Monday, December 22, 2008

Minty Fresh Software

While some people are hesitant to use online personal finance software, I personally find it refreshing. I've been using Mint for more than a year now and enjoy watching the new features as they add them. I used to use Quicken to monitor my finances - and if I was using a desktop product I would still use it - but I find the convenience of online software and the simplicity of make it worth the switch. There are some risks since you are allowing another company to have access to all of your accounts but I feel that is taking the proper precautions to protect my information.

Recently announced their iPhone App. While I haven't been willing to spend the money on an iPhone, I do think these things are pretty cool. This is just another way Mint is staying on the edge of technology. It seems to allow you to do most of what you would do from your PC with the added convenience of mobility. If any of you out there have an iPhone please leave your thoughts on this free app.

Tuesday, November 4, 2008

What is a Monte Carlo Simulation?

If you've been interested in investing for a while now, you may have come across Monte Carlo simulations before. For those of you who may not have heard of it, let me explain. When calculating out the future value of your investments it is common to apply an expected interest rate over a number of years using the compounded interest equation. This works especially well if the exact interest and periodic payments are known in advance. For example, in a fixed-rate mortgage. However, when looking at your investment portfolio as a whole, there are many variables and most of them will change over time.

The purpose of the Monte Carlo simulation is to inject random variability into your calculations. You typically specify which variables will change and an expected range of variability. It is not hard to see that it would be difficult to construct a truly accurate model. This is why there are companies which specialize in creating software, backed by statistical data, to provide more accurate simulations.

Below are some links to information if you'd like to learn more.

Info: Investopedia, Univ. of Nebraska, Bogleheads Discussion
Free Software: Excel Add-in, Money Chimp, Flexible Retirement Planner

*If you're interested in commercial software for more accurate modeling, I recommend reading through the Bogleheads discussion above.

Wednesday, September 24, 2008

Frugal Travel

I'm going to be moving in the next couple of months and decided to start searching for a house. This weekend I will be checking out my new location. I have two buddies from back home meeting me to hang out and look at houses with me. Normally, it would be fairly expensive to get a hotel room for 3 people for 3 nights. Going with the absolute cheapest choices from (which is about the same as the TLF on base) this would cost me around $150 (with tax). Since my parents gave me their old pop-up camper last year, I'm going to be staying at the FamCamp on base for a mere $8/night. This isn't normal camping, mind you, but comfortable living with a stove, sink, ice box, air conditioning/heater, and room for 4 to sleep comfortably. My parents bought it used a little over 20 years ago and got a steal for around $1200. You'd be lucky to get that same deal today. Needless to say, it has been an outstanding purchase and I expect it to continue to serve me well for many years.

Friday, August 22, 2008

Mortgage Options, Consider a 15 Year Fixed

Since I will be moving soon (in the next 3 mos. hopefully) I've started read up more on real estate. One thing that has come up lately has been the mortgage I plan on using. So far, I've simply rented a room or shared a rental with a roommate. Being single, this has worked out fine and saved me quite a bit on my monthly living expenses. However, I'm ready to finally get a place of my own. I'd like to get something modest that can be used as a rental in a year or two.

As far as mortgages go, there are a lot of different choices. Traditionally, the 30 year fixed mortgage has been the standard. This means that there is a fixed interest rate for the life of the loan and that the loan will be paid off at the end of 30 years. Another common mortgage is the 15 year fixed, same deal but half the time. There are also interest only, where you never pay off the principal, and Adjustable Rate Mortgages (ARMs), which have fluctuating interest rates. In most cases, it is best to stick with the fixed rate mortgage. With the fixed rate you know exactly how much your monthly payment will be for the entire loan period and you never have to worry about it changing. Also, ideally, the payment will become easier to make as your career advances and as inflation reduces the relative costs of your payments.

When comparing the 15 year versus the 30 year fixed there are some surprising facts. Although many people think you can simply get a 30 year fixed and pay it off in 15 years, it doesn't exactly work out the same. If you do want to do that, you should make sure that there isn't a pre-payment penalty when you sign the mortgage. But even if you pay it off in the same amount of time, you will generally pay more interest on the 30 year. This is because banks offer better rates on the shorter, 15 year, loan. has a really good article about the differences, so I'll just show some highlights here.

  • "you end up paying less than half the interest over the life of the loan"
  • "While the monthly payments are somewhat higher on a 15-year mortgage, the interest rate is typically a bit lower, which offsets part of the increase in the monthly payment."
  • "by paying less interest you'll also get less of a tax deduction... However, tax deductions for mortgages are over-rated. Sure, if you're in the 28% tax bracket you save 28 cents for every dollar you pay in interest, but you're still paying 72 cents in interest to a lender."
  • You build equity much more quickly
  • You own your own home in half the time
  • The higher the interest rates, the more dramatic the savings in a 15-year mortgage versus a 30-year mortgage

Saturday, August 16, 2008

The Companies I Use

When I logged in to my USAA account today, I saw a message saying that you can now access your account information through text messaging. This got me thinking about how much I like my banks and other companies I use for financial services. So here are some quick thoughts on each of them.

  • USAA - I'm really happy with their customer service and range of services. They are always quick to answer my questions. I'm also really pleased with how well they keep up with technology. Things like banking through text messaging and depositing checks online via your scanner are big pluses for me. The only downside is the low interest rates on checking and savings accounts.
  • ING Direct - For long term savings, I use ING Direct. Back when I first made my account they were one of the highest interest rates. They still offer great rates but aren't the industry leader anymore. They also have a very user friendly website.
  • E*Trade - I wish the commissions here were lower, but they aren't terrible. They charge me to get money out if I don't want to wait two weeks for a check to be mailed to me. Anyway, I rarely use them anymore. If you need a broker, I'd research it a little. I have no problems that would prevent me from using them in the future though.
  • Wachovia - This is my brick and mortar bank. I hardly ever use them. For 5 out of my 6 years in the military there has not been a Wachovia nearby. USAA handles my needs much better and is more military friendly.
  • Vanguard - I moved my IRA from USAA to Vanguard back in January. I have been very pleased with the move. Vanguard boasts some of the lowest expense ratios around and has a great website to handle everything I need. I've also heard good things about TRowe Price if you don't have the minimum amount to open an account at Vanguard ($3000 when I opened).
If you are thinking of switching any of your financial institutions, I strongly recommend that you look at for some comparisons, and also google for some reviews online.

Tuesday, August 5, 2008

Lack of Imagination?!

So I found this quote a while back using StumbleUpon. It was by Oscar Wilde and it said "anyone who lives within their means, suffers from a serious lack of imagination." I immediately took offense to that. I would argue the opposite. That it takes a lot of imagination and creativity to live within your means. For example, you have to come up with new ways to entertain yourself when you don't fall back on the standard tv, restaurant, movie, or mall for enjoyment. Coming up with frugal date ideas always takes some creativity.

Also, when cooking at home you can be imaginative with your food. I recently built some adirondack chairs which used some imagination and creativity. A lot more than taking a trip to Disney World or going to a show. My point is that living frugally requires more imagination than just spending at your leisure. What creative ways have you exercised frugality?

Sunday, August 3, 2008

The Cost of Food

First off, let me apologize for my lack of posts the past two weeks. I've been pretty overloaded with work the last two weeks. I will make an effort to get some more articles out now that I have some time though. Today I found out about a little gem from the USDA called the Cost of Food at Home. This is a table published by the USDA every month that estimates the amount per individual that should be spent on food, depending on the age and sex of the person as well as how frugal or liberal they are with their food spending.

According to the chart, I vary from $39.10 to $76.00 /week as a 24 year old male. It might be a fun challenge to see how close to (or how far below!) the expected costs you can get. It might also be useful in creating your monthly budget. This makes me wonder what other data is out there from government sources that might be helpful in financial planning.

Thursday, July 10, 2008

Credit Card Question

A friend of mine was considering opening up a new credit card in order to pick up a 5% discount on gas. It seems like everything these days comes with a gas incentive, but that's beside the point. His question was on whether or not it was a good idea to open a new card. He's 24 years old, has no credit card debt but several cards, and will likely be buying a house in the next two years but probably not in the next six months.

It is generally a bad idea to open a new credit card if you are planning a major purchase such as a car or house in the next 18 months. Also, you should try to keep the number of cards you have to a minimum. Most sources recommend no more than three cards. That said, you don't need to close the major credit cards you already have, but try to remember and use them all once every six months to keep them current. You definitely don't want any cards which have an annual fee. As far as rewards go, I prefer the cashback versus the points system. I'd rather get a guaranteed 5% back on gas than earn points which are impossible to redeem.

Although not necessarily part of getting a new card, it is always a good idea to know what's on your credit report. I'm not advocating those "services" which give you a monthly update, but you should take advantage of the free report you can get three times per year (make sure you alternate reporting agencies). Visit to get your credit report. This is the official site for getting your credit report.

Sources: Military One Source , Army Times
(It's only a coincidence that they are both military)

Tuesday, July 1, 2008

Housing Market Affects Stock Market

The AJC has a couple of articles on Home Depot (an Atlanta-based company) this week. Home Depot is at their lowest price since January of 2003 and has dropped from the second largest retailer to the third. Obviously, the housing market is being blamed for the loss in the company's momentum. Normally, Home Depot is touted as a solid company with great growth. I'm planning on buying a house in the next year and I'm glad the timing will work out to where I will be getting in at a low point in the market, but another way you can take advantage of the drop in the housing market is by buying housing dependent stocks. Home Depot and Lowe's are two obvious examples. I am sure there are lots of other companies that are based on the housing market. Perhaps a tile or lumber company. Maybe a company that specializes in home fixtures or appliances. Perhaps even a realty company. What companies do you think will be bargains as a result of the downturn in the housing market?

Wednesday, June 18, 2008

Book Review: How Did You Do It, Truett?

How Did You Do It, Truett? is the story of S. Truett Cathy, the founder of Chik-Fil-A. This book, written by Cathy, tells how Mr. Cathy got started in the restaurant business and how Chik-Fil-A was born. It gives some interesting insights into his life growing up and the challenges he faced in starting his business. It also talks about his business model and philosophy.

Mr. Cathy is a firm believer in putting people first. He prides himself on customer service. One key point that stuck out for me is when he says that he likes the response "my pleasure"
when someone thanks you for providing a service. He really drives home the point that providing excellent service should be something you pride yourself on. It makes a lot of sense to me. If you're going to be part of a company, you should be proud of the service it provides and be proud of the part you take in it.

At the end of the book he gives Eleven Do's and Don'ts of Proven Success. I'll list a few here just to get your appetite going, but I really think you should read it for yourself.

  1. Don't be burdened with personal debt.
    1. Car payment
    2. House Payment
    3. Establish a nest egg
    4. Live simple
  2. Start early as a teenager. Concentrate on what brings you happiness in your career. Have a tremendous "want to" determination.
  3. Sacrifice material things. Reward yourself later.
Those are the first three out of the eleven. Overall, I really enjoyed this book and I like the principles he preaches. S. Truett Cathy truly has a good professional and moral compass that has obviously served him well and I think everyone can learn from and appreciate his experiences and examples.

Tuesday, June 17, 2008

The Magic of Vinegar: 1000+ Uses

I've mentioned the amazing versatility of vinegar before. Today I'm going to share some of the vinegar tips that seemed interesting and give you some links to even more tips on this surprisingly useful household item.

Here are just a few of the tips:

  • Kill weeds and grass growing in unwanted places by pouring full-strength white distilled vinegar on them. This works especially well in crevices and cracks of walkways and driveways.
  • Prevent lint from clinging to clothes by adding 1/2 cup white distilled vinegar to the wash cycle.
  • Lighten body freckles (not facial freckles) by rubbing on full-strength white distilled vinegar.
  • Create an all-purpose window cleaner with a few ounces of white distilled vinegar in a quart of water.
  • Kill fleas by adding a little white distilled vinegar to your dog or cat’s drinking water.
  • Clean under arm stains - Soak stained shirts in vinegar for a few minutes and wash. (Thanks Cece!)

Here are some good sites where I found these tips. There are plenty more where these came from.
Now I need to go out and buy a big jug of vinegar! :)

Sunday, June 8, 2008

Paying More for Milk than Gas?

When it comes to milk, lately I've chosen dry milk over regular milk. There are a couple of reasons for this.

  • Dry milk is just as healthy, if not healthier than regular skim milk. There is no fat and it is fortified with vitamins and minerals.
  • Dry milk can be stored indefinitely in its dry state and I only have to mix up small amounts at a time to use. It will go bad eventually after it is liquid, but it lasts a good amount of time and the small servings mean it will be used up faster.
  • Dry milk is cheaper than liquid milk. Last week I paid $2.89 per gallon (based on the liquid amount it would make). This compares favorably to the approximately $3.50-$4.00 / gal. for liquid milk.
Recently there have also been some concerns about illegal price gouging with respect to milk. NY seems to be feeling it the most with milk as high as $4.39 / gal. I never knew this, but it looks like NY actually regulates the price of milk. (See Regulators reportedly probing milk price scheme and Milk jumps over the moon.) You can avoid all this price gouging by just going for the powdered milk.

Some people do not like the taste of dry milk, but I don't mind it at all. There are some things you must do, however, to ensure your milk will taste alright. Putting warm tap water and dry milk in a cup is a guaranteed way to ensure whoever drinks that will never go near dry milk again. You have to mix it up really well and put it in a sealed glass pitcher. Then you should let it chill overnight. The colder it is (without freezing, obviously) the better it will be. I originally used a curved open top glass pitcher and covered it with cellophane. Getting the glass pitcher with the lid works much better (see the pictures). I paid $4.92 for the pitcher. I have also heard of people mixing normal and powdered milk. Also, if you don't want to drink it, you may still be ok with using it for cooking or cereal. For cooking and other ideas about dry milk, check out this hillbilly housewife's article, Saving Money with Powdered Milk.

Please let me know about your experience if you choose to try it out.

Thursday, June 5, 2008

Ten Tips from The Simple Dollar

While reading through headlines in google reader today I found an article from The Simple Dollar that turned out to be really good. It was titled, Ten Clever Money Savers You Might Want To Try This Weekend. Two tips I really liked were the cheapest fruits and vegetables by month and using vinegar for fabric softener. I recommend you check it out.

The vinegar tip reminds me of a list of uses for vinegar I found a while back. Vinegar is quite versatile and can be a really frugal alternative for a lot of things. Hopefully I can do a post on it one of these days.

Tuesday, June 3, 2008

Downfall of the Gas Guzzlers

From the AJC,

General Motors is closing four truck and SUV plants in the United States, Canada and Mexico as surging fuel prices hasten a dramatic shift to smaller vehicles.

CEO Rick Wagoner said Tuesday before the automaker's annual meeting in Delaware the plants to be closed are in Oshawa, Ontario; Moraine, Ohio; Janesville, Wis.; and Toluca, Mexico. He also said the iconic Hummer brand will be reviewed and potentially sold or revamped.

Wagoner said the GM board has approved production of a new small Chevrolet car at a plant in Lordstown, Ohio, in mid-2010 and the Chevy Volt electric vehicle in Detroit.

Wagoner announced the moves in response to slumping sales of pickups and SUVs brought on by high oil prices. He said a market shift to smaller vehicles is permanent.

GM shares rose 25 cents, or 1.4 percent, to $17.69 in morning trading.

Well it looks like there will be a permanent shift towards fuel efficient and alternate fuel vehicles. GM says that the closing of these plants is in response to slumping sales which were caused by high oil prices. They also said that fuel prices hasten a dramatic shift to smaller vehicles and that the shift to smaller vehicles is permanent. Using a transitive relation, I believe this means that GM predicts high fuel prices are here to stay (*transitive relation: if a is related to b and b is related to c, then a is related to c). In other words, high fuel prices lead to a market shift towards smaller cars... market shift to smaller cars is permanent... therefore high fuel prices are permanent. In other words, I think GM is betting that gas prices are going to stay high.

Thursday, May 29, 2008

Small Changes Can Pay Big

A friend sent me a link to an article with ideas on how to squeeze a little extra out of your budget in the hopes of reaching the illustrious $1 million mark. Now a lot of these ideas won't work for me, and they might not work for you either. However, you can look at your lifestyle and try to apply these concepts in other ways. The point of the story is that if you can change some habits slightly to more frugal alternatives and invest the difference you can change your long-term wealth significantly. The FRoW is one way I try to apply this concept.

Monday, May 26, 2008

Odd Business Idea

I found this weird website called The Big Word Project. Basically, they are an online dictionary where the definition is a link to a website. You can pay $1 per letter to specify a URL for the definition of any word. So, the word bubble would be $6. There is only one definition allowed per word. It amazes me that people actually pay for these things. I could understand a popular search engine charging for keywords, but not a random website without any other content. This idea might be better suited for a real online dictionary. If I was these guys though, I'd allow multiple definitions. Maybe they could let the owner of the word sell secondary definitions? I wonder how long until a word here goes up on ebay. The problem is, aside from boredom, I can't think of a good reason why the general public would go to this website to begin with.

Tuesday, May 20, 2008

$1 Admission to World of Coke

In celebration of the one year anniversary of the new World of Coke, Coca-Cola is offering $1 admission to the first 1,000 visitors on Saturday and Sunday (May 24th-25th). Doors will open at 9AM. Having been to both the old World of Coke and the new one, I can say that it is a really enjoyable experience. My favorite part was the taste-testing room with flavors from all over the world and also seeing the old and/or foreign advertising campaigns. The robotic bottling plant is also very cool. For more information, visit this article from the Atlanta Journal-Constitution or for the official page visit and click on Special Events, then 1st Anniversary Celebration. There will be other events throughout the day as part of the celebration.

Sunday, May 18, 2008

Frugal Resolution of the Week

Last week's FRoW went well with the exception of an insane road trip I took over the weekend. This week's resolution is staying with the theme of food. I really think food is the number one place for me to change my budget. So, my new resolution is to cook a large meal at home once a week. I want to make something that will provide leftovers for at least 4 more meals. Currently, although I haven't been eating out much, I have been eating a lot of frozen food. The frozen meals from Green Giant, Stouffers, or Birds Eye. While these are cheap and easy to cook (and do have vegetables), they also have a lot of sodium and other stuff I'm sure isn't the greatest for you. Plus, a home cooked meal should be able to average out less than the frozen stuff if you do it right.

Thursday, May 15, 2008

Frugal Cleaning Solutions

Some people like to use alternative cleaning solutions as a way to keep their house free of chemicals or as a way to live a 'greener' lifestyle. That's great, but alternative cleaning solutions are also good for staying green another way. This article from lists a few uses for vinegar, baking soda, lemon juice, and others. There are also some great ideas in The Complete Tightwad Gazette. I plan on doing a full review of this book in the future, but for now I'll just say that this is a great book for anyone searching for ideas on ways to save money and be more resourceful. Here are a couple of tips from this book.

All-purpose cleaner:
  • 1/2 cup ammonia
  • 1/3 cup vinegar
  • 2 Tbsp baking soda
  • 1 gallon water

Also from the book I learned that the amount of detergent required for laundry and dishwasher loads depends on the hardness of your water and the extra spot for detergent in the dishwasher is wasted unless you select a mode with a pre-cycle, such as pots and pans.

Wednesday, May 14, 2008

A Frugal Alternative to Blockbuster

Many people like to watch movies at the theater on a fairly regular basis. This can get pretty expensive. A cheaper alternative is to rent a movie and watch it at home. This is much cheaper, especially for more than one person. When combined with coupons, or discounts for older movies, this can be a really cheap form of entertainment. But what if I told you, you could do better. Most public libraries offer a wide selection of DVDs. You may be surprised to find out how current their selection is. In my hometown in sunny South Florida, we have an excellent library system. Almost any person could go to the library and find a movie that not only were they willing to watch but that they had actually wanted to see. Currently, I'm living in Mississippi. The library options here are pretty slim, but still offer some choices. In addition, the Air Force base library has a surprisingly good selection, for those who are eligible users. Another choice is a place like SwitchPlanet, which allows you to swap your books, dvds, and cds with other users. I must admit, I've never tried this service, but I love the concept. If anyone tries this, please post a comment.

Monday, May 12, 2008

Frugal Resolution of the Week

So last week's FRoW went great until Saturday. I was coming back from a camping trip with some friends and we stopped at a BBQ place in the middle of nowhere, AL. When we all ordered our drinks I asked for some tea and completely forgot about my resolution to only get water. Although I did slip up once, I was happy with my vigilance the rest of the week. So next week, I will continue to only drink water when I'm not at home and will add on this weeks resolution.

This weeks FRoW is to eat out no more than once a week. I actually started practicing for this last week. I turned down about 3-4 invitations to go out to eat. This is another resolution that should help me save money and improve my health.

Thursday, May 8, 2008

How I Minimize Risk on Prosper

*** This post was updated on May 10th ***

I have been a lender on Prosper for about 13 months now. Although I do not have a lot invested in prosper, I've never had a loan default or have late payments. After reading - Why Bother? from Eden at Finance and Fat, I thought it might be interesting to share my process of bidding on a loan at Prosper. When I choose to fund a loan, these are the things I do.

I initially go to the search loans box on the left side of the listings page. I do not specify a keyword and I use all loan types. Next, I specify only B or higher credit grade. 1.86% of B grade loans default and 8.89% have been late. This compares to 3.42% late on AA loans and 6% late on A loans. I leave "Include high (>20%) debt to income" checked. I also initially check to require homeownership and automatic funding.

The next step is a little fuzzy and something I'm sure financial institutions don't have the liberty of doing. I scroll through the listings and look for people that appear to be honest, good-hearted, responsible people. I also glance at the headlines and look for things that I think would be appropriate for a loan. For example (this is a real example from the search I'm doing right now), "Investments for my evil children" with a picture of a baby with red glowing eyes does not look like an appealing loan to me. From the description, "I'd like to put $2,500/yr away for each of them, but this year I can't see myself able to do so. I'd like to get a loan to get this started. Actually, I'd like NOT to get a loan to get this started, heh, but at least this way interest starts compounding now for them." If you can't see yourself as able to put away money for your childrens future, how will you see yourself able to put money away to pay me back, and to cover your interest. Not to mention that sounds like a ridiculous plan. Why pay 10.89% APR to invest in index funds that may only return 8-10%? This person has an A credit rating, but obviously is not making sound choices regarding their money. I would not fund this loan. Some titles that caught my eye were "paying off credit cards" and "investing in my family" these sound like positive goals and are things I am more likely to look in to.

Once I click on a proposed loan, I read the description. I look for things that cue me in to decide if this is not only an honest and responsible person but also someone who has a plan and knows what they are doing. In the example above, I don't think the person knew what they were doing and they had a bad plan. An example of someone with a good plan is, "This loan will be used to expand my daughter's daycare business... We have acquired a building , and my daughter has poured everything into readying this building up to city and state codes... [needs the money for the] purchase and installation of 2 commercial metal doors with panic bars, and fire protection system... I am the sole proprietor of custom cabinets. I established this company in 1988." To me, all of these things say this person is a hard worker and they know what they want and how they plan on attaining it.

Lastly, I look at the credit profile. Red flags are delinquencies, public records, high number of credit lines, high revolving credit balance, and high bankcard utilization. The first two are show stoppers. The last 3 are more of a judgment call based on the picture you've built from the other information and what an appropriate level is in your mind.

After I have found a loan I feel comfortable with, I will bid the minimum amount at a conservative interest rate. Usually I bid at 7%. To me, this is a rate I'm happy with, given the performance of savings accounts and the average 8-10% in the stock market. By bidding the minimum amount, I spread my money over multiple loans and lower my risk through diversification.

So there you have it. In closing let me just say that it is important to listen to your gut. You should be able to feel good about the loan you are purchasing. Feel free to shop around and don't be afraid to wait a little bit to find a good loan.

If you're interested in joining prosper, please use the referral link below. Lenders will receive $25 for signing up after successfully bidding on their first loan. Also, there is no hard credit check for lenders.

Business & Personal Loans. Great Rates. Prosper.

Fannie Mae has Good News for Some

From the Atlanta Journal-Constitution

Fannie Mae reported losses of $2.2 billion in the first quarter and the nation's largest buyer of home loans said Tuesday it would cut its dividend and raise $6 billion in new capital, with expectations that the housing slump will persist into next year.

Home prices fell faster in the first quarter than Fannie Mae had expected, the government-sponsored company said, and it will open a $4 billion share offering immediately, with the remainder being offered in the "very near future."

I know these are hard times for many people who may have made regrettable decisions regarding real estate, or people who may have just had poor timing, but I am excited about the fact that my luck and timing look like they will work out quite well. I'm planning on purchasing a house within the next year and hopefully a second investment property about a year after that.

Wednesday, May 7, 2008

Top 10 Ways to Spend Your Stimulus Rebate

Many people are expecting their tax stimulus rebates in the next couple of weeks, but how will you spend it? Here is a list I compiled of the top 10 ways to spend your rebate.

  1. Pay off high interest debt.
    • Payday loans, student loans, credit cards, etc. are always good to get rid of first because they give you a guaranteed return of whatever your interest rate is. If you have an 18% APY on your credit card, your $600 will not only be reducing your debt by $600, but will also be preventing you from paying the more than $100 interest that money would have accumulated this year.

  2. Pay off some of a mortgage or car loan.
    • Along the same lines as number one, paying off debt gives you a guaranteed return in the form of interest savings. Eliminating debt should almost always be the priority.

  3. Add to your emergency fund.
    • An emergency fund provides many benefits. It will greatly reduce anxiety since you know you are prepared for anything that comes your way. The first time something does come up, and you have funds available, you will really appreciate your emergency fund. Most advisers recommend saving an amount equal to 3-6 months worth of expenses.

  4. Add to your IRA.
    • An IRA, or Individual Retirement Account, is an excellent avenue for investing once you have your debt down to a manageable number and have a good padding in emergency savings. IRAs offer benefits such as tax-free or tax-deferred growth. Most people will want to use the Roth IRA first, especially if they are young. For more information on deciding which IRA is right for you, check this investopedia article.

  5. Put it towards a savings goal.
    • You should always strive to save for your goals and let interest help you, rather than slow you down. For short term goals see for a list of banks and their interest rates, and shop around for the best deal. If you have longer term goals, the stock market may be a better option. Try to avoid mutual funds with high expense ratios. You may even want to consider an Exchange Traded Fund invested in an index. may be a good option for those with more than $2500 to invest since they offer 10 free trades per month.

  6. Add to your taxable investments.
    • This is along the same lines as number five, but with no specific goal in mind. You are simply investing for the future.

  7. Make a home improvement.
    • If you've been putting off doing some home repairs, now may be a good time. Your extra cash can go a little bit further if you take advantage of some of the tax stimulus sales such as the 10% bonus from Sears.

  8. Make a car repair.
    • People are now trying to make their cars last longer (and they should!) as this article from the Atlanta Journal-Constitution points out. Personally, I think you should keep your car until it can't be saved. So part of that is getting things repaired or replaced when they go bad. This can be a good way to spend your rebate.

  9. Invest for your child's education.
    • There are several options in this arena. If you haven't started a college plan for your child, and funding their education is something you would like to do, there's no better time to start than now. This article from the Motley Fool compares your choices of pre-paid tuition, Coverdell ESA, and the 529 plan. From the article, "Due to the higher contribution limits and favorable financial-aid treatment, 529 savings plans are the best deals for most people."

  10. Donate it to charity.
    • Lastly, donating to charity can be a worthwhile cause. There are many charities to contribute to, including your local church, scouting troops, or the university you attended. As I mentioned in an earlier post, I am contributing to a memorial fund for a fellow airman.
Whatever you do, please be wise with your money and do not fall for places like this. And if you need to cash your check, Wal-Mart will do it for free.

Monday, May 5, 2008

Frugal Resolution of the Week

So I decided to start doing this thing I invented called Frugal Resolution of the Week, or FRoW. Each week, I'm going to try and find a way to reduce my expenses. Hopefully these small changes will begin to accumulate in big ways. My FRoW this week is to stop buying drinks. I'm referring to drinks such as Diet Coke or Iced Tea, not alcohol. If I did drink alcohol, I probably would have started with that since alcohol at Bars and Restaurants tends to be very expensive. But normal drinks are very expensive too. According to Cheap Eats, "fast food companies clean up on the margins for soft drink sales." And besides, water is healthier for you anyway. I know drinking only water can get boring, that's why I picked up some Wal-Mart brand drink powder that comes in little packets. I plan on carrying my water bottle when I'm at work and using the drink powder to add some variety. I got sugar-free apple juice and sugar-free cranberry apple juice. I believe drinking water when I go out will save me about 15-25% since I usually spend less than $10 and drinks tend to run about $1.50-$2.00.

Sunday, May 4, 2008

Get $25 for Free

You may have noticed the links on the right side for ING Direct. ING Direct is the primary bank I use for my savings goals. When I first started saving aggressively, they had an amazing 5.5% interest rate. While they still have a competitive rate, it is much lower now due to the Fed cuts and overall condition of the economy. Despite that, I still believe ING Direct is one of the best banks out there for your savings. They have a top-notch, simple to use, web interface and great phone support. They also have a couple of ING Direct cafes which are cool places to stop by. They often run free seminars there and I can vouch that they are fun and informative. So here's the deal, if you use the links on the right side to open a savings account with $250 or more you will get a $25 bonus deposited into that account and I'll get $10. There is no commitment to keep your $250 in the account after you get the bonus (which takes about 2 weeks). You could look at it as getting a guaranteed 260% APR. And here is ING's pitch...

If you open this account with an initial deposit of at least $250, you will receive a $25 bonus to get you started and I will get a $10 thank you bonus. To qualify for this bonus, you must use the link in the right hand column.

Industry and Frugality thinks you'd like to make your money work harder by opening an Orange Savings Account with ING DIRECT! And, if you open your account with an initial deposit of at least $250, you'll get a $25 bonus to get started and Industry and Frugality will get a $10 thank you bonus. Simply use the link in the right hand column to qualify for the bonus.

The Orange Savings Account

  • Great rate - no minimum balance required. Everyone earns the same high yield.
  • No fees - your money goes to work for you.
  • No changing banks - the Orange Savings Account is linked to your checking account.
  • 24-hour access to your account - you're always ready for opportunities.
  • FDIC-insured - your money is safe and secure.

In closing, let me just reiterate one thing. This is the bank I actual use for all of my savings. I am not trying to push some lousy company just for a $10 bonus. The $10 bonus is nice, but I do believe in this product and service.

Win a House and 2 GMC Yukons

Everybody loves free stuff, and the ultimate free thing would have to be a decked out house with a new car. Every year I enter the HGTV Dream Home Giveaway religiously. I've never won, but I still persist. This year, however, HGTV is also running a contest for the Green Home. This is a very nice home, but no where near the price of the Dream Home. I would actually prefer to win this home because the associated taxes and upkeep expenses are much more manageable. The cool thing about the Green Home is that it is energy efficient as well, saving the winner even more money. The Yukon that comes with it is also a hybrid. Although the hybrid Yukon still isn't really all that efficient, the Yukon is sweet ride. After you enter for the Green Home (which comes with a Yukon), you get a second opportunity to enter to win a Yukon from GMC. Well, Lowes is running a contest as well, which gives you a third way to try and win that Hybrid Yukon. So what are you waiting for? Go win something! :) *Note: There are only 5 days left on the HGTV contest.

Friday, May 2, 2008

Economic Stimulus Rebates

You may have heard that the economic stimulus rebates are starting to hit bank accounts across America. If you have received yours yet, this may explain why. The IRS is sending out the rebates to those who chose direct deposit for their tax returns first. After May 16th, the paper checks will start to arrive. The time frame is broken down even further according to your social security number. To see your expected time frame, check out this page from the IRS.

If you are wondering if you're even eligible for the rebate, an answer from the IRS FAQ may help:

"If you had a net income tax liability for 2007, you will generally receive a payment, unless you can be claimed as a dependent on someone else’s return, had higher income or do not have a valid Social Security number."

Wednesday, April 30, 2008

Fed Cuts Rate, Inflation on the Rise

From the Atlanta Journal today,

"The Federal Reserve trimmed short-term interest rates by a quarter of a percentage point Wednesday, the seventh cut in seven months.

But the central bank also signaled that it likely would pause its rate-cutting campaign, which so far has pushed down the federal funds rate to 2 percent from 5.25 percent."

I have been pretty displeased while watching the interest in my savings account decrease each month despite adding additional funds regularly. On the other hand, I plan on buying a house towards the end of this year, and will want interest rates to be as low as possible. When it comes down to it, I think the lower interest rate on the house will benefit me more than a higher interest rate on my savings. I do think the rate has gone low enough though. I am afraid that inflation is going to begin to take its toll.

Tuesday, April 29, 2008

Memorial Fund

Recently I had a coworker pass away. I'm not sure coworker is the right word, but that's all I can think of. Anyway, a bunch of us decided to create a memorial fund for his wife and unborn child. We wanted to make sure that they had enough money to get by until the baby was a little older and his wife could start working again. What I learned during the process is that each individual can give $12,000 as a gift tax-free each year. If you want to give more than that, then it will affect the limit you have on the dollar amount of the gifts that you give. The limit is $1 million dollars for your lifetime, and isn't affected unless you give more than the $12,000 to any one person. It is a combined limit, so if you gave $20,000 to three different people in one year, you would have an extra $8,000 for each person that would reduce your $1 million limit. You would then have $976,000 that you could give above and beyond the $12,000 limit before you would have to worry about the Gift Tax.

TurboTax has a good article about this.

The fund we set up is located here, if you'd like to contribute. Please read the information about Matthew.

Sunday, April 27, 2008

Industry and Frugality

Benjamin Franklin once said,

"The way to wealth is as plain as the way to market. It depends chiefly on two words, industry and frugality: that is, waste neither time nor money, but make the best use of both. Without industry and frugality nothing will do, and with them everything."
I found this quote inspiring. So inspiring, in fact, that I decided to start this blog. This blog will focus on ways to use time and money wisely. In other words, ways to practice industry and frugality. It will mainly be a blog on personal finance, small business, efficiency at work and at home, and anything else along those lines. I hope that over time this will become an enjoyable forum for information and discussion. Welcome to my blog!