Friday, September 29, 2006

PayPal Does Pay Interest

Over the past few weeks I was wondering about this. Recently, I opened a paypal account so that I could receive income as I did some work on the internet. This account is currently just receiving money since I don't purchase anything using it.

While at first I was a little anxious to get the money into my "real" bank account as soon as possible, I soon found that the money that I was getting in the account could be setup to compound at a nice interest rate by setting up a money market option. So far I haven't even earned a dollar on the money, but it is far better than having no interest at all. The trick to the interest seems to be waiting more than a month since the interest is not paid out all that often on these high-yield/online accounts etc.

For household savings, we have an ING account as well which pays interest and including the account bonus that was earned, that account has earned over 40 dollars in interest. This is totally free money because it took no additional effort for me to get it.

Both accounts have been easy to setup and manage online and I am quite pleased with both so far. On one hand, I am interested in setting up an emigrant direct account because the interest rate is a little higher (close to a whole percent), but at the moment, I am not really jumping on that because I have so many accounts that I am in the process of setting up.

I want even Easier Change!

The title of my blog here is easy change but recently I might have bit off more than I could chew. I stopped playing World Of Warcraft. Although it was a bit of a difficult decision, I think that it is for the best over the long run. It will save me money, close to two hundred dollars a year, in fact. And what's more, I am spending more time taking care of the chores, working, and exercising.

This brings me back to one of my original wants when I started this blog not long ago though, which is a new bike. Since walmart has them at prices under 100 dollars, and I've been doing really well lately with money, working, and might be the perfect little purchase.

I will say this though. I do hope that I can keep this up and not get too overwhelmed. I think that the key to this is to make sure that I am still enjoying myself doing what I am doing. And the nice thing is that I've replaced WOW with not just one activity (work), but also some different extra activities that I wasn't doing very much of before (like exercise).

Saturday, September 23, 2006

Only Eat Half of the Pizza

It sounds really silly, but very often I am ordering pizza out. However, there was often a desire to buy a full large pizza for each person, even though it was probably more than was needed.

Recently in our house, we've gotten better at this and we split one pizza. It controls the amount of the food that we eat so that we dont go overboard in terms of calories etc AND it saves money since one pizza is not being bought. After we eat our portion, we are often satisfied but not overstuffed and it was just the right amount.

So, when purchasing any kind of take-out food, really consider whether or not the amount you are ordering is realistic. No one cares if you split something when you are eating at home.

What's more, some people can really take this advice to the bank when New Years rolls around. There's always too much leftover chinese food!

Friday, September 22, 2006

3 Ways Improving Your Skills Can Increase Your Income

Not long ago, I read an interesting article where Steve Pavlina explains how to improve technical skills. This got me to thinking about the opposite side of the cashflow equation: the income side.

Most people in the personal finance community seem to focus on saving money, and being frugal, and minimizing expenses. All of these are items that are generally about the expense side of things. But the income side should not be forgotten, just because it is often more difficult.

Getting a higher-paying job is often the most straightforward ways to improve your income. However, most people often stick in their current position or field when taking the next position. However, this is not always where the most money is made.

After taking Steve's tips and a strong work-ethic, it is possible to perhaps branch off into other related fields, or at the very least become proficient in these skills.

3 Reasons it matters:

1. Learning more skills may change your ways of thinking. Often, problem-solving is a matter of changing your ways of thinking, not working harder. New skills provide new ways to think about and work on solving a problem.

2. More experiences give you things to talk about in an interview. Often, interviews are just a way for hiring managers to size you up in terms of your experiences and how you handle yourself in a job. Going after new skills is a sure-fire way to show your drive and aptitude for learning new things.

3. Side-Jobs abound for people with multiple skills. If you have multiple skills and use them successfully, you may find yourself doing work on the side in the form of a second job, or a small business. Combining your different skills together might actually be an excellent way to gain a competitive advantage over your competition.

Personally, I've combined my skills in fixing computers with my skills as a programmer to start a small business that I've been running since college on the side. It has allowed me to learn more, grow my skillset, and also provides me with plenty of opportunities to learn above and beyond my regular positions.

Thursday, September 21, 2006

Progress Report

I figured since I've been doing this blog for a few months, it would be worth taking a look at what we've accomplished:

1. First credit card completely paid off (over 1500 balance)
2. Second credit card almost paid off (only 435 dollars left after this month's payments)
3. Working more side jobs to generate additional income
4. Opened up a few accounts to start investing and building assets.
5. Opened up an ING Savings account and have already earned close to 50 dollars in interest.

In the next six months I would like to
1. Get financial paperwork organized and ready to execute (will/trust? and power of attorney etc)
2. Finish paying off credit cards
3. Rebuild savings accounts to have at least 4000 dollars in savings + money for goals.
4. Save enough to go on vacation without putting anything on a credit card or any kind of pay-over-time.
5. Pay for christmas on a 500 dollar budget and pay cash for everything.

Friday, September 08, 2006

Are Too Much Of My Savings At Home?

Home is where the heart is, but not necessarily your money.

"The value of my home has more than tripled over the past five years, so I'm considering selling it and renting a house or condo to lock in the profit. Then I'd invest most of the proceeds in dividend-paying stocks. I just feel the housing market is going to keep weakening in the near term, and I don't want to lose these gains. My plan for early retirement would be shot if the price of my home fell significantly. What do you think?"

This was a quote from a letter that was in a financial article I was reading recently. And upon reading that, I realized that this was something that I had often considered myself. Currently, the equity of the condo where I live is nearly 1.5x the current value of my 401k. This is amazing, but at the same time a little absurd. If I was strictly concerned about keeping my assets diversified, I'd have to come up with a few thousand to put in my 401k (assuming a 50/50 split) or sell the condo to regain parity in my diversification.

Common sense and historical reality, however, dictate otherwise. When investing, you are trying to get as much return for your initial investment as you can. This is common sense. That is why flipping became so popular during the boom of real estate (which many people call a bubble). People were buying a property and nearly doubling their money in some cases in less than a year. This kind of 100% return was far and away better than anything that the stock market could offer. And although it wasn't a sure thing, it certainly was much less risky than a stock.

Now we are back to a more normal market in terms of real estate though. And over the long haul, real estate generally only seems to go up in value about 2% over inflation each year. That is not much of an increase, really. So, in terms of investing in your home with the idea that you will sell it and make a bundle, its really not that great of an idea. So, this seems to indicate even more that I should get my money out of my house as soon as possible and invest it to get a better return right? Not really.

My grandfather and I often discussed people with big houses who flipped for quick cash. "Sure they can do it, but now where are they going to live?" And he was right. The author of this letter I quoted at the start of this article really needs to look at what average middle class people are living in where he is. If he is living in one of these McMansions (as I so affectionately hear these houses called), it is probably adventageous to consider downsizing and putting the excess capital into something with a more stable to become more diversified.

But, if he is like most people (who are living in average-sized homes) I think that this type of thinking can be dangerous. Obviously, the real estate markets are different everywhere. And there are people that are able to make tons of money by doing flip and buying large, expensive pieces of real estate. However, for me, and most average people, the condo or smaller home is not so much an "investment" or an "asset" as it is a place to live. I expect it will increase in value, provided that I care for it, but it is not where I am putting large amounts of money to invest for my retirement. Rather, getting it paid off is insurance against the ever increasing price of rent.

If I wanted to invest in real estate, I would invest in real estate. I would not get myself a 1 million dollar mcmansion and hope it improves in value. This just seems silly and risky. If the economy goes sour and you need cash to live on, these homes will become a source of cash for some people. In a really bad economy, there could become a glut of such homes (such as many parts of the country are seeing now) and in the end, someone who *really* has money will come and swoop in and steal these houses right out from under people who will lose thousands.

Thursday, September 07, 2006

If I could save a dollar like that every day, I'd be rich!

Its not that amazing really, but this morning when I went to get my morning coffee at Dunkin' Donuts™, the clerk sold it to me for .51 cents. I was amazed and I wanted to throw it out there to anyone else in the Boston/Dowtown Crossing Area. It was the Dunkin' Donuts next to the Capital Crossing Bank. The guy actually rang it in to the register, so he might have miskeyed, or they might have mispriced it for .51 instead of say 1.51. Either way, it was good stuff.

Monday, September 04, 2006

Personal Finance Blogs Are Getting Their Due: What it Might Mean

Not long ago, I read this article about personal finance bloggers.

One item that I have been noticing lately is that there are more and more financial bloggers. The fact that there was this article is an indication that I was not imagining this phenomena. I think that this is quite exciting because it indicates that there has actually become a very useful function of the internet and blogging. That is, to provide information about money in a person-to-person manner so that people can become more educated and handle some of these more complicated financial issues themselves.

This got me thinking though. What does all of this mean though? What are some of the ideas that might come out as a result?

Here's what I think could happen

I think that we will begin, probably by Generation Z, to start seeing most kids graduate from high school and college with a thorough understanding of their own finances. This implies that they will understand how to save money, why they should, how to plan for retirement and other long-term goals, all at a very young age.

I think that investing will change as a result and that returns will actually grow significantly. The returns on this money will actually be phenomenal and I think that the stock market (for this period) will actually have higher-than-average returns by a few percent.

I will admit, I have no scientific backing for this - it is simply a prediction, an idea if you will, of where this trend might lead us.

The downside that I can see though is that there will be people who either cannot or do not save and invest and manage their money properly. This might spell disaster. Similar to the mcmansion race that many in the baby boom and generation X are currently having with ever larger homes, I can foresee an arms race of investments and 401ks as we get older and the current generation passes into the major segment of retirees and Generation Y and Z are actually providing a majority of Social Security funds.

It seems a little early to get too worked up about it yet; there's tons of time between now and then. But if I said that I wasn't concerned about the potential impact on society when these generations start retiring (if nothing is changed before then), I'd be lying.