Easy Change

One of the most important skills, indeed, the most important skill when it comes to personal finance is the simple rule: Spend less than you make. This is a simple rule that works for handling all personal financial situations. If applied correctly and the wisdom that it imparts is correctly understood, it can determine the course of your financial future. Personally, I am continuing to work on ways that I can spend less than I make. For this to happen, I need to accurately understand all of my expenses and all of my sources of income and determine how I can track it and ensure that I take steps until my income is larger than my expenses. I have reached this point many years ago and the progress has been positive since then and I consider myself lucky. Now, I am proceeding down the path and I realize that there are two aspects to this constant quest--a shorter term aspect which consists of very specific steps that can be taken in the very near term. Then there is also a longer ter...

One of the largest US Lottery prizes in history was claimed recently by a man who works in a small convenience store according to MSNBC. I think that it is pretty amazing when you think about it. Chris Shaw is a guy who is working and can really really use the money. I hope he gets his health and kids taken care of and really is able to improve his long term quality of life for him and his family going forward. Even at a lump sum, the payment is over 120 Million dollars which is quite respectable. I think that many people would be able to make a serious lifestyle change with anything close to even just a million, so 120 million is impressive. Many people often feel like winning the lottery is like a curse. It is unfortunate but many people lose their lotto winnings . So the best thing to do in these situations is be slow, deliberate, and have a group of advisors who can really help you manage any kind of dramatic new wealth. With a good plan in place, it is far more likely that the m...

As I was browsing the web this week I came across an article that I found quite astounding. The article was online at The Atlantic magazine and dealt with the socio-economic impact of unemployment on neighborhoods and the long tail effects going out ten, twenty, and thirty years. What I found interesting about the article was the premise. That is, the idea that unemployment was a problem that was rather long-term in nature was something that quite honestly I'd never really given much thought to. However, given how long and deep the downturn has been (e.g. even in the face of an upswing in the stock market, many people still are out of work), it is not hard to believe that there will be some longer term effects. This article about unemployment takes this concept and really explores it to the depths. The idea begins with a common example, that men (and people in general) often feel that their job is a major part of their identity. And in a protracted period of unemployment, that can...

I just picked up this story on the net tonight and I thought it was really worth sharing because this is really innovative, I think. Go here to read more about the Gum Wrapper Prom Dress . I think the story is very cool and timely with Prom right around the corner for some students.

The press has been covering various countries and their possibilities of defaulting on their debt for some time. Last year, Iceland had a financial crisis that caused many to become quite nervous that it could cause a series of defaults across Europe. Lately, the big target has been Greece. For quite some time, the burgeoning levels of greek debt have made many investors nervous. A country, like a company or a person, can spend more than they have, but must borrow in order to do so. Companies can borrow by issuing stock or bonds. Countries can borrow by issuing bonds or other similar securities. All are forms of IOUs. In the case of Greece, the increased debt levels have made people nervous because they seem to be at a level that could never be repaid. This fear was lessened to some extent today with a new agreement that provides some backing for Greek debt. Read Bloomberg's Greek European Union Accord article to learn more. What does this all mean for the average personal finan...

I've been using a tool to track my household net worth for years and I think that it has been an enormously helpful tool as a motivating factor for helping me to make the correct decisions. The tool I have been using is NetWorthIQ. You can view a small sample chart that they produce. But I think that more than the chart, it is about the motivation that the chart provides. Besides providing a simple line of how your net worth has grown or shrunk, it shows how your net worth can be impacted by the events of the day and how well you've navigated those storms. Personally, the great opression of 2008/2009 has been awful. It has left me feeling somewhat void. My feelings are not that unique, and my approach is not that unique. From the perspective of making money, it is difficult because the people that tend to do well are people who are far out on the risk curve, people who are doing something different. So, with the net worth tracking tool, I am able to determine that my approach,...

One of the more interesting things that happened in the news recently is that Bernie Madoff was finally convicted in what was basically a shut case. Many people have decried the punishment he received though: a hundred and fifty years in prison. His representatives were taken aback by this judgement but it seems reasonable to me. According to the article I read online, there was not even a single person who wrote to the judge prior to sentencing in support of Madoff. Not his family. Not his friends. In the end it seems that Madoff is utterly alone. Unfortunately Madoff took a lot of people. And certainly some of these investors should have known better. But, if you even ignore that, aren't we forgetting the people who probably were otherwise involved? I will be much happier when I find out that the accomplices are brought to justice also. Read the news story here. All that this story does is underscore the fact that people need to be responsible for their own actions. No one else w...

Everyone who has been paying attention is aware that the economy is in dire straits. From the serious tumble that the stock market took, to the completely tanking housing market, it is easy to see examples nearly everywhere that things are going badly. Fortunately though, the chances are, that if you're reading this, that you're in relatively good health. This is something that has the kind of value that doesn't have a price tag. There, I said it. Now think about it for a minute; you're good health is priceless. Recently I had someone close to me undergo a serious surgery. This has given me a new perspective on my health and also made me realize how important it is that everyone, no matter what their situation, do what they can to stay healthy. When you go to the doctor, you may be told to change your lifestyle, quit smoking, stop eating bad foods, etc. When you go to the dentist you may be told to brush better, or floss more. Regardless of what these professionals are ...

You'd have to be living under a rock at this point to be unaware of how scary the situation is with the global economy. That's right, GLOBAL. Even though we like to segment our countries into developing and developed...and give them even fancier names like 'frontier', the reality is that this current situation shows just how coupled all of the world's economies still are. The big concern for many at this point, and many of the government officials is the fact that the credit markets are not yet flowing. Instead, all of the money is being locked up nice and tight at banks and they are not lending. In the end, I am interested in considering prosper and some of the other peer-to-peer lending sites. In the event that these banks do not open up lending, we will be in a severe recession quite fast. But for the average person, there is a genuine concern that there might not be enough money for their boss to get enough cash to make payroll, or that there might not be money...

This week has been quite a ride already and we're not even half done. Lehman Brothers is bankrupt , B of A buying Merrill Lynch , and AIG not looking so hot, searching for some emergency money ..... One of the most important things you can have in this kind of uncertain time is an emergency fund. Not only should you have it, it should be big. The next best thing you can do is cut expenses and do all that you can to shore up your financial footing because who knows where the financial axe is coming from? I know that for many people out there, it is simply too late to do much in the short term about their emergency fund and way too difficult to figure out what to do to move their money around in any significant way. There are 3 things small things you should consider doing though, right now, before the summer ends in order to start picking up some stability in these uncertain times: 1. Make sure that your "safe" money is really safe. If its safe money, it is in an account t...

So, tonight on my way home, I needed to get some gas. I pulled in off the highway and stopped at a small gas station and figured I was in for a good 45 bucks to fill my tank. I squeezed the pump and let my mind wander and then the pump popped because the tank was full. I hung up the pump and looked at the price and was shocked. It was less than 40 bucks to fill my tank. Normally, when you pay less for something, it is a thrill. And I was quite pleased as I pulled away. The annoyance only came once I realized that I was so happy. I was completely snowed. After months of paying higher gas prices -- prices that were around four dollars per gallon -- it felt great to pay 3.60. This is not a blessing or a deal though. This is still painfully expensive. And I don't think that these temporary decreases in price are a very good indication that we'll have cheap fuel for long. I'm with other people that think that our heating bills this winter will be significantly more than we had p...

One of my favorite things to do on the weekend if I am not already busy is to watch Consuelo Mack: Wealthtrack on my local PBS station. This show features investment and finance gurus from all different major firms like Merrill Lynch, BlackRock, MorningStar etc. The reason that I really like the show is that it focuses on two very interesting parts of finance. The first is the economy in a macroeconomic view. Too often as personal investors focus on personal finance, they become deeply entrenched in the ideas around debt repayment, debt snowballing, 401ks, IRAs and other types of personal finance. While all of these items are critical to personal finance, there becomes a point where the average person begins to have money to invest. And in order to know where to invest, it is critical (in my opinion), to understand the global economy, particularly at a macroeconomic view. Of course, it is fairly well known that the past is no guarantee for the future, but I am still bullish on personal...

So, its been a while since I've written anything and I think it is interesting to start looking at some macro ideas. I'd like to sum up a couple of conversations I've had recently about the economy. With a friend over the holidays, we were discussing the economy and people were asking me what the best thing to do was. I told them that I thought that the time to "prepare" and "react" to this situation is long since gone. People that are leveraged in investments or real estate are going to have a hard time unless they have liquid cash to weather the storm. An emergency fund is key here and most people don't have serious free cash flow to save money right now, especially with the cold winter and holidays coming up. So, the takeaway for people in trouble is to do the same old boring things: 1. Build an emergency/freedom fund to handle these lean times that we're in. 2. Cut spending and increase earnings so that you can have a good "cushion"...

Most everyone is aware of how the markets tanked last week and now are somewhat struggling. I am still checking my 401k every day or two and I am not really doing anything much as a result of the markets, but I am keeping an eye on things. So, the big question for me right now is, do I believe Greenspan? Greenspan was in asia not long before this whole market downturn happened and he said that there could be a recession this year. Of course, for some people, even the faintest whiff of recession can make them throw the baby out with the proverbial bathwater when it comes to investing. So a selloff was not exactly rocket science. Similar to other downturns, many of the trades were automatic as a result of stocks tumbling down to preset levels etc. But, here we are and now the market is just sort of going up and down a little like a fishing baubble. All that said, an article I read on MSN money was interesting. http://articles.moneycentral.msn.com/Investing/Extra/GreenspanVsBernanke.asp...

So on friday, I went to see Suze Orman at a book signing/talk in boston. I had a great time and it was fun to meet Suze in person. Her book about women and money seemed to resonate with quite a few people in the audience; my mom is a big fan of Suze and has really started getting her finances in order as a result of reading Suze's books and watching her show. It appears that Suze has changed her mind at this book in that she now believes that there are some fundamentally different things about how men and women handle money. I find this concept interesting but not *always* true. I like many of the ideas in her new book though and I think that men and women could both often benefit from the advice Suze gives when it comes to money. And the concepts in this book are really no exception, in my opinion. Sure, most guys are probably not as "touchy-feely" and emotional about money as women are. But that doesn't mean that some of the same concepts cannot be applied. One conc...

This weekend I am quite excited. I will be taking my mom to see Suze Orman give a talk about her new book about Women and Money. This past Christmas I gave my mom Suze's book about the 9 Steps to Financial Freedom which I liked. My mom devoured the book and has been taking steps to get her finances in better shape ever since. This book promises to focus on women's issues and will probably delve more into the emotional/psychological issues that many women have with regard to their money. But I'm ok with that. I think that many people out there need to hear some of these things and I think that changing your thinking is the critical first step to affect a positive change in your life -- whether its financial or otherwise. In general terms, people are creatures of habit. And yet we expect to do the same things again and again and again and somehow get a different result. It usually doesn't work. Instead we are stuck in cyclical behavior and thought-patterns and then are s...

Recently, I joined the blogger network No Credit Needed. It is similar in function to the NetworthIQ site in that it provides charting for your progress toward your financial goals. But in general, rather than tracking net worth, it usually tracks progress toward paying off debts specifically. In addition, it provides a forum where users can update/change/and provide comments on each others' progress. And I am excited to see that it got mentioned in the article. Here is the link:  http://www.nytimes.com/2007/02/18/us/18debt.html This is an excellent step toward broader recognition for all the work that NCN does in terms of keeping members updated and encouraging one another. As for me, I need to get my chart updated at No Credit Needed because this month, I took a big chunk of the tax return money and eliminated a small student loan that I'd been chipping away at for a few years. This was a huge step for me since I know now that I have one less bill to worry about each m...

I came across an interesting article today about 1.2 trillion dollars. The premise is that when amounts get large (like over a million), that they all start to sound the same. And when comparing large numbers, the best way to compare them is what you could get with them. Of course all of this is in the context of the 1.2 trillion dollar amount which is considered to be the cost of the Iraq war. Although there are vastly different opinions on the war, I think this article is worth a read. It gives an interesting way of looking at high price tag spending and brings us back to the old standby when it comes to personal financial decisions: its all about trade-offs.

Ok, so wal-mart made a mistake. Some buyer of their shirts bought a design that was done with some nazi logos on it. Obviously it was a bad move. I think it was most likely done out of ignorance. I didn't know the significance of the symbol, but clearly, many people do. And it's not surprising that it is offensive. My question now is: Does wal-mart care? I wrote about this many many days ago and even got a response from someone who claimed to be from wal-mart that posted a comment, claiming they would remove the shirt. Ok. The consumerist just had another post about it today. I'm assuming it is true. So now I am just feeling a bit disappointed. I mean, how hard is it to get a note out in a staff meeting or memo that there is a shirt that needs to be pulled from the shelves? And frankly, I've read and seen a ton about Wal-Mart's technology. Their ability to restock and track merchandise is top-notch. They do it in the space of a couple of days. How come they weren...

On saturday, I went to IKEA in stoughton, MA and it was very different than I expected. It had a european feel, which is to be expected from the Swedish Home Furnishing's Store given their roots. However, I was also impressed with the prices. They were relatively affordable, even for someone who doesn't have tons of money. Unfortunately, though there was not much that was really ideal for my home because the stuff is definitely not at the same level of quality; but I wish that I had known about it when I first graduated college. It is a great place to go if you want to decorate stylishly and then redecorate every 5 or so years.... Or you are on a budget and cannot afford to pay lots of money for furniture.... Or you know that you are going to have to setup house in a very small apartment or rooms (since much of their furniture is scaled down). On the plus side, I bought several items that were only a dollar and it was fun because I got some christmas shopping done since I...