It’s unfortunate but true, that out of all the things that college teaches you, winning money habits are not among them. If you are a recent college graduate, it’s almost certain that you’ll have to learn money management for the first time in your life.
Sure, you learned a few things about money during your school years – mostly living without it. But it’s a big difference when you have a paycheck that needs to be allocated, and all kinds of expenses pulling at you from all different directions. It can be confusing, and if handled incorrectly, it can set you up for poor money habits later in life.
If you are a recent college graduate, what can you do to adopt winning money habits now? Here are some excellent ideas.
1. Embrace a low-cost lifestyle.
You undoubtedly learned the art of living on less while you were in school, but now is no time to abandon that strategy.
Many college students – thoroughly tired of living on a shoestring – begin spending money with reckless abandon upon landing their first full-time job. This is a mistake, not only because it can cause you to spend money you don’t have, but also because it can cause you to increase your expectations in life. High expectations cost a lot of money!
The most basic strategy for financial success in life is to spend less than you earn, and invest the difference. Over time, that strategy is almost guaranteed to make you rich. But in order to get there, you have to keep your expenses low.
Live in the least expensive housing you can, drive the cheapest car possible, learn to cook and eat your meals at home, and do whatever it takes to avoid spending sprees.
2. Don’t borrow.
If you are a recent college graduate, it’s very likely to you are already carrying a significant amount of debt in the form of student loans and even credit cards. It should go without saying that you should have a workable plan and the tools you need to pay those off as soon as possible.
But beyond paying off school-related debt, it is essential that you avoid replacing it with new debt. The less debt you have, the lower your cost of living will be, and the more money that you will have to save and invest.
3. Build an emergency fund.
No matter what challenges you are facing in life – financial or otherwise – they will always be easier to handle when you have a few thousand dollars sitting in the bank. This is one of the primary purposes of living a low-cost lifestyle and not borrowing money. You want to make sure that there’s room in your budget to build your savings on a steady basis.
An emergency fund will not only protect you from unexpected expenses, but it will also be a ready cash reserve in the event you lose your job. Never underestimate this possibility, no matter how secure you may feel in your job at the moment. An unemployment check, supplemented by extra money drawn from an emergency fund, can carry you through a period of unemployment. But you have to have the money saved up in order for that to happen.
4. Start saving for retirement – even if it’s just a little bit.
On the surface, it can seem almost absurd start saving for retirement when you’re in your 20s. But as any retirement projection will show, the sooner in life you begin saving money, the more money that you will accumulate – and the sooner you will be able to retire.
There’s another important reason why you want to begin saving for retirement now. You need to establish the retirement savings habit now, so that it will be a regular part of your routine going forward. The more money that you save early in life, the more options that you will have later on.
Don’t fret if you don’t have a lot of money to save – after all, you have other obligations right now, such as paying off school debts and building up emergency savings. But even saving $100 or $200 per month for retirement will start making a difference in just a few years, especially if you have an employer match in your company savings plan.
No amount of money is too small to save on a regular basis. As time goes by, you can begin to increase your contributions as your financial situation improves. But that will only happen if you make saving for retirement a habit, and the time to do that is now.
5. Buy second-hand whenever possible.
There’s no doubt about it, college graduates have a lot of needs upon entering the adult world. There is a car to buy, and apartment to furnish, clothing, and even business equipment that you’ll need. All that will cost money – but you can make sure that doesn’t cost so much. Buying secondhand will be your best friend.
Start by buying a used car. Ideally, your car should cost no more than what you can pay without taking a loan. And if you have student loan debts to pay, the last thing you need to be doing is adding a car payment to the mix. Buy the best car that you can with the cash you have available, then plan on trading up every couple of years as your income and savings grow.
The same is true of home furnishings. Sure, we all like to have new stuff, but when you’re on a budget you have to make sacrifices. You can generally buy secondhand furniture for pennies on the dollar. And you should – after all, furniture is quite possibly the worst “investment” you can make.
Buy secondhand wherever you can – clothing, entertainment equipment, and maybe even a used computer if you can find a good one. You can save thousands of dollars this way, and that will also help you to avoid the temptation to use your credit card.
It’s important to remember – especially when you graduate school – that this is a time to build habits, good habits! That’s critically important when it comes to finances. The habits and patterns you develop now will be with you for the rest of your life. See them for the long-term choices that they truly are.
What are some other winning money habits you think you should put in place? Leave a comment!
One of the things that was driven home while I attended the Financial Blogger Conference recently was the importance of developing your own brand. This doesn’t even have to apply only to those who have their own businesses. Even as you work to climb the career ladder you still need to manage yourself as a brand.
Your Smiling Face
Among the first lessons taught at FinCon was in the opening keynote by Pat Flynn. He talked about first impressions. The way you impress others with your personal branding can make a big difference later. Whether you are looking for business clients, or whether you are trying to climb the corporate ladder, you need to consider how you want to present yourself. Because you will become a brand that others recognize.
Pat also talked about the importance of connecting your smiling face with your brand. He talked specifically about including your image on a blog to provide that connection with others, but the idea is transferable. When people see your face, what do you want them to think? Are you competent? Are you capable? What do you stand for? Can you be trusted?
These are all things that you need to think about as you reach out to others in all aspects of your career.
The Importance of You as a Brand
In the past, many workers held between one and three jobs. Workers didn’t change careers very often. You could expect to work at a single company for most of your life. You might move up the ladder, but, really, your personal brand didn’t matter as much. In the past, you just had to get the job and you were pretty much set for life.
Now, though, it’s common for people to hold down more than seven jobs throughout their careers. And with the job market somewhat uncertain, many workers are branching out and starting their own businesses. In the past, the company you worked for was part of your identity. Now, with so much career switching, that sort of identification doesn’t exactly work. You’d have to change your identity every few years!
Instead, work on branding yourself. Being able to identify yourself with a certain skill set can be helpful as you look for new jobs, advance your career, and even as you strike out on your own. Rather than just borrowing the values and attributes of your employer, you need to develop your own branding.
Thanks to social media, this is possible. You can create a brand around your own personal abilities. This makes it possible for you to separate yourself from your current employer and define yourself as someone who might be attractive to many different employers – or even clients (if you decide to start your own business).
Think about who you want to be, and how you want to present yourself. You want to be genuine, but you also want to make sure that you are careful about your image. In today’s world, you truly are your own brand. You need to make sure you like your brand image.
How do you feel you’re managing your own personal brand? Leave a comment!
For most people, a car loan is the single biggest debt payment they make each month – right after the mortgage payment. But what if you could put an end to car loans forever? How much would that improve your household budget, and your financial situation overall?
With the high cost cars today, is that even possible? Yes! And here’s how you can do it.
1. Start by buying no more car than you can afford with cash.
Most people handle the car buying decision completely backward. They start with a certain model and price range in mind, and go from there. Those parameters are usually dominated by emotional factors and preferences – not finances. As a result, you buy more car than you can actually afford and you end up with a loan.
That puts you on the new car loan treadmill – you take a loan to buy a car, and as soon as the loan is paid off you buy another new car. The result?
Perpetual car loans!
The best way to prevent that outcome is to not get on the treadmill in the first place. Buy a car that you can purchase for no more than the amount of cash you have available to pay for it. If that means a $2,000 “beater,” then that’s what it means. But it also means that you will have no car loan.
Sure, it may cost you anywhere from $1,000-$2,000 in annual repair bills to keep an old car running, but compare that to the $5,000-$6,000 that you’ll have pay to make monthly payments on a newer car.
Buy an inexpensive car for cash, save your money, and as your savings grow, you can trade up on the car you have – without ever having a loan on it. And my guess is that paying those repair bills won’t feel nearly as bad when your bank account is full.
2. Consider appropriate steps for your current car loan.
Obviously if you already have a car with a loan attached to it, it won’t be practical to sell it to buy a less expensive car – unless of course your back is up against the wall, financially speaking. If it is, then you’ll have to do whatever it is you need to do.
But if you do have a loan on your car right now, the best thing to do is to simply pay it off. One of the biggest advantages of car loans is that they have a limited term, generally anywhere from two years to six years in length. That means that if you do nothing else but make the payments on time every month, eventually the loan will go away. But if you want pay it off early, you can always make additional principal payments just as you would with any other type of loan.
The idea is to pay the car off once and for all, and to vow never to borrow for a car again.
3. Keep your car until you run it into the ground.
Once your car is finally paid for – or even if the last car that you bought was a beater – drive it until it can’t run anymore.
No matter what we think about older cars, the truth of the matter is they will usually continue to run for long as you’re willing to fix them. That means you can keep an older car going quite a long time after most would get rid of it.
That will set you up nicely for the ultimate strategy that will enable you to buy a car – any car that you like – and to buy it without using a loan.
4. Pretend you have a monthly payment, but put the money in the bank.
So what’s the purpose of driving a car for years without having a payment?
Simple. While you are driving the car without a loan, pretend that you actually have a payment to make – but make it to yourself.
Let’s say that you’re paying $400 per month on your car, but you just made the last payment and paid off the loan. Since you’re in the habit of paying $400 per month, direct the money into a dedicated savings account. That account should be specifically earmarked for the purchase of your next car.
Rather than making the payment toward a car that you bought in the past, you’ll instead pay yourself for the next car that you will buy. You’ll turn the whole car buying arrangement around completely.
If you follow this policy religiously, you’ll eventually be able to buy any car that you want – and own it free and clear. You won’t have a car payment tearing into your budget every month, and more important – you’ll be keeping yourself ahead of the game by saving up money for the next car you buy.
Follow that strategy, and you’ll be putting an end to car loans forever.
Do you have a car loan? When are you planning on getting rid of it? What could you do with all that extra money? Leave a comment!
Do you try to go the do-it-yourself route when it comes to buying insurance? Some people do, thinking that they can get a better deal. But whether you are buying life, health, auto, homeowners, or any other type of insurance, you’re generally better off buying through a broker or agent than going it alone.
For the record, I’m not in the insurance business, nor do I represent anyone who is. This is just one of those little facts in life that I’ve become aware of though the school hard knocks. It’s well worth passing on to others.
3 Reasons Some People Don’t Use Brokers or Agents
People sometimes feel that they will be dealing with certain disadvantages when working with a broker or agent. Some of the areas of concern include:
1. They think the cost might be higher.
The general assumption is that you will pay more for an insurance policy since the broker or agent works on commission. It’s often believed that the broker or agent’s commission will be added on top of the cost of the policy, resulting in higher annual premiums.
2. They think they might be steered into policies that are in the agent or broker’s best interest, not theirs.
There is also the widespread belief that agents and brokers will steer customers into policies that they themselves prefer. The reason for the preference could be the possibility that the broker or agent will want to place your policy with a company that pays the highest commission, rather than the best policy for you.
3. They think they might have to deal with a hard sell.
Most of us would probably rather go to the dentist for a cleaning then spend an hour alone with the salesperson. We don’t like the hard-sell treatment when we’re trying to make important financial decisions. It can make us nervous, and cause us to make decisions that we wouldn’t otherwise. And in fact, some people feel just plain intimidated by strong sales pitches.
While there could be some truth in each of these concerns, most often our fears are exaggerated. There are solid reasons why you should prefer working with a broker or agent any time you buy insurance of any kind.
You Don’t Pay Extra Using a Broker or Agent
Surprise! Generally speaking, you’ll pay no more for an insurance policy that you buy through a broker or agent than you will for one that you obtain on your own.
Insurance brokers and agents work on much the same basis that travel agents do (or at least did, when there were more travel agents around). Much like airlines, hotels, and car rental companies working with travel agents, insurance companies make their products available to brokers and agents on a discounted basis.
The same policy that you might buy for $1,000 per year, can be had through a broker or agent for the same price. As an inducement to attract business from brokers or agents, an insurance company will make their products available to them at a lower price. The insurance company will accept the policy from the broker or agent at the same premium rate you would pay anyway, but they might pay a 15% to 20% premium to the broker out of the proceeds.
It works such that you will pay no more by using a broker or agent than you would if you purchase the policy directly from the insurance company yourself.
There is a big reason why you should happily accept that the broker or agent is being paid a commission on your policy too . . . .
The Broker Knows the Business Better than You Do
Unless you work in the insurance industry yourself, a broker or agent knows the business much better than you do. That’s important since insurance policies are far more complicated than most of us understand. This is especially true when it comes to health insurance, auto insurance, and virtually any type of business insurance.
You can simply explain to the broker or agent what kind of coverage that you want, and it will be their job to find the type of policy you want at a price you can afford. They may even tell you that such a policy is not available, which will save you a lot of time and money shopping around.
You’ll Likely Pay Less Using a Broker
Given that agents and brokers work on commission, it seems like a contradiction in terms that you would pay less for an insurance policy by using one them instead of doing it yourself. But that is actually more likely true than not.
Because brokers and agents know the business, they also know where the better-priced policies are. At any given point in time, there’ll be some insurance companies who will be particularly aggressive in an attempt to increase business – and others who are looking to reduce their exposure. The broker will know who the aggressive companies are, and you may save money on your policy as a result.
The important distinction is making sure that the broker or agent is independent and not a representative of a single company. They should be working with dozens of different insurance companies, to make sure you get both the best price and terms.
A Broker or Agent Can Deal With the Insurance Company Regarding a Claim
Still another advantage is that a broker or agent can be your contact person going forward. The broker or agent speaks “the language” of the insurance industry, which is something that the rest of us don’t. It can be a huge advantage going forward, particularly if there any issues in the future. The broker can intervene on your behalf, and either improve the situation or move you to a different policy.
When you need to buy insurance, do you seek out a broker or agent? Or do you prefer to do it yourself? Leave a comment!
We can all agree that paying off debt – any debt – is a good thing. But specific tactics for paying off debt are usually open to debate. There are various debt payoff strategies, such as the debt snowball, that simply have you paying off the smallest debt first, then working your way up.
The complication is that not all debts are created equal. Some debts are more threatening than others, while paying other debts can lead to quicker improvement in your financial situation. That’s often the case with car loans and credit cards. So which do you pay off first?
The Advantages of Paying Off Credit Cards First
On the surface, paying off credit cards first seems to be the default choice, and there plenty of reasons for this.
1. Credit cards usually have higher interest rates.
While car loans typically have low single-digit fixed rates, credit card rates can run well into double digits. That would seem to make credit cards the natural first choice.
2. Credit cards are variable rate loans.
Car loans are fixed rate, while credit cards are variable. Even if you start with a low single-digit rate – even zero interest – the variable factor means that there is plenty of room for rates to go toward the upside. Credit cards are something of an interest rate ticking time bomb!
3. The revolving nature of credit cards.
Another factor with car loans is the term. Even if it runs as long as six years, it’s still certain that the loan will be completely paid off within that timeframe. Credit cards on the other hand are revolving arrangements that can keep you owing money on them for many years, particularly if you only make minimum payments.
4. Credit cards can be annoying!
Few other credit arrangements so raise our “debt awareness” as credit cards. There is a term in the lending industry: Once a Visa, always a Visa – and it brings the point home. Credit cards seem to hang around, even as other fixed-term loans are long gone. If you have multiple debts, it will be natural to want to knock out as many credit cards as possible.
The Advantages of Paying Off Your Car Loan First
Despite the usual reasons for wanting to pay off credit cards, there are equally compelling reasons for paying off car loans.
1. A car loan is probably your biggest single debt payment.
Next to your house payment, your car loan is probably your largest monthly payment. Paying off the loan and getting rid of the payment may be the single best step you can take to lower your overall debt. The money that you will save as a result of the nonexistent car payment can then be plowed into paying off credit cards, which will make that process go much quicker.
2. Payment-to-balance ratio is usually high with car loans.
Relative to the amount of the loan balance, a car payment is typically much higher than credit cards. For example, while you might pay $200 per month on a credit line with a $10,000 balance, the payment on a car loan with a similar balance can easily be $400 per month. Paying off your car loan can be the equivalent of paying off several credit cards – at least as far as the monthly payment is concerned.
3. It frees up a strategic asset.
For the vast majority of people, a car is a strategic asset in that it’s completely necessary in order for you to earn a living. This is true whether you commute to a job, or if you have a business that requires the use of your car. Owning the car free and clear eliminates the possibility of losing the car to creditors. And that’s important because the loss of the car could seriously impair your income, and not just your credit standing.
4. It will leave you in a better position to buy your next car.
You can never know when your car will break down and need to be replaced. But at least if you own the car free and clear, you’ll be in a better position to make a larger down payment on the next one. That will leave you in an improved future debt position! If your car is 100% financed, or worse, you’re upside down on the equity, you’ll have to scramble for cash to come up with the down payment. Owning the car free and clear will leave you ready for whatever may happen.
The Choice Depends on Personal Circumstances
Each of the advantages – whether they apply to paying off credit cards or your car loan first – will depend upon your own personal circumstances.
If the size of your car loan is larger than your combined credit card balances, paying off your car loan may have the greatest positive impact on your overall financial situation. Or, if you put a lot of mileage on your car, and replacement is more likely, paying it off will be a priority.
On the other hand, if your credit card balances are large and threatening to get out of control, it may be best to start with paying those first.
In a perfect world, we should concentrate on paying off all debts equally. But we’re not equally affected by all the loans that we have. That’s where a priority needs to be developed.
What’s your opinion? Which loan type would you prioritize for payoff, a car loan or credit cards? Are there any reasons you can think of that I haven’t cited here? Leave a comment!
Now that the use of credit cards and debit cards has become so universally accepted, we can often forget that paying cash offers certain benefits. Some merchants and businesses may provide a discount for cash for a variety of reasons that we don’t normally think of.
Though we often associate merchants accepting cash as being primarily a tax dodge, there are actually very tangible reasons why a business might do it – and even provide you with a discount to encourage you to pay cash.
Cash Eliminates Credit Card Fees
Credit cards and debit cards are quick and easy – no doubt about that. But from a business owner standpoint, they also charge fees. These fees are typically in the 2% to 3% range, but a merchant might offer a discount for cash simply because they are tired of paying fees to the bank.
From a psychological standpoint, accepting cash may be the merchant’s way of “sticking it to the banks.” It may enable them to feel less dependent upon banks for their living.
Cash Eliminates Chargebacks
When accepting credit cards, merchants have to be concerned about the potential for chargebacks by the customer. If you return an item that you paid cash for, you’ll have to dispute the transaction directly with the merchant. But if you go through the credit card company, they can initiate a chargeback against the merchant with very little input from the merchant. This is especially prevalent with service-type businesses.
When a business accepts credit cards, they can never be entirely certain that all of their sales will remain intact. A certain number will be charged back in any given month, and that will reduce profitability and the overall benefit of accepting credit cards.
The Merchant Doesn’t Have to Wait for Payment
Most businesses need payment yesterday! Accepting credit cards often involves a delay in receipt of income for several days or longer. If it accepts checks, it will have to wait for the checks to clear before accessing the money. As a result, the business may accept cash if for no other reason than it has immediate financial needs.
The advantage to cash is that it is both immediate and unconditional. The business owner can spend the money as soon as it is received. And if they deposit it in the bank, the access is immediate since there is no need to wait for funds to clear.
Certain Merchants are More Cash Dependent than Others
It’s without question that some businesses are more dependent on cash than others. A merchant may operate in a business environment that typically requires cash, rather than checks or credit cards. It could be a tradition of the business, or it could be more tangible reasons.
For example, if a business operates largely with immigrant labor, its employees may insist upon being paid in cash. This is often because the employees don’t have a banking relationship and would be forced to rely upon check-cashing services otherwise. The business owner may find it impossible to hire employees if they pay them in anything other than cash. Since payroll often consumes a significant percentage (and often the largest) of a businesses cash flow, the need for cold, hard cash may be particularly high.
Still another situation may involve the merchant’s personal financial situation. If they have financial problems – particularly credit issues – payments in cash may be especially welcome. The immediate nature of cash will make it easier to handle debt payments and other obligations.
Merchants that are Most Likely to Give a Cash Discount
For starters, let’s eliminate the businesses that are unlikely to provide cash discounts. These would include large chain operations and likely most franchise businesses as well. And obviously paying in cash would not garner any favor in paying tax bills, loan payments or utilities.
As to the businesses that are likely to welcome cash – and provide a discount – this would include any small, privately-owned businesses. This can include retail merchants, restaurants, repair services, housekeeping services, and even medical providers.
Though paying with cash has become much less conventional than it used to be, there are plenty of businesses that would be more than happy to provide a discount if you did.
How much of a discount should you expect? Some businesses may provide no discount at all, while others may offer discounts as high as 10% or 20%. It will all depend upon factors behind the scenes (as discussed above) that the businesses are dealing with.
Try offering cash in exchange for a discount for any payments you make to any privately-owned businesses. The worst they can say is “no,” but they may say “yes” – and then you’ll save some money.
Do you ever try to work out cash for a discount? Or are you strictly a credit/debit payer? Leave a comment!
It’s tough out there for job hunters. If you are looking for a new job, you need to make your resume stand out. And one way to do that is to include keywords. Not only can the right keywords on your resume cue a human resume reader to your fitness for a position, but they can also be helpful if some sort of digital filtering process is used.
Including keywords on your resume indicates that you understand the position and that you are qualified for it. If you want want to send the right impression to a potential employer, you need to include keywords.
Use Keywords that Reflect Your Skills
First of all, consider your skills. What are your strengths? What have you done in previous positions? As you ponder this information, remember to include any job titles, professional organization memberships, jargon, words used to describe certain job responsibilities, certifications and degrees, and types of services. If you know that you will need to show your proficiency with certain software programs, list what packages you can competently use. Consider other skills that you have, including soft skills that might prove useful.
Write down these words that describe you and keep them in mind. These are words that might match a job description!
Read Job Descriptions
Next, go through the job postings to find positions that suit your qualifications. You can look at old and new postings, and even postings that you don’t intend to apply for. You will likely notice that certain words are used over and over again in ads for similar positions. Note those keywords, since they are the likeliest candidates for inclusion on your resume.
You should also look at the specific job description that you plan to apply for. What skills, certifications, and past experience are required for the position? Make sure you use words that show how you fit well with that position. Your resume should include something that highlights all of the qualifications listed in the job description. Make a list of a few words that appear prominent and important in describing the qualifications of the successful candidate. Then, match up those with the words that describe you. Tweak if necessary to ensure that your skills fit the keywords that you plan to use but be honest!
Inserting the Keywords in Your Resume
Rather than simply listing duties and responsibilities, you should make an effort to show dynamism. This means using action verbs that show you doing something. Pair your keywords with an action verb. This shows that you have accomplished something solid. Simply sharing a responsibility isn’t nearly as interesting as showing what you’ve accomplished. Additionally, the old list format doesn’t really allow you to focus on keywords. Rework your resume so that each qualification starts out with an action word, and remember to add keywords that highlight your expertise.
Also, realize that you can include keywords in the headings for various sections, as well as in other areas. Don’t forget, too, to add keywords to your cover letter. With a little planning, you can identify the keywords that are most likely to be associated with a qualified candidate and tweak your resume so that you appear to be close to the ideal person for the position.
What keywords would you use to describe yourself and your abilities? Leave a comment!
This article was originally published September 28, 2012.
One of the great things about traveling for business is that what you spend, in many cases, is tax deductible. As I write this, I’m on my way to the Financial Blogger Conference (also called FinCon), where I will learn some new things, make a few business deals, and have a great time connecting with people I consider my friends.
It’s a great experience, in a city I’ve never been to, and some of the costs are offset by the fact that they are tax deductible.
What Business Travel Costs Can You Deduct?
Whether you are traveling for a conference, or traveling for some other reason, your business expenses are tax deductible. This means that you can reduce your income by the amount that you spend on your business trip. Here are some deductible expenses while you’re on a business trip:
- Rental car
- Ground transportation
- Dry cleaning
- Conference registration
- Mileage if you drive your own car
- A portion of your meals
- What you pay to entertain business associates or clients (double check though, since not everything is tax deductible)
- Internet access and other business services at your hotel or the conference center
You can ask a knowledgeable tax professional about what else might be tax deductible for your trip.
Getting the Most Out of a Business Travel Tax Deduction
You want to make sure that you are getting the most out of your ability to use business expense deductions, so it makes sense to keep good records. The IRS will want to see the records anyway. Keep all of your receipts. You can use an application like Shoeboxed to help you sort them. I just keep them in a folder at home, after entering them into my desktop personal finance software. I am able to mark business expenses, so during tax time I just get a report and use my receipts as backup.
You should keep other records as well. If you have a business lunch, and you want to deduct a portion of the meal’s cost, it can be a good idea to jot down notes about who you met with, and what you talked about. If you are driving your car, you want to properly record your mileage. Use odometer readings to help you.
Remember that a tax deduction is not a dollar-for-dollar reduction in the amount of your tax liability. Indeed, while you can offset some of the cost of your business trip, you are not traveling for free. Keep this in mind. Don’t go on a trip that you pay for unless you had planned on it, or unless you can see benefit in it. Your business trip should be something that you have planned on, and would take anyway.
Be aware that if you are on a business trip that your company reimburses you for, you can’t take the tax deduction. You can only deduct business travel expenses that you were not compensated for. I recently went to Houston as part of a book project I’m working on. Since the client paid all the costs, I can’t deduct the cost of the trip on my taxes (but he can).
As long as you are careful about your travel, and you are engaged in activities for your business, you can enjoy yourself and reap a tax benefit.
What are some other business tax deductions you can take? Leave a comment!
If you have debt, chances are that one of your financial goals is to get rid of it. Debt can be overwhelming, especially since you pay so much in interest that it reduces the effectiveness of your payments. As a result, it can become disheartening as you try to pay it all off.
A plan can help your efforts, though. When you have a plan to reduce your debt, you have a direction and a purpose. That can make a big difference. Map out what you want to accomplish, and as you follow your plan, you will see your debt begin to disappear.
Two approaches you can take to paying down your debt are the debt siege and the debt assault.
The Debt Siege
A siege is all about wearing down your opponent. It may take a little bit of time, but eventually, if you keep at it, you are likely to be victorious. The debt siege works the same way. You wear down your debt over time.
With the debt siege, you figure out how much money you can put toward paying down your debt, and then pay that money each month until your debt is gone. You will need to figure out how much money you can put toward your debts each month in order for this to work. Here are the steps to follow as you prepare for your debt siege:
- Look at your income.
- List your expenses.
- Figure out which expenses can be cut (hint: the average household wastes 10% to 15% of its income).
- Decide how much extra money is available to put toward your debt each month.
Once you know how much money you can put toward your debt every month, budget that in. This becomes a non-negotiable expense. You pay off your debt before you spend money on “fun” items. If you want to speed up the effectiveness of the debt siege, you can do so by looking for ways to earn more money with a side hustle, or through a part-time job.
The Debt Assault
If you think that the debt siege technique is going to take too long, you might consider the debt assault! This method of debt reduction involves taking a very aggressive approach toward paying down your debt and it requires more sacrifice up front.
In the debt assault, you decide when you want to have your debt paid off by. You choose a realistic date, based on how large your debt load is. You can even make a stretch goal if you want. There are stories of people who have paid of tens of thousands of dollars of debt in less than two years.
Once you figure out when you want your debt paid off by, it’s time to go to work on your goal. The debt assault requires that you do whatever it takes to reduce your debt in the specified amount of time. Sell most of your stuff (and maybe even your house). Get a second job. Cut out every unnecessary expenditures. Reuse as much as you can.
The debt assault can be one of the fastest ways to pay off debt because you pull no punches. You make paying down your debt top priority, and then sacrifice until you have no more debt. The process can be more painful – at first – than the gentler debt siege, but if you can stick with it for between one and three years, the results are amazing. Plus, the faster you pay off debt, the less you pay, over time, in interest.
Which Should You Choose?
Consider your situation and decide what method of debt reduction would work best for you. For many people, making a big change and attacking debt head on to get rid of it as soon as possible is preferable. In some cases (especially if you have children or other obligations) the debt assault in its most extreme form may not be practical. The debt siege is easier to handle, and doesn’t require major lifestyle adjustments. Either of these methods can be tweaked to fit your circumstances.
Which debt elimination method will you choose? Explain in the comments!
This article was originally published October 9th, 2012.
One of the advantages of having a real estate agent sell your home is that you have access to their expertise. In addition the agent is working on your behalf so that you don’t have to do as much with the nuts and bolts of selling your home. The biggest downside is the fact that you have to pay a commission.
Many real estate agents take a 5% to 6% commission on a home. On a $180,000 sale, 5% is $9,000 – that’s money not going into your pocket. Whether realtors are worth it is a topic we’ve discussed before and it really depends on your personal situation.
However, if you’ve decided not to use a real estate agent to sell your house, here are some things to consider.
1. Understand the market.
Research your area and understand the local market. Find out what comparable homes in your neighborhood are selling for. You can also ask a couple of real estate agents to come by and give you some analysis. If you are up front about your desire to sell the home on your own, some may pay you a visit. They want to leave a good impression just in case you get tired of trying to go it alone. Get a realistic idea of what you can expect for your home and try to avoid pricing it too high.
2. Advertise your home.
You can’t sell your home if no one knows it’s for sale. To spread the word, you’ll need to advertise your property.
You can do this with ads in the local classifieds, which can be quite reasonable. You can also list online with a service like For Sale By Owner. These cost anywhere between $200 and $1,000, depending on the service and what is included. Some sort of listing is a good idea, since it will make your home more searchable in databases used by real estate agents and buyers when they are looking for homes.
For the best exposure you can have your home included in the Multiple Listing Service (MLS) by agreeing to pay the commission of the buyer’s agent when your house sells. This is typically about 3% of the sale price – which is still a lot of money but better than 6%.
If you have some free time and want to be creative, you can take pictures of your home, and put them online on a website or blog of your own. Getting people to your site will be the trick but if you’re creative enough you might be able to draw attention from local media or local bloggers.
3. Know the paperwork.
Perhaps the most difficult portion of selling your home without a real estate agent is making sure that the paperwork is in order. You can get help on this from a trusted attorney, preferrably one with experience dealing in real estate.
The legal fees you’ll pay won’t be cheap but will be less than what you would pay in commission. You can do the paperwork yourself, but you need to make sure that you are in compliance with all the state and federal laws that apply. Take some time to educate yourself about these things before you begin.
4. Prepare to work hard.
Selling your home is hard work. Be prepared to show the home, negotiate, and keep it clean. You may need to stage your house or enhance its curb appeal. You also need to be ready to put in the hours necessary to educate yourself and properly advertise your home. If you are prepared, you can sell your home on your own – and save yourself the commission fee.
Are you thinking about selling your house on your own? What questions might you have? Leave a comment!
This article was originally published May 6th, 2011.