Kids: What They Need to Know about Money and How to Tell Them (Kiplinger’s Personal Finance) answers these and other questions. The book is easy to read and provides a lot of inciteful ideas.
Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence does a great job of describing how our lives and money should interact. This book will definitely give you a new perspective on money and work. A note of caution, however. The book includes chapters on inflation and investing that are truly misguided. But the rest of the book is worth reading, particularly if you or somebody you know struggle to control your spending.
This book can be a real paradigm shift if you envision most millionaires as driving expensive cars and living in mansions. The Millionaire Next Door describes how most self-made millionaires actually live. I’ll give you a hint–they live modestly.
The Richest Man in Babylon teaches a great lesson in the power of slow, steady and small investments. It teaches that you don’t have to have a lot of money to be rich. What you have to have is time and discipline.
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explains in an easy to understand way investing, mutual funds, bond funds, asset allocation, taxes and more. I bought this book for my sister earlier this year. With no investing experience, she said the book was very easy to read. She’s also now regularly investing in her 401(k)!
answers these and other questions. The book is easy to read and provides a lot of inciteful ideas.
can help you determine what line of work you’d most enjoy. 
is a companion workbook that is worth considering, too.
is a great book to learn some of the more advanced concepts of asset allocation. If you’ve read this book, two good alternatives are 
and 
.
does a great job of describing how our lives and money should interact. This book will definitely give you a new perspective on money and work. A note of caution, however. The book includes chapters on inflation and investing that are truly misguided. But the rest of the book is worth reading, particularly if you or somebody you know struggle to control your spending.
describes how most self-made millionaires actually live. I’ll give you a hint–they live modestly.
teaches a great lesson in the power of slow, steady and small investments. It teaches that you don’t have to have a lot of money to be rich. What you have to have is time and discipline.