5 Ways to Pay Off Your House Early

pay off your housePaying off your house is probably something that you’d love to do but like many of us you don’t have the funds to make it happen. Today we’ll look at some ways that you can make a dent in the amount you owe on your home loan and pay off your house early.

Paying it Off

For most homeowners your mortgage represents the largest outflow of cash from your budget every month. We like to think about all the things we could do in life if we didn’t have to pay to keep a roof over our head. Imagine how fast you could ramp up your retirement savings, build a college fund, or save up for a big vacation. In addition to the increased cash flow, having your house paid off also comes with a sense of security – that you own your home and not the bank.

One tax note to be aware of on your quest to pay off your mortgage. For many of us homeowners the interest we pay on our mortgage is what enables us to itemize our deductions. If you pay off that loan you might have to start taking the standard deduction.

5 Ways to Pay Off Your Mortgage Early

Here are some ways you can pay off your mortgage early and reap financial benefits from not having that payment.

1. Extra Principal Payments

The easiest way to pay off your mortgage faster than normal is to simply include additional money on every payment you send in. The additional money will go straight toward the principal of your loan rather than to paying the bank interest. Over time this will slowly pay down your mortgage faster than your original financing term.

Check with your lender to see how they treat additional payments. Most banks automatically apply additional payments to any outstanding fees. How they handle extra payments after that can vary so be sure to note on your extra payment that it should be applied to your principal.

2. Bi-Weekly Mortgage Payments

A second way to send in additional payments is to coincide your mortgage payment with your pay cycle. Since many people are paid bi-weekly you simply send in half of a mortgage payment on each pay day.

This doesn’t seem like it would save you any money, but you’ll end up paying an extra month’s worth of payment every year. This is due to how the calendar year plays out. Most people know there are 4 weeks in a month, but over 12 months that is just 48 weeks. That means throughout the year there are a couple of times where you will get a 3rd check in that month even though you’re paid bi-weekly. If you send a half payment in on those pay days you’ll end up making two additional half payments (to bring us up to 52 weeks in a year). It’s an easy way to “trick” yourself into paying off your mortgage faster.

3. Refinance to a Shorter Mortgage Term

Another way to pay your mortgage down faster is to refinance to a shorter mortgage term. If you’re three years into a 30-year mortgage and refinance to a 15-year mortgage you’ll save money over the life of the loan. Granted your payments will be higher every month, but the shorter term combined with the higher principal payments will save you a lot of money in comparison to your previous mortgage.

4. Refinance to a Lower Interest Rate

Even if you don’t change the length of your mortgage in terms of the number of years you are still better off if you refinance to a significantly lower interest rate. The lower interest over the life of the loan will pay for any refinancing costs you have out of pocket and still save you thousands of dollars in interest.

5. Recast Your Mortgage

In contrast to paying a little extra each month, a mortgage recast is usually used to pay off a big chunk of your loan at once. When you recast your mortgage your bank actually reamortizes your loan based on the remaining term left on your loan and the new loan balance. Your interest rate remains the same but because you’re paying interest on a lower balance, the amount of overall interest you pay goes down.

If you’ll remember from the amortization tables in the mortgage calculator post, since you’re paying less interest your monthly payment will drop. Ideally this will free up money each month you can use to make extra principal payments. Another benefit of a recast is that it can help you get rid of private mortgage insurance (PMI) if the lump sum you pay puts you over 20% down on the value of your property.

There are some limitations on this strategy. Not all banks are willing to recast a mortgage so if yours doesn’t allow it then it won’t work for you. Most banks will have a minimum amount that you can recast and typically they’ll charge a several hundred-dollar recast fee. Some banks have limits on the number of times they’ll recast your mortgage.

What are some additional ways you can pay off your mortgage early? Leave a comment!

This article was originally published on May 4th, 2011.

How to Save Money on Your Cell Phone Bill with Ting

Ting Cell Phone BillFor many Americans a family cell phone plan is a necessity to keep in contact with the hectic schedules we all have. Johnny needs a cell phone to call his mom after practice so she remembers to come pick him up, while his dad needs it to stay in touch with the family when he’s traveling for business.

As phones have gotten increasingly more complex – a good thing – the plans that support all of these features have become even more expensive – a not-so-good thing. A family of four all using cell phones on tiered data plans could pay more than $300 per month once all the taxes and fees are added on.

That’s $3,600 per year.

Finding a way to trim your cellular service costs is difficult. With only a handful of major carriers they pretty much have the freedom to set the prices they want without serious consequence to market share.

So how can you save money on your cell phone bill? Here’s one new idea . . . .

Saving Money on Cell Phones with Ting

Enter Ting.

The company claims to be a different kind of mobile provider and in a way they are.

Instead of charging you for a set rate plan with a set number of minutes, text messages, and megabytes or gigabytes of data transfer, Ting charges you just on what you use. There are different buckets of usage that you graduate into with more use but you’re never charged a flat fee for a set number of minutes.

For light users of mobile services it can mean big savings. For a user that uses 500 (or fewer) minutes, 1,000 (or fewer) text messages, and zero data the bill would be $20 plus surcharges.

Ting’s goal is to provide a simple service that doesn’t hit you with overages and hidden fees.

Is Ting a Cell Phone Service Provider?

Ting rides on top of Sprint’s nationwide network just like many of the prepaid phone companies do. This puts Ting in competition with the likes of Boost Mobile and Virgin Mobile who also utilize Sprint’s network.

Ting doesn’t own cell phone towers or any crazy type of infrastructure. They use Sprint’s network for a fee and charge you some other amount on top of their cost to make money.

How Does Ting Compare to Other Companies?

Let’s look at how Ting’s offerings compare to other companies.

Boost Mobile: Unlimited Android

Boost Mobile offers monthly plans with unlimited voice and texting. They claim “unlimited” data, but only 2.5 GB of that data is considered high speed. (In other words they throttle your connection after that.) The plans start at $55 per month for an Android phone and every six months you have on time payments the payment goes down $5. The lowest your bill can go is $40 per month.

With Ting $41 would get you 100 minutes, 2,000 text messages, and 1 GB of data.

Virgin Mobile: Unlimited

For $55 per month Virgin Mobile gives you essentially the same as Boost Mobile, including 2.5 GB of high speed access (LTE if available). With Ting you could 1,000 minutes, 1,000 messages, and 1 GB of data.

Where Ting Maximizes Value

Ting isn’t designed to compete with big plans from the legacy carriers like Verizon and AT&T nor to truly compete with the unlimited prepaid plans. Ting’s goal is to find a niche at the lower end of the scale with folks that use a cell phone only sparingly. You can get 100 minutes, 100 text messages, and 500 MB of data transfer for $25 plus surcharges. Your bill with other carriers would be much higher.

What Phones Does Ting Use?

You can buy a phone from Ting but they also accept used Sprint devices since Ting uses Sprint’s network. That means you could go to Craigslist or eBay to snag a cheap phone and get started with Ting for very little money up front.

Is Ting a Good Value?

It all depends on how you use your cell phone. If you are constantly on the road and utilizing a lot of minutes, texts, and data transfer then Ting probably isn’t the best bet for you. (Especially since it uses Sprint’s smaller network compared to Verizon, T-Mobile, and AT&T.)

But for those that only sparingly use a cell phone Ting can be a great option to save some serious cash over other options. If you rarely call someone and use Wi-Fi a lot instead of cellular data, you can make Ting work for you to save big dollars compared to other plans.

What are some other ways you can save money on your cell phone bill? Leave a comment!

My 3 Biggest Money Mistakes and How You Can Avoid Them

money mistakesLike most of us, I’ve made my share of money mistakes. I’ve been fortunate that I’ve been able to recover from most of them without too much damage to my finances. However, there are a few that still affect my finances years later, even after they’ve been mostly corrected. Here they are including how you might be able to avoid falling into the same traps:

1. Piling On the Debt as a College Student

One of the most common money mistakes made is getting into debt. Indeed, many of us pile on the debt as a college student.

Not only did I max out credit cards during my time as an undergrad, but I also used student loans unnecessarily. I had a full-tuition scholarship. My parents paid for housing (and after two years, I was a Resident Advisor with free housing and a stipend). I had a part-time job on campus. There was no reason for me to take out the student loans I did. But they were available to me, so I took them.

I also stopped saving up for things, and instead used my credit card for the instant gratification. It’s easy to lose track of how much you are spending when all you have to do is swipe a credit card, and I didn’t use any sort of method (pen and paper or computer-based) to track my spending. In order to avoid all the debt, it makes sense to plan your expenses and track your spending:

  • Be realistic: Just because you can get a certain amount in loans doesn’t mean you have to. Don’t borrow if you don’t need to. If you do borrow, only borrow the minimum that you need.
  • Only spend money you actually have in hand. This means developing discipline and avoiding the attraction of instant gratification. Save up for what you want.
  • Track your spending. This way you know where your money is going. Track credit card spending, and only spend what you can pay off each month.

2. Lack of Communication with My Life Partner

Even after ten years of marriage, my husband and I still have miscommunications – including about money. There were times that I thought we were doing one thing with our money, and he thought we were doing another. Sometimes, we didn’t talk about major purchases. He’d go to spend $100 on something, and I had already spent $200 on something else. In some cases, our lack of communication led to overdrafts (and the fees that accompanied them).

Other times, it meant that we were working toward different financial goals at the same time. Imagine my surprise when he announced that he wanted to buy a home when I thought we were trying to pay off the rest of the credit card debt and pay off the car loan!

All of a sudden, we were trying to buy a house, and instead of saving for a down payment, I had been aggressively paying off loans. That led to a bigger mortgage than I wanted, as well as a little more debt as I used the credit cards to buy everything for two months so we could have cash to have something for a down payment.

In order to avoid these difficulties, it’s a good idea to communicate about expectations, and touch base regularly with your life partner. Whether it’s allowance for the kids, retirement savings, or your next family vacation, shared goals are important. For the most part, my husband and I are on the same page now. And it’s much less costly.

3. Failure to Account for Taxes

Remember that the government wants a cut of what you make. When I first started my home business, I didn’t account for taxes, and were surprised with a rather hefty tax bill one year. We had to raid the emergency fund to pay it.

In order to avoid this problem, realize that you have different tax obligations when you work for yourself. Set money aside to pay quarterly taxes to avoid costly problems with the IRS and read a good book about small business taxes.

What have been some of your biggest money mistakes? Leave a comment!

This article was originally published on May 25th, 2012.

How to Analyze Stock Performance (Fundamental Analysis)

stock analysisMany investors are interested in identifying individual stocks that can add value to their portfolios. Adding individual stocks to your portfolio is a bit more hazardous than simply investing in a mutual fund or an ETF. With mutual funds and ETFs, you are investing in a group of stocks, and so the end result is influenced by a larger group of assets. When you pick an individual stock, your success relies on the performance of that one asset.

While you can limit some of your risk by adding various stocks to your portfolio and diversifying your investments, when you pick stocks, each one needs to be properly evaluated so that you stand a greater chance of coming out ahead in the long run.

Using Numbers to Analyze Stock Performance

Value investors like to look at some of the numbers associated with an asset in order to gauge how well it’s doing. Some of these numbers are designed to help you get a feel for the fundamentals of stock. The fundamentals are all about how strong a stock is underneath everything. It’s not about price action per se, but about the overall strength of an investment.

Some of the numbers to consider when analyzing a stock include:

  • P/E ratio: The price to earnings ratio represents the amount of money an investor is willing to pay for each dollar a company earns. A stock with a low P/E ratio is one that costs less per dollar of earnings – it’s a better deal than a stock with a higher P/E ratio. However, you need to compare P/E ratios within sectors or industries, since what’s reasonable for one industry might be too high for another.
  • P/B ratio: Rather than looking at price as compared to earnings, the price to book measure looks at how much investors are willing to pay as compared to the companies’ assets. It’s important to consider intangibles – such as good will – and balance that against tangible assets. A company with a lot of intangibles likely has a P/B ratio that seems too high.
  • Cash: Earnings aren’t the same as cash. You can get an idea of how much cash a company has, and balance that against its liabilities, with the help of statements. Take a look at cash flow to get an idea of how well a company is doing, and whether the company is well run.

There are other considerations, such as how much debt a company has as compared to its equity, and the PEG ratio (a modified P/E ratio that also considers earnings growth). You can look at profit margin and other numbers as well to get an idea of where a company stands, and the kind of value it might offer. You can even look at dividend yield to see if a stock offers a reasonable opportunity for ongoing income. But don’t just look at the numbers. There are other considerations as well.

Big Picture Fundamentals

As you analyze stocks, don’t forget some of the big picture fundamentals of a company. Think about the other factors that might affect a company. Does the company use outmoded technology that could lead to obsolescence in the coming years? Just because a company has performed well in the past doesn’t mean it will continue to do so in the future.

Look at the management as well. Do you trust the management to do the right thing and make the right choices? Is there a culture of innovation? Does the company match up with your ethical values? What kind of political issues might impact the company? Does the company rely on seasonal performance, or are there vulnerable supply lines?

Choosing individual stocks is a lot of work, if you want to do it right. Make sure you are careful about your analysis, and choose the right stocks for you.

What are some other aspects investors should consider before buying a stock? Leave a comment!

5 Part-Time Business Ideas for College Students

college student business ideasYou’re a college student, and money is tight, so how do you earn the money that you need in the very limited amount of time you have available? While it’s common to think about getting a part-time job, having a part-time business can actually work better for you as a college student, both in regard to money and time.

This is especially true if you have certain skills that are in demand. You can earn a lot more than minimum wage, which means that you will have to work fewer hours in order to make the kind of money that you need. Here are some part-time business ideas that may work well if you’re a college student.

1. Social Media Management

Since millions of businesses are now trying to attract business on the Internet through the social media, there is a rising demand for social media managers. Since the social media has only been around for a few years, just about any skill that you have in this area can qualify you to work in this capacity.

If you have a lot of experience with Facebook, Twitter, LinkedIn, or any one of a number of other social media sites, you may qualify as a social media manager. In fact, as a college student you are probably more fluent in the various social media than most business owners. Since the social media has only been around for a few years, you’re probably far more adept with it than most business owners over age 30 are.

You can work as a social media manager as a regular job, but it is more likely that you can start a business by attracting several clients. With your social media skills, you can manage the social media operations of several businesses at once. It’s mostly a matter of getting the word out on the social media to potential customers of those clients – and with your social media skills, you should be able to do that.

Start with one client, learn specifically what it is they want done, use your own knowledge of the social media to make suggestions as to what else they can do, and then have at it. Once you have one client, it’s just a matter of adding more – one at a time.

2. Freelance Writing

The Internet is a rich opportunity for freelance writers. You can write for blogs in any subject area that you’re interested in. But there are opportunities than blogs on the web. You may also be able to write web articles for various businesses, weekly or monthly newsletters, and even articles for reference sites.

Start by doing some free articles on three or four sites. Once you do, you’ll have a “portfolio” of published material. You can use that small portfolio to offer your services to potential paying clients. Though you may get only a few dollars per article when you start out, your compensation rate will climb steadily as you build a network of clients.

3. Light Hauling or Moving

Why would you start a business doing this when there are moving companies out there already doing it? People need light hauling and moving for all kinds of reasons that fall short of the need to pay for a full service moving company. Sometimes they just want junk hauled out of their garage or basement, other times they have an adult child who is moving out of their home, and sometimes all they need is to have furniture moved from the second floor down to the basement.

There are a lot of households that don’t have anyone living there who can do any kind of heavy lifting. They may also lack the resources to pay for an established moving company. That’s where you come in.

You can advertise your services on Craigslist.com (for free), through word-of-mouth, neighborhood flyers, or flyers placed in public venues, such as grocery stores, Laundromats and churches. And once you get a few customers, you will likely begin getting referrals that will keep you busy on a regular basis.

It will help if you have the availability of a van or a light pickup truck – you don’t have to own one, but you should know where to get one if you need to. Sometimes you don’t even need a vehicle – the customer may only need to move furniture from one room in the house to another. You won’t be able to charge anything close to the rates the professional moving companies do, but that will be your “in.” People will come to you precisely because you are cheaper.

And you’ll still make a lot more than you would in a part-time job at minimum wage.

4. Tutoring

Since you are in college, you are already in the perfect location to be a tutor. If you have a subject or two that you are really good in, you can offer your services as a tutor in those subjects to other students who don’t share that strength.

Again, you can advertise on Craigslist, in local venues, and around the campus. And if there any high schools in the immediate area, you can also provide them with a flyer offering your services to the students of those schools. You can probably get at least $30 an hour as a tutor, which is about four times minimum wage.

5. Photography

Are you good at photography? Professional photographers are expensive, and if you can do good work at much lower fees, you may be able start your own side business. Digital photography, along with use of the Internet, make this easier to do than ever.

It may be difficult to get a steady clientele in the way you would with the business ideas above, but you’ll almost certainly get more money per customer. We just paid over $400 for senior photos for our daughter – if you could put together a similar package for half as much, that would still be a substantial income. You only need a few customers per month, and you would have as much money as you would need.

One caveat here: you can’t be “okay” as a photographer – you have to be pretty good. Even if you’re charging a much lower rate than professional photographers, it’s important to realize that you are capturing special moments. People will be less forgiving if you are unable to do this in a professional way. Still, if you have that ability, this can be one of most lucrative part-time businesses a college student could have.

If you are a college student, have you tried any of the business ideas above? Do you know of others that can also work? Leave a comment!

7 Ways to Advertise Your Business on a Shoestring

new businessVery few businesses can run strictly on referral business. In fact, if you have a startup business, there will be no referral business at all. Since most businesses need to advertise on an ongoing basis, how can you advertise your business on a shoestring?

1. Build your own website.

Having your own website is a virtual necessity for just about any business today. Even if people don’t find you through your website, they will commonly ask the question, “Can I check out your website?” If the answer to that question is anything other than yes it is highly likely that the prospect will go elsewhere.

At a minimum, a website is a source of credibility. Many businesses today no longer have a physical location that a customer can come to and check out. That makes having a website more important than ever.

The website is also a source of advertising. And since you need a website just as a matter of being in business, you can think of the advertising side as being a free add-on benefit.

Coded with the proper keywords, in combination with sufficient back-links from other credible websites, your website can draw a steady stream of potential customers.

It typically costs only a few hundred dollars per year to create and maintain a website, but this is one of the least expensive ways that you can advertise your business. And since it also acts as a touch point for your business, it will serve a dual purpose.

2. Add a business signature to your emails.

You probably send out dozens of emails each day. That makes this a potentially rich advertising source. You should have a business signature that automatically appears on any outgoing email, even those not related to business. The business signature simply lets the reader know that you are in business, complete with all the necessary contact information.

This is a way of advertising your services to people who you are in contact with on a regular basis. Think of it as a 21st Century equivalent of handing out business cards to everyone you meet. You’re contacting these people anyway through your emails, you may as well let them know that you’re in business. And doing so is completely free.

3. Try magnetic car signs.

Do you ever see those custom-designed vehicles that advertise a business? Think of the Oscar Meyer Weiner wagon. You don’t have to go to that extreme, but you can get a pair of inexpensive magnetic car signs to put on each side of your car. For about hundred dollars you could have a pair made up in a local print shop, such as Kinko’s.

In the course of a typical day, your car – and the attached magnetic signs – will be seen by literally hundreds of people. Though that may not bring in a flood of business, it will alert anyone out there who has a particular need for your product or service that you can help. This is an inexpensive way to reach a large number of people with your business message.

4. Pin ads to local bulletin boards.

If you are an upstart business, you should develop a professional looking flyer, and place it in as many locations as you can. Depending upon what type of business you have, you may want to post flyers in churches, grocery stores, laundromats, apartment complexes, college campuses, and any place else that will allow you to do so.

This is an inexpensive way to reach a large number of people on a daily basis. It is especially important to conduct advertising campaigns such as this since the majority people no longer read the local newspaper. And it will cost you no more than paper and printing costs, and gasoline needed to get you from one location to another.

5. Put your friends on commission.

This is one of the most effective ways to have “employees” without having ongoing payroll. Simply offer your friends either a percentage or flat amount as a referral fee for any customers or clients who they send your way. You might pay a friend a commission of $50 for a client who is worth $1,000 in revenue to your business. And since you are paying your friends, they’ll have all the incentive they need to sell you to people they meet.

Just be careful that in some businesses paying referral fees, commissions, bonuses, or compensation by any other name might be prohibited. For example, if you are in the mortgage business operating in most states in the country, such payments are illegal. Be sure there are no such restrictions in regards to your business.

6. Send periodic email blasts to your email contacts.

You probably have a fairly large email contact list, and it can be a valuable asset if you are trying to advertise your business. Though you probably don’t want to be sending ad material to your contact list too frequently, a periodic blast – say once every two or three months – probably won’t be too intrusive.

You don’t have to be too formal or even professional about this. All you need to do is send out a general email asking your contacts, “Who do you know who might need my services?” Sometimes the best marketing contacts you have are the ones in your own social circle. This is a way of letting people in that circle know that you’re in business, and to please refer anyone they know who may need your services.

7. Advertise on Craigslist.

To some people, Craigslist.org has a negative connotation. Just about everyone has a “Craigslist war story,” but that doesn’t mean you should ignore it as an advertising source if you have a business.

With the decline of local newspapers, we are also experiencing the disappearance of classified ads in the print media. Craigslist has become the primary worldwide cyber classifieds, and it is well worth looking into. Advertising on Craigslist is free, and any advertising source that is that large and is also free is one that should be considered on instinct.

It is Craigslist’s popularity that is also the source of some of the bad stories we hear. Anything that large and successful will have its share of scam operators. The majority of people advertising there are on the up and up – and you can be one of them. It’s a way of reaching customers and clients that you will not reach in any other way.

You can pay more for advertising – you can pay as much as you want – but if your business is new or struggling, any of the options above will be well worth considering. At least until you reach the point when you can pay big dollars for big advertising.

What ways will you start advertising your business?

Why You Shouldn’t Lend Money to Family or Friends

lend moneyProbably every one of us – at one time or another – have been confronted with a decision of whether or not to lend money to family or friends. Though I have never seen a survey confirming this, I have a strong suspicion that most people who have gone ahead and made the loan saw it come to an unhappy end.

The time-worn warning has always been never do business with family or friends. That’s probably been one of the most bankable “old sayings” ever to make the rounds. The problem is compounded now by the fact that so many people are struggling financially and, due to tighter lending restrictions, they are unable to get traditional bank loans.

If you are confronted with the decision to lend money to family or friends, be aware of the unique potential problems that are involved, and – more importantly – how to avoid them.

1. The terms are usually too soft or non-existant.

This is one of the biggest snags when making loans to family or friends. The loan is typically based on nothing more substantial than a handshake or a “gentleman’s agreement.” Not only does this open the floodgates to misunderstanding, but it also provides no basis to seek legal remedy in the event of nonpayment.

As much as we may find it distasteful, there are very solid reasons why bank loan agreements come with so many specific provisions and so much “legalese.” It’s all to protect the bank.

If you are going to make a loan to a friend or family member, you need to do much the same. You probably can find standard form loan agreements somewhere online, or even at a business supply store. It would be well worth investing a few dollars in using one of these forms to frame out your loan agreement.

If the person you are loaning money to objects to the terms – or to the whole use of a written agreement itself – you can probably take this as a sign that the loan is heading for trouble. Better to find that out before transferring the funds!

2. You might become the collection agent.

Both you and your borrower friend will be all smiles the day you make the loan. But in the event that repayment comes slowly or not at all, you’ll be put into the very uncomfortable position of having to ask for the agreed-upon payments. Not only will you feel stress in asking for the money, but the friend or family member you loaned money to could become overly defensive at your approaches.

Having a written loan agreement will help by spelling out the terms of the expected repayment. In addition, it may be helpful if you emphasize – over and above the written agreement – why you need to have the payments when due. You must be unequivocal on this point! Even so, this will not prevent late or non-payments as a result of the borrower’s inability to pay, but it will make clear that repayment is expected, and expected at regularly scheduled intervals.

3. Your relationships might dissolve.

Anytime you make a loan to family or friends you have to be fully prepared for the possibility that the money may never be repaid, and that can be a real relationship killer. This is a risk that you take any time you lend money to family or friends.

But there are three ways that you may avoid this outcome – not the unpaid loan, but the ruined relationship:

  1. When you make a loan to a family member or friend, be prepared to convert the loan to a gift. That will cement the fact that you will not be repaid, but if it will save the relationship, it may be well worth doing.
  2. This is a corollary to the first point – never lend money to family or friends that you are not fully prepared to part with forever. This will keep you in a financial position to forgive the debt if need be.
  3. Only lend money to a family member or friend if it will solve a clearly identifiable and temporary problem.

The third point needs more explanation. If you are going to lend money to family or friends to cover an unexpected medical bill, this is probably an acceptable reason to make a loan. The bill is a one-time event, and won’t create a series of obligations that will keep the person in perpetual financial distress.

But if the person asks for money to make the mortgage payment on a house that they cannot truly afford to keep, the loan will be a classic case of throwing good money after bad. Your loan may keep them in the house for another month, but eventually they will lose the house for the very same reason they needed to borrow money from you in the first place.

The purpose of the loan does matter, and you should feel free to decline the request if you are not satisfied with the reason, or don’t believe that will truly fix anything in their lives.

4. You might need the money before it is paid back.

No matter how much you want to help someone else, you have to consider the impact that making the loan will have on your own financial position. If the loan – and the failure to obtain repayment – will put you into financial distress, you will eventually need to borrow money from someone else. You’re not helping a loved one if by doing so you’ll be putting your own situation in jeopardy.

It’s worth reemphasizing that you should never loan money to family or friends that you cannot afford to lose yourself.

5. You could be opening the door to more loans in the future.

I think that it was Ann Landers who first said, “No good deed ever goes unpunished.” While I admit that I’m not entirely comfortable with that whole philosophy, it is also a self-evident truth when it comes to loaning money to family and friends.

Make a loan to a family member or friend, and there’s one thing you can guarantee: either that person – or someone they know – will come to you in the future for yet another loan.

In your circle, you may even come to be viewed as “the one with the money.” The very fact you can make a loan to another person will confirm this fact to other people.

Unless you are fully willing and able to make additional loans, the best way to avoid this fate is by pledging the borrower to absolute secrecy about your loan arrangement. Feel free to tell them the reason why you don’t want to disclose it to others. You can also explain that you are unwilling to make future loans – to them or anyone else.

Just because you’re making a loan once doesn’t mean you’re going into the banking business! The borrower should fully understand this, and be willing to keep whole arrangement under wraps.

Have you made a loan to family or friends? How did it turn out?

How to Make Room in Your Schedule to Earn More Money

money and timeWe often think of making more money in terms of having money (i.e., you need money to make money), having certain skills, or having certain assets and equipment that can generate income. In truth, making more money typically has more to do with time, and how we use it. If you think that you want to make more money, you may need to make room in your schedule.

Life seems busier than ever, so how do you make room in your schedule to make more money?

1. Learn to say “no.”

One of the biggest reasons why we never seem to have enough time to do what it is we really want to do, is simply because we have too much going on. Often, that happens for the best reasons. The people in our lives – spouses, children, friends, extended family members, and coworkers – ask us to help them in some way.

Though there certainly are times when we need to be there to help, spending too much time helping others can rob us of the time we need to help ourselves. In many cases, we do things for other people that they could very easily do for themselves. Separating out when someone really needs us – as opposed to simply making things easier for them – is a skill we all need to learn.

In order to make room in your schedule to make more money it is crucial that you learn to say “no.” On the surface, this may seem somewhat insensitive. In truth, it is the only way to gain control of your time. Not only will saying no give you more time to work on what you need to, but once the people around you become accustomed to hearing you say it, they will also be less likely to ask you for help in the future. It’s a matter of disciplining yourself – as well as the people in your life.

2. Get up an hour earlier.

This recommendation has two benefits. First, getting up an hour earlier gives you one extra hour to do it you need to do. Second, it gets you up early in the day when most of us are most productive. While you may have to make it up by going to bed earlier at night, it is likely that that evening time is also “wind down time,” when you’re not terribly productive anyway.

You can use that extra hour in the morning either to work on what it is that will make you more money, or to take care of other tasks so that you will have more time to work on your new venture later in the day.

Is getting up early a sacrifice? Yes! But if you want to make more money, the only way to do it is by sacrifice. And once you get used to getting up earlier, it will become part of your routine and it won’t bother you nearly as much.

3. Turn off your TV.

According to the Bureau of Labor Statistics, the average adult watches TV for nearly three hours each day. Now even if you worked a part-time job at minimum wage for those three hours – instead of watching TV – you can earn about $22 extra each day. At five days per week, that would be extra $110, or more than $5,700 per year.

What if you have a side business or do contract work earning you several times minimum wage? You can do the math, so you can see that there are far more profitable things you can do with your time than watch TV. If you want to make more money, turning off your TV is the first step to making more room in your schedule.

4. Limit your web surfing.

20 years ago TV was the primary time drain for the average person. But today we also have the Internet. And just as it is with TV, you can spend several hours a day surfing the web for no productive purpose.

Since the web is a primary source of both communication and information, it’s not possible to stop surfing entirely. But it is extremely important that you discipline yourself to keep your surfing to a minimum.

Better yet, make web surfing part of your attempt to make more money. There are opportunities to make money on the web and they’re all over the place. Instead of surfing for sports information and popular news stories, instead research ways to make money on the web. That will be converting leisure time into productive time.

5. Never be a slave to your cell phone.

Being accessible on a 24/7 basis has its advantages – but it’s also a major distraction. And it’s not just the amount of time that you spend on the phone.

Every time you make a call or take a call, it breaks your concentration. Even if you’re working on something that is very important, taking a phone call in the middle of it could require anywhere from 10 minutes to a half an hour to re-engage yourself in the project at hand. That kind of interference is a productivity killer, and one that we cannot afford to engage in too frequently.

Practice doing what a lot of successful business people do – let your calls go to voicemail, and return them at your convenience. Unless a call is an obvious emergency, you don’t need to answer your phone simply because it is ringing.

6. Give priority to your effort to make more money.

Once you have cleared a few obstacles out of your schedule, it will now be a struggle with your self to keep you focused. That means that when you have the time that you need, you have to put it to productive use.

Since any time that you will clear for making money will be limited, it will be important that the time will be spent on the most productive activities. If selling, writing, or designing are the activities that bring in the money, then that is where you will have to spend your time.

Plan to hit the ground running as soon as you begin working. That will mean that you’ll have to have an agenda prepared before you start working, such as during the course of the day (or during the hour you create by getting up earlier). And when you start working, you have to block out distractions and use the extra time strictly for the purpose it was created.

Do you want to make more money, but find yourself struggling to make room in your schedule to do it?

How to Cut College Costs With Community College

community collegeThe cost of attending college has exploded in recent years, and so has the level of student loan debt being used to pay for it. On top of that, graduates are learning the hard way that not all college degrees are equal. While jobs are plentiful for certain majors, they’re close to nonexistent for others.

There is no question that you are likely to earn more money over a lifetime with a college degree than without one. But it is equally clear that the cost/benefit ratio is not nearly as lucrative as it once was. There is no way to predict the job market, but you can control how much money you invest in your education. One way of cutting college costs is by attending community college – at least for the first two years of your education.

Why should you consider attending a community college?

Keeping Costs Low During the First Two Years of College

Attending a four-year college typically costs $20,000 to $60,000 per year. Taking an average of $40,000, that will be $160,000 over four years.

Community colleges typically cost anywhere from $5,000 to $15,000 per year. Taking an average of $10,000, that’ll be $20,000 for attending a community college for two years.

If you spend your freshman and sophomore years at a community college, at a cost of $20,000 – then complete your junior and senior years at a typical four-year school at $80,000 ($40,000 per year) – the total cost of your college education will come to $100,000.

That’s still a lot of money, but it’s $60,000 less than if you were to spend the entire four years at a four-year school! That would leave $60,000 less in potential student loan debt.

You would still earn a degree from a four-year school, but you would do so at far less expense and equally less debt.

Having a Degree to Trade After Just Two Years

For a moment, consider the fact that you may not be able to complete a four-year degree. It could be because your motivation crashes, you and your family run out of money, or any one of a number of other reasons. Should you drop out of a four-year school after just two years, you will have little to show for your effort. After all, four-year colleges don’t give out partial degrees.

But let’s say that you attend a two-year college and decide two years is all you can stand. You will likely graduate with an Associates degree. Your two-year education will be completed, and you’ll come out with a degree in whatever it was you studied. At that point, you may decide to take some time off to earn some money, gain some hands-on experience, or just to get your head together.

And there’s some good news on this front. There are certain careers that you can enter with just a two-year degree and make some decent money. Those careers include nursing, paralegal, and certain computer fields, including computer programming.

Your education does not have to stop upon completing community college, but you’ll have more options two years in than you will at a four-year school.

Experience is Increasingly Weighing More Heavily than Education

Up until a few years ago, a college degree was generally all that you needed in order to qualify for an entry-level career type position. Unfortunately, that is no longer the case. Employers are increasingly looking for specific hands-on experience, in addition to your education.

If you can get a job with a two-year degree, and then combine that work experience with completing your four-year degree afterward, your chances of landing a well-paying job upon graduation will be considerably better. That might involve some form of blending work with school, but it will give you far more options than you would have as a debt-laden graduate of a four-year school with no work experience whatsoever.

Not Everyone is Ready for University Life at 18

A lot of people start college but never finish. Some only complete a semester or two during their freshman year, and then drop out. For whatever reason, they are unable to handle college life, or perhaps being away from home. But with the cost of college today, a single year could cost $40,000. If that is the end of your education, that could leave you with high debts and no tradable degree.

By contrast, if you drop out of school after your freshman year – while attending community college – the total cost will be something around $10,000. Even if you paid for that with student loans, that kind of debt is far more manageable than $40,000.

Once again, community college gives you greater options – in this case, the ability to make a mistake without indenturing you for the rest of your life.

Staying Out of Debt

We’ve touched a good bit on student loan debt already, but since college and student loans are practically synonymous today, it’s worth a more specific discussion.

A recent survey of the college graduating class of 2013 revealed that while the average amount of student loan debt owed is $26,000, the total amount owed is actually $35,200. That includes credit card debt and other loans, over and above student loans.

Even if you land a job paying $50,000 per year upon graduation, $35,000+ in unsecured debt is a lot of money to pay back. And that debt level is an average number across millions of students. Many owe $50,000 or more, and more than a few owe in excess of $100,000.

No matter how optimistic you are about your career prospects upon graduation, that is a serious level of debt to have early in life. As a college student today, particularly if you and your family are middle-class, you should accept compromises in your education in order to keep the debt level to a minimum. Attending community college for the first two years of your education is one very big way to do that.

Have you or your children attended community college? Would you recommend it to others?

How to Make Room in Your Budget to Knock Out Debt

budgetBecause most of your regular income goes to paying for living expenses, there’s often no room in your budget to pay off debt. At least that’s the way appears on the surface. Most of us can cut or eliminate various expenses that will provide the ability to pay off debt.

When you actually take a close look at how and where you spend your money, it can often become obvious that there’s room to cut.

1. Put an immediate stop to all discretionary spending.

There isn’t much you can do about your basic fixed expenses, such as your house payment, car payments, insurance premiums or even many utility bills. That forces you to focus on the spending areas that often give us the most pleasure. While we may not like cutting those either, they can be a major source of extra budget space to pay off debt.

Eating out is often a rich source of savings. It has become so normal to eat out – workday lunches, gatherings with friends, or even when you don’t feel like cooking – that we may not realize that we have an option not to do it.

There are also certain recreational habits that we have, such as going to the movies and other pastimes. This isn’t a pastime you have to give up for the rest of your life, but you do have to reduce or eliminate them until you get the upper hand on your debt.

2. If you don’t absolutely need it, get rid of it.

Most of us live with a certain amount excess, even if we don’t see it. But if you are serious about paying off debt, you need to eliminate or reduce anything that you don’t absolutely need:

Cable TV

One of the big problems with cable TV is that you pay for 200 channels even if you only watch 15 or 20 of them. Can you reduce the number of channels? Can you use alternative services? Could you do without TV for a few months to help you pay debt?

Cell Phone “Bells and Whistles”

Cell phones are great, but they come with a lot of costly bells and whistles. For example, do you really need Internet access on your phone? Do you really need unlimited texting? Unless you need these services for business, they may be luxuries more than necessities.

Subscriptions and Memberships

Do you maintain a gym membership for a gym that you no longer attend? Do you subscribe to magazines that you don’t read? Do you have memberships in organizations that you don’t even participate in? If you need pay off debt, get rid of them all.

Sell Your Stuff

Look around your house – do you have items that you no longer need and can sell for money? This is an easy way to find extra money to pay off debt. If you haven’t used the item in at least a year, it should be a candidate for sale. This includes cars that are not entirely necessary, boats and even vacation homes.

If this sounds like a lot of sacrifice, just keep in mind that a lot of extraneous spending is done in an effort to deal with stress. But if you concentrate your resources on paying off your debt, you will be removing a major source of stress. Once that stress is gone, you may not need all of the extras that you are now spending money on.

3. Stay away from your TV.

If you want to make room in your budget to knock out debt, you must eliminate or seriously reduce the amount of time you spend watching TV. In part, this will free up your time to find ways to make extra money (next section). But just as important, TV is primarily a marketing tool, that is designed to get us to buy products and services. The more time you spend watching TV, the more you’ll be driven to consume.

You can save money simply by turning off your TV and doing something else. Speaking of which . . . .

4. Use your spare time to make extra money.

If you need to get out of debt, you may also need to increase your income. Blending spending cuts with increased income is the most effective way to supercharge your debt payoff.

Consider getting a part-time job or working overtime on your main job. If you have special skills, start your own side business or even offer yourself out on a contract basis. You can probably make a lot more money with either of these approaches, rather than with a part-time job. And it can often turn into a lucrative side business that will enable you to pay off your debts even faster, and then to begin building up savings.

If you need to pay off debt, you should think less about leisure time and more about productive time.

5. Stop funding your retirement plan.

Financial advisors often recoil at this recommendation, but if you are deep in debt it’s a perfectly reasonable strategy. End your 401(k) contributions until your debts are paid, but be sure that you redirect the extra take-home pay into paying off your debts. Once they are paid, you can resume your contributions. This is far better than withdrawing money from your account (incurring tax liabilities) or taking a loan against it (replacing debt with debt).

6. No vacations until your debts are under control.

To many people, an annual vacation has become an expected part of life. But if you have substantial debt, you should let go of that notion until your debts are paid. Even a fairly simple week long beach vacation can cost several thousand dollars. That kind of money would be better spent paying down your debt and relieving long-term financial stress.

7. Cut your grocery bill to the bone.

It almost seems tiring to suggest cutting your grocery bill to pay off debt. But since grocery shopping is probably the largest single discretionary expense in your budget, it is one you have to focus on reducing if you want to get out of debt. Try the following suggestions:

  • Meat is expensive – cut down to eating it 3-4 times per week instead of seven.
  • Do at least some shopping at food warehouses (Costco and Sams), try Aldi (milk $2.49 a gallon), and even a dollar store (where the same bread at a grocery store at $3.29 goes for just $1).
  • Use coupons to the greatest extent possible.
  • Buy bulk items on sale.
  • Store brands are cheaper than name brands and many are just as good.
  • Make fewer, larger shopping trips so you can avoid running out for a few items every few days (you spend more doing that).

Remember, you don’t have to do any of these forever – but just until you get your debts under control. Think of it as going on a diet until you lose as much weight as you need to.

Do you need to pay off debt? How are you going to make room in your budget? Leave a comment!

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