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What Are Your 2009 Personal Finance Goals?
Today, we're interested in your goals for 2009.
What are you hoping to do with your personal finances in 2009?
Answer the poll below. If you have more to add, leave a comment!
You can select more than one option.
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With Fed Rate Cuts, Prepare for Savings Dips
The news that the Federal Reserve cut a key interest rate to near zero on Tuesday may have pushed the stock market up more than 300 points, but for savers, there's a downside.
Almost consistently, when the Fed has cut rates, savings accounts have dropped in reaction.
Given that it's been a while since the last round of rate cuts, don't be surprised if you get a notification (or not, if you use E-Loan) that your APY is dropping.
While I'm not normally a rate chaser, there are still a number of great APYs available.
Dollar Savings Direct is at 4.00% APY, by far the highest available among the big names.
Other options include ING Direct at 2.75%, FNBO at 3.25%, WTDirect at 3.06% and HSBC at 3.00%.
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Money Saving Links: 12/14/08
With two weeks left in the year, everything seems to be slowing down. The news is less dramatic, the stock market is almost mellowing out, and the holiday spirit is kicking in.
This past week, we participated in two carnivals: the Rich Life Carnival #23 and the 42nd Money Hacks Carnival at financial wellness project.
Check out a few of the great stories:
5 Money Changes To Keep More of Your Money - Debt Free Destiny
Living from one paycheck to the other gets frustrating and depressing and it feel like it is a situation that is never going to end. However, it is ultimately up to you to do the changing to get more change back into your wallet. Sometimes it is these small changes in our thinking and our lifestyles that will help us find a debt-free life.
Here are 5 things you can change right now and find yourself a few steps closer to living without debt.
Two Financial Goals - Less Debt, More Income - Cash Money Life
As the year comes to a close, think about your finances and how you would like to improve them. If you are like the majority of Americans, there are two things on your wish list: less debt and more money.
3 Basic Principles for Good Personal Finance Habits - Destroy Debt
There are three basic principles surrounding good personal finance habits, and they are:
- Live Within Your Means by Spending Less Than You Make
- Making the Money You Do Have Work More For You
- Anticipating and Preparing for the “Unexpected”
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Ross Perot on the Economy, Auto Bailout, and More
Former presidential candidate and businessman Ross Perot is answering questions over at the Freakonomics blog.
Check out some of the interesting points:
Do you consider all deficit spending misguided? Surely there are some times when it is called for.
Classical economic theory calls for deficit spending by government when faced with prospects of recession and depression. The challenge, of course, is to spend money in a manner that will create the most benefit for the economy. This will prove to be an incredibly complex assignment and the subject of much debate.
Of course, wartime often requires deficit spending. World War II required huge amounts of deficit spending, for example. The difference between then and now, however, is that we ran budget surpluses after the war and paid off the debt.
I remember when you were running for president, they showed you driving around in your old Volvo. What are you driving now? And what would you do about the U.S. automakers’ woes?
Actually, I was driving a 1986 Oldsmobile. I have always driven American-made automobiles, and I currently drive a Ford product.
Clearly, General Motors meets the definition of too big to fail, as do Ford and Chrysler. General Motors happens to be closer to running out of cash at this moment. The question is whether domestic automaker sales are slumping as a result of the short-term liquidity credit crunch or more basic reasons such as their business models. I suspect both are to blame, but the proportions are difficult to determine. An analytical approach would favor a prepackaged bankruptcy, but the situation is well beyond that stage. It’s now in the hands of the politicians who are almost certain to craft some type of bailout or bridge-financing feature to keep G.M. out of liquidation.
Check out the full Q&A here.
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Is Tracking Your Spending as Good as Budgeting?
Can you hit your financial goals without budgeting your spending each month? What about if you're tracking every penny you spend, but not setting aside certain amounts for each category?
For the past year or so, we've been tracking all of our purchases to find how much we are totalling at the end of the month, but not planning out how much we will spend for groceries, entertainment, and other expenses that fluctuate month-by-month.
Since we're automatically setting aside money for our retirement and short-term goals, we know we're saving — and pretty aggressively, too.
But would it be better to establish budgets for the expenses that change every month?
This month, we're trying it. (We used to do this when we first started saving money, but stopped after a while).
The past few months have been a bit expensive — our out-gos have been higher than our incomes. But since we treat savings as expenses, we're basically moving money from our cushion into savings.
Our paycheck to paycheck mentality makes our checking account levels relatively low, but this forces us to really watch what we spend.
What do you think: If you're automatically set to save money, is tracking your spending as good as budgeting?
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Money Saving Links: 12/7/08
With three weeks left in the year, have you started to plan out your 2009 finances? Where do you want to be in December of next year?
It's time to figure it out.
The best way to reach your goals is to plan for them. If you don't know where you're going, there's no way you're going to get there.
This week, we participated in 3 (count them, 3!) carnivals:
- Carnival of Personal Finance, Cyber Monday 2008 Edition at
Mighty Bargain Hunter - Rich Life Carnival #22
- The Money Hacks Carnival: The Best Crazy-Simple Money Hacks Edition at Credit Material
Check out some of the great posts, including:
FNBO Direct vs ING Direct - Reader Compares Online Savings Accounts - Money Smart Life
The main complaint I hear about FNBO Direct is that it’s user interface is a little behind the other online savings accounts available in terms of functionality. The reader seems to agree with this sentiment, preferring the ING Direct web site but he isn’t as pleased with their interest rates. I agree the interface isn’t as flashy but the FNBO Direct interest rates and customer service are better.
8 Money Management Tools for iGoogle - About.com Financial Software
You probably already know that iGoogle pulls information from a wide variety of sources to give you a highly customizable online personal start page. Here are some of the best financial gadgets to add to your iGoogle pages.
How to Save Money on Your Monthly Technology Bills - Free Money Finance
Here are some thoughts from Kevin Brand, EarthLink's SVP of product marketing on how to save on tech bills.
- Assess your Needs
- Downgrade
- Take Advantage of Freebies
- Avoid Bundles
- Study your Bill
- Pay Smart
- Carnival of Personal Finance, Cyber Monday 2008 Edition at
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Deploying Consumer Credit Isn't the Answer
A recent headline from the Washington Post reads "U.S. Moves to Revive Consumer Lending."
The first line of the article tells readers "The government said yesterday that it will deploy up to $800 billion to make it cheaper for Americans to get a home mortgage, take out a car loan or borrow money through a credit card…"
The word "deploy" has never been a financial term in my memory. Troops get deployed, but money is typically saved or spent. Dollars need to be spent rather than deployed to revive the economy.
The article's use of the word deploy tells us the government knows Americans are short of more solid sources of money to spend: wages, salaries and savings. Instead they apparently hope consumers will return to their usual excess and borrow.
Spending our way to prosperity was the policy of Franklin Roosevelt in the 1930's and every president since, but a policy that deploys dollars for consumer loans differs from previous expansionary policies.
Will it work? As a saver, I believe there are many other savers like me who have matched percentage payments into defined contribution pension plans and 401(k) plans as well as other purchases of CD's, stocks and bonds. This fall's stock market and interest rate drops have caused a massive decline in purchasing power for this group.
As savers in a good economy, we were the least likely to use consumer loans or abuse consumer credit. In a bad economy, it is hard to think savers will be the ones most likely to resort to consumer borrowing. We are the group more able to postpone discretionary purchases like cars, clothes, electronics and vacations.
For the many others who defaulted on sub-prime loans and continue to struggle to pay credit card balances, it is hard to believe the government's plan will find them ready and able to borrow more and spend us out of recession.
When our government stops talking about consumer loans and starts discussing tax policy and the Federal Budget, there will be good reason for hope. If all they want to do is "deploy" consumer credit, expect another quarter of decline.
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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Instead of Spending, Sock That Cyber Money Away
One of the first things you should do after you get a raise at work or pay off a recurring debt is to continue to live at your existing levels.
Don't take that 'extra' money you now have and start to live larger. Instead, automatically transfer it to a savings account and watch your net worth grow.
Rather than accumulating extra stuff, you're increasing your savings without cutting back on your lifestyle. It's a win-win situation.
Today, on Cyber Monday, do the same thing. Instead of buying something you see online, take the price of the product and transfer that amount to your online savings account.
Spending money isn't bad. But wouldn't you rather spend money on yourself than on having more stuff?
The best gift you can give yourself is financial comfort. Today, make it happen.
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Are You Thankful For What You Have?
Look around you. What do you have in your life to be thankful for?
It's probably more than you think.
So much of our society places an unneeded desire on material possessions, wealth and status. But that's not as important as you might think.
Believe it or not, you've got it good.
There are so many people in the world who have way less than you do. A lot less.
Even if you think you're in a bad situation, look at yourself through the eyes of the less-fortunate.
Whether it's family, a home to live in, or food on your table … you could have it a lot worse. And many people do.
So on this day of Thanksgiving, remember to be thankful for what you have. It's not all about the Fortune 500 job, the fancy new car or even being debt free. It's about taking a moment and putting your life into context.
There's always someone who has it much worse than you.
Be thankful for what you have. Have a happy Thanksgiving.
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Can Credit Ratings Be Trusted?
Many savers with a 401(k) or other investment account are probably familiar with the Standard & Poors, Moody's or other credit rating firms. Monthly statements usually include their ratings alongside a list of assets.
Lately though the credit rating firms have admitted to Congress [Washington Post, Credit-Rating Firms Grilled Over Conflicts, October 23, 2008] their ratings have been tainted by conflict of interest. Moody's and Standard & Poors are paid by the firms they rate.
The article quotes a memo written at Standard & Poors by someone who said "Let's hope we are all wealthy and retired by the time this house of cards falters."
Long before I read that anonymous statement, I wondered about credit ratings and whether they are good guides for savers and investors. Credit rating firms use past performance to rate future risk.
Forecasting the conditions in markets years ahead is hard enough, but the current wave of defaults on mortgage-backed securities has spread to other firms in a domino effect. The good management and triple A rating at one firm can be affected by defaults at other firms. Ratings cannot be given in isolation from the solvency of the larger financial system.
Since a bond is an enforceable contract just like a home mortgage, it is worth asking whether a failure to pay interest and principal on time is the important financial risk. As long as a defaulting institution remains after a default, then late payments can be recovered later.
For example, corporate bond holders risk losing interest and principal in a default, but a corporation can literally disappear in a bankruptcy. Cities, counties and states do not disappear. Even if they go into default they continue to have taxing authority to meet their legal pledge of full faith and credit to pay their bond obligations.
Furthermore, city and county governments are created and governed by state legislation, which makes state government responsible for city and country bond payments in the event of their default.
Following this logic, even small municipalities should have higher credit ratings than private sector corporations. Size and name recognition should not matter in credit ratings and the difference of market interest rates between government and corporate bonds may not reflect actual differences of risk.
Remember that non-federal government bonds and bond funds are not taxed as part of income.
The article did not tell readers if Congress wants to impose professional standards, or what if anything it intends to do about this newly reported conflict of interest.
In the mean time, remember governments are likely to be around to pay their bills.
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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