Choose Your Education Wisely

Tip # 192 - Choose Your Education Wisely. An education is never wasted, although the money you pay for it might be. When planning what education you are paying for in order to find a job, choose wisely. It always pays to have a degree, certificate, license, or knowledge from a field that is in demand in your area. One doesn’t need to be a doctor, lawyer, or accountant to make a good living, but having a qualified skill always makes sense. Learning something such as cutting hair, fixing transmissions, or being a dental hygienist can go a longer way than other educational pursuits that aren’t as specific. Some of these can even be gotten without shelling out big bucks for your education.

Perhaps you have a degree in sociology and can’t find a job? If there is a demand for teachers then you may be able to take a fast-track course load to certification to teach in your state. Or maybe you always dreamed of going to college to become a lawyer, but don’t have the time or money to do so now. How about looking into a paralegal certification? Jobs that require specific skills or knowledge are always in demand. If you don’t have those skills then look into what you can do to acquire them to enable you to get a good job.

Sure learning about Aristotle may be thought provoking or having knowledge of mid-eighteenth century artists may be interesting, but if this knowledge cannot translate into a good-paying job, it may not be worth it to you at a time when you are struggling to earn money. Concentrate instead on specific skills that can lead you to a career. You can always concentrate on your interests as a hobby. But in this economy, be realistic and learn a skill that is in demand.

In Real Life (IRL) – Throughout my childhood I always excelled in math. And I thought I wanted to be a math teacher when I grew up. However, I felt that I could do “more” or be in a more prestigious/higher-paying job. So when I went away to college I chose to major in business administration with a concentration in finance. The problem is, unless you have specific accounting skills, it is sometimes hard to break into a field that requires experience and business know-how or further certifications. I did get a decent entry-level job but it was in the life insurance industry, which wasn’t exactly my cup of tea (is it anybody’s?). So I went back to school for statistical research, hoping to land a job in educational research. And I did. However, it turned out to be more of a writing and training job rather than a statistical research one. And I’m afraid my knowledge of statistics is now buried in cobwebs behind my knowledge of how-to-snap-a-cloth diaper while talking to my daughter about her book report somewhere in my left brain. If and when I go back to the working world, I don’t feel confident to get a job in the area I studied.

That leaves me with looking at my skills set that an employer would want to hire me for, and feeding a baby while cooking dinner skills aside, I’m not sure I have any concrete ones that an employer would find attractive. And now I am wishing I went for that mathematics education degree after all. Teachers in our area are still in demand, especially math teachers. So now I am thinking that one day soon I may go back for one of those accelerated second-career-as-a-teacher-programs, which was probably what I should have done to begin with. My sister who has an advertising degree who went back for a special education degree and license; my brother who majored in accounting who is sitting for the CPA exam this year, and my husband who majored in communications but got his insurance license would probably agree with me. Specific skills are marketable. That’s where the jobs are.

Happy 1-Year Anniversary!

Happy 1-Year Anniversary! Today is officially one year since I began blogging. After reading homemaking and couponing blogs for about a year, I decided to take the plunge and start one myself geared to the bigger financial picture without getting too complicated. I believe that we should all learn to be good managers of our finances. And good financial habits start young. If one grows up observing good role models handling money well, then one is more likely to handle money well himself as he gets older. However, if one grew up with poor role models in that regard, then one will probably not be so lucky with his financial future. And that’s where more financial education is needed.

I was fortunate to have grown up with good financial role models. Because of that and an inherent interest in numbers and saving, I have been able to successfully put away a little bit of my income each year in order to reward me in the future. Sacrifices and smart money moves I made years ago have helped allow me to stay home with my children while they are young. Sacrifices we are making now will hopefully pave our way for paying fully for college education our children and providing us a stress-free retirement, financially. In this blog, I hope to be able to impart some basic financial knowledge to those who may not have yet learned how to handle their money. It really is the simple things that work: spending less than we have, saving for a rainy day, learning about general investment vehicles, and being aware of basic tax advantaged products.

Much of what I write about becomes somewhat repetitive over time, not just with others who write about finances, but with myself over time. Good financial rules bear repeating or being worded in other ways. Most of what I write about is based on what has worked for me, and what I have learned from managing my own money for twenty years. What I do may not be the best for everyone. But I try to write about good, basic money management methods that would apply to a broad spectrum of people. I appreciate all of the readers that I have so far. And I look forward to another year of writing about Saving Money In Real Life.

This weekend marks the observance of Yom Kippur, a Jewish Holy Day. I will be spending it with family and will be back next week with more financial ideas.

Save Now For Retirement

Saving Money Tip #191 - Save Now For Retirement. I’m going to speak in general terms here. People in the US live approximately 80 years on average. From age 0 to 20 your parents take care of you, paying for your needs. From age 20 to 60 you work, paying for your own needs and that of your children, if you have any. From age 60 to 80 you don’t work, so who pays for your needs? Well, the idea is that you will pay for your non-working years from your working years. And that is why if you are between ages 20 and 60 and you are working, you should be putting aside money for when you won’t be working. Now I know not everyone follows this predictable pattern. Some might go to school until age 25. Others might work until 65. Some might live to 75, while others will live to 95. Again, I am speaking in general terms about why it is necessary to save for retirement.

If you want to not be working in your elderly years (or not working as hard) then you need to put aside money for that time now. It would be great if we all started that saving for retirement at age 20 – not only does it give us many years to save up, but it also takes advantage of the magic of compounding. However, I understand that not all of us were aware that it was necessary to save for retirement fresh out of high school or college. And we may find ourselves to be age 45 without having saved a dime. If that’s the case, then we can hope start saving furiously now and/or plan to work a bit longer maybe until age 65 or 67. It is never to late to start. I have done many other posts on retirement. One of which has you calculate how much you will need to save each year to live comfortably in retirement. The truth is nobody can accurately predict how much you will need. If your house will be paid off by the time you retire, that is a big expense that you don’t have to account for. If you plan to sell your big house in the northeast of the country and move to the south where real estate is cheaper, then you may be pocketing a big amount of money. If you are 60 and in good health and love to work, then you won’t need as much as someone who wants whittle their days away on a tropical beach.

The point is, in general, the approximately 40 years we are working needs to pay for about 60 years of living. And that is why we should be saving. I have heard people say that retirement is a modern notion and that years ago we didn’t need to do all of this retirement planning. That is true. But years ago, much of the country lived on farms, and multi-generations lived together with the younger generation taking care of the older generation when they couldn’t plow the fields any more. If you don’t anticipate moving in with your children, then you need to take care of yourself and start saving now.

In Real Life (IRL) – I’ve been reading lots of financial forums lately, and I have seen some people write that they are not planning to save for retirement. Their feeling is that they are going to live for now because they don’t know if they will even be alive in retirement. Or, they think that retirement planning was dreamed up by the financial industry earn fees on all of our investments. Or that retirement is a modern notion that has no basis in history. And while any or all of those ideas might be partially true, it doesn’t change the fact that there is a good possibility that most of us will be alive well into our 70’s or 80s, that we will need money to live on whether the investment company we choose is making income off us or not, and that while retirement might be a modern notion, we are living in today’s world that is much different than that of the past.

I know when I started my first “real” job at almost age 22 I laughed when the human resources person told me about retirement benefits they offered. To me, retirement savings was something my father who was in his fifties should be doing, not me, a young person in my twenties. When my co-worker advised me a year later when I began to qualify for the company’s 401(k) benefits, that I should at least invest up to the match my company was giving me, I listened. After that I began to talk to more people and learned not only about the tax benefits of putting money away for retirement, but also the financial benefits I would receive for starting to put money away early and consistently, taking advantage of compounding interest and good habits that had me continue putting money away for twenty more years.

If you didn’t have someone in real life advise you about saving for retirement, take my advice, the sooner you start putting money away, the less work you will need to do when you are older and possibly not in the position to be working. There are usually tax benefits to retirement savings, and the earlier you start, the more you will accumulate and the longer time you have to let the magic of compounding work for you. Use your working years to save for the years when you don’t want to be working.

You Don't Need To Become a Millionaire

Tip #190 - You Don’t Need To Become A Millionaire. Many of us have grown up in a society where the measure of success is to be “the best.” We strive to get the best grades, to be the best athletes, wear the best clothes, live in the best houses, etc. But are those people who have achieved “the best” are always the happiest? Is the person who is the smartest in school also the happiest? Is the one who lives in the biggest house happier than those who live in smaller ones? My guess would be no.

While it certainly would make ones life easier if he didn’t have to worry about where the next few dollars are coming from to pay for his electric bill, living in the biggest house in town does not guarantee happiness. So why is it that many of us want to try to become a millionaire? Are we trying to prove something? Have we been programmed that the only way we will be considered successful is if we are rich? Perhaps.

But let’s be realistic about our goals. Each person’s goals should be individual to him or her. While one person might work long and hard hours so one day he can build a large home on acres of land and own a yacht; another may be happiest living in a cozy cape cod and not having to work 60 hours per week. If we are making $50,000 per year on the East Coast, we probably won’t be the richest in town or living in the biggest home. But we can still strive to live comfortably and be able to pay all of our bills in a timely manner. That really is the whole point of this blog. It is not to become “rich” or have the most money or have more money than your neighbor. It is to utilize efficiently what you are making, to learn the basics of money management, and improve your financial situation if you are struggling. Not everyone wants or needs to be a millionaire.

In Real Life (IRL) – I admit that the word “millionaire” has a nice ring to it. Back in the day, a millionaire was really something – the ultra rich. Today, not so much. Having a million dollars net worth might mean you live in a small $600,000 home on the East Coast and have a decent amount for retirement. It doesn’t mean you are hanging out with the Vanderbilts and Astors. But still, there is just something about having a million dollars that sounds so rich. Anyway, my goal is not to become a millionaire, but it is to be able to retire around the age of 60, to fully pay for my children’s college education, and to have our house paid off before we retire. And if we can live decently in the interim that would be our objective, too.

I think sometimes we get caught up in what society thinks is important or what we see on home and garden-type tv shows or what friends are doing, that we lose sight of what will make us happy. Personally, I would not be happy if I had to join a country club to fit in with my husband’s business partners. Nor would I be happy if we lived in a town where my children’s classmates are traveling to Europe every spring break and we felt like we needed to keep up. There is no reason for us to try to reach the “millionaire” status. It would not make us happier and it is not in line with our goals.

So let’s all be realistic about our financial goals –whether it is to buy your first home, raise enough money to put your son through college, or to buy a cottage by the sea, not all of us need to strive to be millionaires.

Don't Wait Until New Year's To Start On Your Financial Goals

Tip #189 - Don’t Wait Until New Year’s To Start On Your Financial Goals. Any day is a good day to start working on your finances. If you are hoping to get out of debt and it’s late November when you come to this realization, it would be easy to push off your debt reduction plan until the New Year. If you want to start contributing to your 401(k) plan, you may be forced by your company to wait until open enrollment, but there’s no reason why you can’t start putting away savings immediately in your own account. If you want to start saving for a house, you don’t need to wait until you get your next raise to start saving for that. Look at your budget now and find where you can reduce some spending to start putting away for that house right now. The reality is that there is no set date that you need to wait for to get started in securing your financial future. In fact, the sooner you start, the sooner you will reach your goals. Don’t wait for some date in the far-off future to start working on your financial plan.

Of course New Year’s, Open Enrollment Days, Raise Days, and Birthdays are always special occasions that may be the impetus for us starting afresh. And because of that, these days are often the source of getting people moving in the right direction financially. But you don’t need to wait for one of those special days to start. Your financial future starts today. You cannot change what you have done in the past, but you can start to correct it or make up for it immediately. Write out what your goals are, what you can do about it now, and start working towards it. Starting now versus January 1st may save you hundreds of dollars in interest fees or be the jump start to thousands of dollars in savings. What are you waiting for?

In Real Life (IRL) – Tonight starts the first night of the Jewish New Year. Each fall, following the Jewish calendar, Jews around the world celebrate the start of a new year. While much of the rest of the world celebrates New Year’s Day on January 1, we start in September or October on Rosh Hashanah, which commemorates the creation of the world. In a way it’s kind of nice to have a secular New Year and a religious one. Because it gives us a chance to make amends and start afresh twice per year, rather than once. In my family, we’re triply blessed because one of my children is adopted from China. Because of that, we actually celebrate Chinese New Year as well, usually in late January or early February. So we really have three chances to start afresh.

But the reality is having more chances to start anew also gives us more excuses to wait. If we don’t start trying to get out of debt on January 1, it’s easy to say we’ll wait until Lunar New Year to start. Or if that doesn’t work, we can wait until Jewish New Year to start. These dates, however, may start to become excuses for why we haven’t started. And that’s why we should utilize them to strengthen our commitment to getting out of debt or saving money each year but we shouldn’t use them as excuses not to do things.

In our family, we use the secular New Year as our budgeting tool. It works with my husband’s job, the IRS, and the calendar. But tonight on our religious New Year, a time for introspection, when we try to make amends for past mistakes, ask forgiveness to friends and family whom we may have wronged and give forgiveness to those who may have wronged us, we also look upon the next year with renewed hope and energy. This could include thinking about how to stay on the right path, including our financial path, too. My husband and I recently had a budget meeting to discuss our goals for the rest of the year. I hope in the coming year, we will be blessed to meet them. On Rosh Hashanah we eat apples dipped in honey in hopes of having a sweet New Year. May you and your family have a joyous, sweet, healthy, and prosperous 5770. And may it be one filled with financial blessings, too. L’Shanah Tovah!

For frugal ideas to get you started, check out Frugal Fridays.

Take Baby Steps

Saving Money Tip #188 - Take Baby Steps To a Better Financial Future. In our quest to become millionaires or at least to get out of debt, it is often the case that we want to reach our goals yesterday. But that is just not possible. Getting out of debt, building up your savings, and learning about finances take time – lots of time. That’s why it’s important to set goals. When you have written goals and a plan, you can be realistic about how long it will take to pay off that $6,000 credit car bill or how long it will take to save $50,000 for a down payment for a house. Since most of us will not win the lottery to help us reach our financial goals, we need to learn how to achieve them slowly.

If you want to cut back your grocery bill by cooking more and eating out less then start out buying some prepared food from the grocery store or frozen meals that are costlier than cooking yourself but cheaper than a restaurant. When you’ve gotten used to eating at home, start trying to cook semi-homemade meals with ingredients that are a mix of convenience foods and basic ingredients. Then try cooking from scratch using just raw ingredients. Then you can look into cooking in bulk and freezing for future meals. You are not going to go from eating out 3 days a week to cooking from scratch in a week’s time. There is a learning curve to learning how to be able to cook your meals from scratch and to stop relying on restaurant meals. Take it slowly.

The same principle applies to saving money. You will not save $10,000 overnight. If you make $40,000 per year, set a goal to save $300 per month. After one year’s time, you will have $3,600 saved. After three years, you will have your $10,000 and then some. Building up your savings account will generally not be quick. Be patient.

If you want to start putting some of your savings in high-earning investments, then it is a good idea to learn about the different types of investments that are available and what its risks are. Investing in a “sure thing” or a “hot” stock is not a good idea unless you have done your research. Learn about the different investment types. Start out by learning why your money may not keep up with inflation if all of it is in a savings account at the bank. Then learn what a mutual fund is and how it can benefit you. Then move on to stocks and what the risks are with investing in them.

You will not become a millionaire overnight. You will not get out of debt overnight. You will not learn how to be a great stock picker overnight. But taking the time and having patience to cut back, learn, and put away money by starting out with baby steps and building up from there will get you where you want to go.

In Real Life (IRL) – I have always been one who looks toward the future. When I was young, if my dad gave me $20, I usually put it away in the bank to spend it sometime in the coming months or years rather than that day. I don’t know what makes me that way. I just am. I know for others it’s not so easy. However, this formula of taking baby steps really does work. I took baby steps building up my savings. I used to save my allowance. Then when I had a job at summer camps, or McDonalds or as office help, I always put away part of my paychecks for the future. When I got my first “real” job out of college, I started putting away a couple of hundred dollars per month toward a mutual fund. It wasn’t much. And I’m sure friends of mine spent the same amount of money on beer, or a car payment, or going out per month. But after 10 years, that little bit of money built up to thousands of dollars – enough to put a substantial down payment on a home in a nice neighborhood. Did I do something special to buy a home in a nice neighborhood? Did I inherit the wealth or suddenly come into money? No, it took years and years of savings to get to the point where I could afford one. As far as buying real estate, it wasn’t until I has bought my own home that I considered looking into buying a home for investment or vacation. I was able to build on what I had learned in the home-buying process that I was willing to take the risk and buy an investment property. Same thing with stocks. I was never comfortable buying stocks on my own, so I joined an investment club where the risks were less and I was able to learn more about stocks over a period of several years. Once I had that experience under my belt, I was comfortable enough to buy on my own.

As far as being able to live frugally, I am learning in that area all the time. Learning how to garden is a great way to cut down on expenses on food. But it takes time to learn that skill. We have started slowly on a home garden in our yard. And each year we’ve been adding to it. I can’t expect to be an experienced farmer overnight but we’re learning.

I know that most of us when we finally put our mind to something we want to make our changes instantly or reach our goals right now. But that is just not feasible. Taking baby steps is really the only way to reach your financial goals – whatever they may be.

Invest In An Education Savings Account

Tip #187 - Invest in Your Child’s Future With Education Savings Accounts (ESAs). Many people have heard about 529 plans to invest for their child’s education. And more than likely we have also all heard how poorly some of those plans performed over the past year. And even though these plans will probably gain back their losses by the time college rolls around, I am afraid that that may make some people scared to invest in their child’s education. And then when college or trade school time rolls around, there will be no money for the child. Enter the ESAs. An ESA is officially a Coverdell Education Savings Account, also known as an education IRA. A person can invest up to $2,000 per child in an ESA per year. While that certainly won’t be enough to pay for a person’s full college tuition, it is a great start to college savings.

The best part about an ESA, though, is that you control where you will be investing. If you are conservative and aren’t ready to invest in mutual funds, you can open a CD as an ESA. Or you can do a mutual fund, stock, a savings account or bonds. An added benefit is that the ESA grows tax-free as long as the money is used to cover your child’s education expenses. So if you want to start saving for your child’s college education but aren’t ready to make the leap to the 529 plans or you are worried about someone else having control of your investments, then start out with the ESA. You can invest it the way you want to. If after you have invested $2,000 per year per child you want to invest more then you can investigate the 529 plans or other options. Please not that there are some income limitations for being able to invest in an ESA, but they are fairly liberal.

If you don’t have much to invest or if you want to control where you are investing the ESA is a great option to begin investing for your child’s future. You have until April 15, 2010 to make the contribution for 2009. Please note that because of the way the law was set up, the contribution amount to the ESA may be lowered in 2010 to $500. Hopefully, the law will change by that point, but in the meantime why not make your contribution for 2009? I did another post a few months ago on ESA right here if you want more information.

In Real Life (IRL) - I love the Education Savings Accounts because I like having control of where I invest. I am not one who wants to hand my money to someone and have that person invest in the allocations they want or put money in investments I don’t understand. So for me, the Education Savings Account is a perfect investment vehicle. I have a mix of conservative and riskier investments that I have chosen – mainly some CDs and mutual funds. If the value goes down, the fault is just mine and not because I blindly handed my money to a financial advisor to invest for me. While I may not be as knowledgeable as a person who does finances for a living, I know what level of risk I am comfortable with and I have a good understanding of the investments I have chosen.

While $2,000 clearly isn’t enough money to fund my children’s college education, it is all we can afford to invest per year right now so it works out perfectly for us.

Remember September 11, 2001

Tip #186 - Remember The Terrorist Acts of September 11, 2001. I had a post planned on Education Savings Accounts (ESAs) but decided I would do a follow-up post to yesterday’s post of learning how to fish in light of September 11. What does being frugal or doing things yourself have to do with the horrific acts of September 11? Well, actually, it has a lot to do with it. On that fateful day, when fire fighters, police officers, and countless other civilians risked (and some lost) their lives to save others, they used skills that they took the time to learn before the atrocity happened. Who knows how many people’s lives were saved because nurses or people who took the time to learn first aid in advance of that day were there to help?

We don’t know when the next terrorist strike will happen. And we don’t know where it will happen. But one thing I am certain of is that it WILL happen. It might not come by plane into public or government buildings. But it might come by car, by train, by individuals, rockets, or who knows what else? What if that terrorist act takes place near your city? Will you be able to help out? Will others be able to help you? What can we do to prepare for a horrific event?

Well, again, being self-sufficient is the first step. In times of disaster when grocery stores may be closed, those of us who know how to grow our own food will be the ones in better shape than those who don’t. Those of us who can give first-aid care will be in a better position than those that can’t. Those of us who can fix things will be in better shape than those that don’t know how to do so. The benefits of learning how to do things yourself such as knowing how to fish are too numerous to count.

I am grateful not only to those individuals who have jobs that help the public everyday but also to those others who used their wonderful skills to aid victims, counsel them, provide for them in others’ time of need. What will you be able to do if disaster strikes your area one day?

In Real Life (IRL) – September 11, 2001 is a day that is etched in everyone’s memory in the USA. We can all say where we were and what we were doing when we realized what was going on. As a resident of the DC metropolitan area who was pregnant with my first child on that fateful day, I felt very vulnerable to the events that were going on around me. Although I was lucky because my child was with me rather than across the river in another state while I was working in suburban Maryland. Still, whether I would get home, how I would get home, and where else the acts were going to take place were very real and scary. I, like many others, would have had to depend on others’ kindness, generosity, and skills to help me if something had taken place right near where I lived or worked.

I think it is my duty to learn some skills that cannot only benefit my family or friends but society at large – skills like learning CPR, first-aid, and the Heimlich maneuver. One never knows when those skills will be needed. Learning basic medical skills, cooking skills, growing skills, mechanical skills, and basic survival skills can benefit us all. Let us all take some time out of our busy lives to learn some of them. The lives that benefit may be strangers’ but they also may be your own.

A heartfelt thank you to those of you out there who helped save lives on September 11, 2001. And a prayer for the many of you who are suffering even more today than on every other day of the year because you lost a family member or friend to the acts of some vicious individuals. I especially remember my neighbors three doors up from me in Broomall, Pennsylvania who lost their son when his young life was cut short on September 11, 2001 while he was working in the World Trade Center that day. You are not forgotten.

There are commemorations all over the world and on the Internet today remembering the events of September 11. If after reading some of them or having your own personal rememberence you want to read some lighter fare, check out Frugal Fridays for some more frugal tips.

Teach A (Wo)man To Fish

Tip #185 - Teach a (Wo)man to Fish. This is absolutely one of my favorite sayings. "Give a man some fish and he’ll eat for a day. Teach a man to fish and he’ll eat for a lifetime." This saying applies to women as equally to men. And it can be applied to so many facets of our lives, that it is hard to pick just one to talk about so I’ll discuss why I like this saying so much in regards to many aspects of our lives.

Learn a Trade – Let’s say you need something typed. You can pay someone to type it for you. Or you can learn to type yourself and do it for free. And then you have a valuable skill that people may pay you for, possibly earning you money for a lifetime career. This skill can range from typing to woodworking to fixing cars to sewing to cooking. Learn how to do it yourself and you will have a career.

Organize Your Finances – Anyone reading this blog or other personal finance blogs, websites, or magazines regularly is learning about finances. Many people earn a paycheck and spend money freely, because they have not taken charge of their finances. By learning how to budget, pay yourself first, save for retirement, and spend less than you earn, you are learning how to manage your own finances, which will serve you for your lifetime. Once you have taken control of your finances, you will be taken care of financially for the rest of your life.

Grow Your Own Food – Most of us rely on the grocery store for food that we eat. But farmers often take care of themselves and their families by growing fruits and vegetables and raising animals for eggs, milk or meat. While many of us can’t live on just what we grow or harvest, we can learn to grow food so we can at least always have some food that we are in charge of from seed to table.

Any new skill we learn can serve us for the rest of our lives. We can eat off our skills, live well off our skills, make money off our skills, and serve others off our skills. So next time you need something done, try to figure out if you can learn how to do it yourself or have somebody teach you. You may learn some skills that will last a lifetime.

In Real Life – I have to admit I am always envious of people who seem to do everything well. I know people who can sing well, draw well, dance well, and sew well. I have a husband who can fix practically anything he examines closely enough. Some of these skills are surely G-d-given talents, while others are skills that some people work hard to acquire or nurture. I sometimes, lazily, lean on others who have such good skills and then I don’t nurture the ones that I have. If I need something sewn, I almost always give it to my mother-in-law who is an excellent seamstress. If anything is broken, I always ask my husband to fix it because he excels at handyman work. But by doing that I don’t gain any of those skills of my own. In some ways it works well because my husband and my skills complement each other, but if he’s not around I have absolutely no idea how to do some of the things I depend on him to do.

Lately, I have been challenging myself to learn new skills – trying to fix the camera when it stops working, learning how to plant vegetables in our garden, trying to cook new or challenging (to me) foods, and learning how to play the piano. I’m pretty sure I won’t ever have a career in any of these areas, but they are all skills that will serve me well for the rest of my life. And over time, they can each save me lots of money. What skills would you like to learn that can serve you well?

Savings Can Add Up Quickly

Saving Money Tip #184 - Just Like Debt Adds Up Quickly, So Can Savings. Some people spend money so freely that at the end of the month or the year they have little savings to show for the money that they made. "Where did the money go?" They ask. "How could I have accumulated so much debt?" As an outsider looking in, it’s usually easy to figure out where the money went. The weekly shopping trips to the department store to buy clothes, the monthly hairdresser visits, the weekend visits to the home improvement stores, or the twice-weekly take-out meals can add up quickly. Fifty dollars here and $100 there add up very quickly. Before you know it, there is a $500 credit card bill waiting in the mail.

Suppose we did something different with that $500 and instead of using it to buy things, we put it in the mail to a savings account with our name on it? Where would you be at the end of the year? How about at the end of three years? Well, with $500 monthly being sent to a savings account, you would have $6,000 to your name at the end of the year. After 3 years you would have $18,000 to your name. And that is assuming you are not earning interest. It adds up that quickly – in three short years you can easily accumulate a fair amount of money. Once you get used to sending a certain dollar amount each month to your savings account it becomes like another bill that you have to pay. Except at the end, all of the money you sent belongs to you! It sounds good, doesn’t it?

Now of course, not everyone has $500 available each month to send to a savings account with his/her name on it. But there is no reason that most people cannot find $100 to send away each month or even $50 – that’s less than $2 per day. Make it part of your routine, and you will see how easy it is to build up your savings.

In Real Life (IRL) – About a year out of college, I started mailing $250 per month to a mutual fund. Once I started doing it, it became routine to me and was like any other bill I put in the mail – rent, utilities, car insurance, etc. I think I did this for about 10 years until I got married. After that 10 years' of savings, I had about $50,000 total in two different mutual funds. (I can’t remember if I contributed the same amount month after month or if I changed it at some time.) Regardless of whether I had just sent it to a savings account rather than a more sophisticated investment or if the mutual fund performed well or not, the point is I put away a lot of money. Even without any interest or compounding, 10 years' of saving $250 month after month, I would have still had $30,000 stashed away. That’s how quickly savings add up. Had I been putting that $250 toward clothes and shoes each month, my money would be in my closet right now - out of style and collecting dust, I might add.

So if you are having trouble getting started on your journey to financial stability, take this one small step. When you receive your paycheck at the beginning of the month, immediately write out a check for $100 or $50 or even $25 and send it to a savings account with your name on it. You are paying yourself for all of the hard work you do. Start doing this on a monthly basis. As your savings accumulate over the months, you may get motivated to send even more away each month to an account with your name on it. And at the end of the year or three years or five years, you will be amazed at how quickly your savings will grow.

Real Estate CAN Be A Good Investment

Tip #183 - Real Estate Can Be A Good Investment. The party line these days seems to be, “Don’t invest in Real Estate.” “Real estate is not a good investment.” “Your home is not an investment.” I want to put myself out there and say I disagree. Yes, if you bought your home three years ago and sold it last month, it probably was not a good investment. With that I agree. If you bought an investment property in Florida in 2004 and tried to sell it today, you probably will have lost a fair amount of money. With that I agree as well (from personal experience, I might add).

Does that mean that real estate is always a bad investment? No. Does it mean that real estate has always been or will always be a bad investment? No. Does it mean that no one has ever made money on real estate? No. Therefore, can real estate be a good investment? Yes. So when we hear the talking heads and the media and most of the general public say that real estate is a bad investment, I think we are hearing them speak based on being “reactive” to what has happened in the real estate market in the past few years. However, what has happened over the past few years isn’t typical of the real estate market over the long term or other shorter-term periods.

Let’s look at other scenarios – when real estate has been a very good investment for some. According to City Data, the median house value in Sea Isle City, NJ in 2000 was $257,200. In 2007 it was $633,681. Do you think the person who bought a house in Sea Isle in 2000 and sold it in 20007 thinks real estate was a bad investment? Probably not. How about the person who bought a house in suburban Philadelphia in 1972 for $40,000 and sold it for over $250,000 20 years later? Does that person think he made a bad investment by buying a house rather than renting? Probably not. So why does everyone say that real estate is a bad investment? Because if you bought two years ago and tried to sell today, you probably lost money. That’s all.

But like every other investment, we need to look long-term. Has real estate gone up over the past 50 years? How about over the past 20 years? Are there certain areas where real estate is still a good buy? If the answer to any or all three of these questions is yes, which I believe it is, then real estate can be a good investment. Yes, it helps to know what you are doing. Yes, you need to know where the good places to buy are. Yes, you may need luck on your side. But it can and is a good investment in many circumstances. For example, real estate can bring balance to a person’s portfolio that may lean heavily toward a certain type of investment. It also can provide a place to live or can offer rental income. Which brings me back to the main points of this post – look long-term with real estate. Don’t come to general conclusions just based on what has happened in the real estate market in the past two years. Because what has happened is atypical, just like the huge increases a few short years earlier were also atypical. However, consider that real estate can still be a good investment in the long-term.

In Real Life (IRL) – I have been interested in real estate as an investment since I was a young teenager. Or perhaps a better way to say it is I’ve been exposed to real estate as an investment (on an almost daily basis) since I was a teenager because my dad was passionate about it. Nearly every day in our house and in the car we would listen to a local real estate show on the radio about real estate. And even though I tried to drown it out with my Bruce Springsteen cassettes on my Walkman (yes, I was cool), I sometimes had to suffer through endless talk radio about real estate. Fortunately, in the process I picked up a few things and actually did become interested in it later in life. What I learned was real estate at the Jersey Shore and other places can be a very good investment. And my dad should have bought a condo in Cape May when he first considered it in 1980 not only because I’m pretty sure he would have at least quintupled his money by now, but because I would have had a nice place to go every summer. :-)

Seriously, though, real estate in the long-run has often been a good investment. That may not be true in every little town in the middle of nowhere, USA. But it was certainly true on coastal towns and big cities in the mid-Atlantic and many other places. And lately every time I hear or read on blogs that real estate is not a good investment, I cringe because it’s simply not true any more than when someone says stocks are not a good investment. Some people do well in each of these types of investments, and some do poorly. Lately, in real estate, a lot of people have done poorly. But many people over the years have also done very, very well in real estate. And I venture to bet, many more will do very well with it in the future, too.

Now to give you a real life example, my neighbor sold his house last month. I was watching it closely because it’s not too different than ours. The lot size is a little smaller. And there’s one less bedroom, but one more garage. So when I looked at his selling price I had to do a double-take: $599,000! And this is for a 1960’s, 3-bedroom split level on slightly more than a quarter-acre. “They’re crazy!” I told my husband. “They will never get what they are asking for. In this market! Ha! What are they thinking? Don't they know that the real estate bubble has burst?” After all, that’s all I hear about day in and day out is how bad real estate is and how much money everyone is losing. And while I did think he could have gotten something close to his asking price at the height of the housing market a few years ago, I was positive he was asking way too much in this market. In fact I thought he was asking about $100,000 too much. Guess what? I thought wrong. Today I finally found out what his house sold for: $575,000! I never in a million years thought he would get anywhere near that. And you know what? According to the housing records, he bought his house exactly 11 years ago for $237,000. I’m pretty confident, he thinks real estate can be a good investment, even in today's down market.

So when you are considering buying a home or purchasing some real estate for investment, take everything into consideration, not just the news on the media today. How long you plan to hold on to a place; when you buy; location, location, location; and of course a little bit of “luck” are all big factors on whether real estate will be a good investment for you. Consider it carefully.

Step Back And Recharge

Tip #182 - Step Back and Recharge. With back-to-school events in full swing and the Labor Day holiday this weekend, there are activities, events, meetings, and commitments galore. If you have children and are trying to do fun things for the long weekend as well, it seems as if there is not a moment to sit down, let alone think about saving money or how to do things on less. There seem to be certain times of the year that are like this – around the Christmas holidays, graduation and spring holidays and events, the beginning of school year, and maybe other times unique to each family when there are birthdays or other events clustered together.

Whenever it is a busy time, that’s when it is easy to fall off the budget bandwagon. It’s easy to get overwhelmed with all that is going on, and it’s even harder to do it while trying to keep costs down. It’s important to step back and take a break not from saving money but from the chaos that envelops us. It’s easy to get caught up in the back-to-school fundraising sales, the school shopping, the barbeque at your neighbor’s house, the start of fall sports and activities, the back-to-school meetings, as well as anything else that takes place in September. You don’t need to do everything. You can surely back out one or two activities. Do you really need to buy expensive wrapping paper from your son’s school or can you make a small donation in line with your budget, instead? Can you back out of the planning dinner at the overpriced restaurant down the street and alternatively send your ideas via email to the leader? It might not only save you money but also your sanity.

Before the huge barrage of activities takes place, think about what you have time to do, and what you can skip. Think about it in terms of your budget and your time. Review your budget as we close in on the last quarter of the year. What financial goals are you meeting, and which ones are falling short? Can you do anything differently during this busy time of year to still help you meet your goals before the year’s end? Have you signed your children up for too many activities? Can you back out of something? Can you cut down on the amount of entertaining you are doing? Step back and reevaluate your goals and your activities and make any adjustments that you think are necessary.

In Real Life (IRL) – Here in Northern Virginia, school is starting next week. This last week before school starts in conjunction with Labor Day weekend has been absolutely crazy. I’ve baked things for a teacher breakfast, gone to two school open houses, am holding a barbeque at my house, signed up my older daughter for Brownies, piano, and Hebrew School and signed up my younger daughter for gymnastics. And I am contemplating signing them up for other things. Am I crazy? Sometimes I think so. Not only because all of these activities bring more stress for me, but because the costs of them are becoming too much for us. That’s when I realized I need to step back and perhaps make some changes.

I was hoping to go back to work part-time this fall, and have my 2-year old in a two-morning a week program at a local church. I’ve done it in the past, and it has always been good for all of us – financially and socially. But earlier in the year, my old boss said they do not need my services. So while my extra income used to cover the cost of preschool plus a few other activities, I don’t have that money anymore. Therefore, my son isn’t enrolled in preschool, and I am wondering if I’m putting my kids in too many activities. And between that and all of the other things we are doing, I feel like I am shelling out money left and right – school supplies, supplies fees, entertaining in my home, last-minute weekend trips before the weather gets cold, etc. As I am in a whirlwind of activities, I am planning some time this weekend to sit down with my husband and go over our finances once again. The weekend away might have to wait. Our older daughter might not get to do tennis this fall, and we may be staying home more often than we’d like. I’m still confident that our budget is pretty strong, but we may need to cut back on some things before the year comes to a close to keep up with our goals. Hopefully, we can figure it out when we step back and recharge in the direction of our goals. For other frugal ideas, check out Frugal Fridays.

Have A Go To List of Websites

Saving Money Tip #181 - Have a Go To List of Websites for Reference. In our information overloaded world, it is sometimes hard to zoom in on the best places to get information. Yes, Google is our friend, but there are other websites that can be crucial to someone who is trying to save money, reduces costs, and make informed decisions on buying – not necessarily financial websites or blogs, but websites that are useful tools to someone who wants to take charge of his financial matters and save a little money. Each person will have different needs and wants in this regard, but I thought I’d share some websites that are invaluable to me on a regular basis for useful information. These are the ones that are bookmarked on my computer.

Real Estate:

City-Data – I discovered this site a couple of months ago. If you have a job transfer on the horizon or are contemplating starting over in a new city with better employment opportunities, go over to this site and check it out. There are forums for every state in the union, most major cities, and a few other countries. You can ask questions to residents of the area where you wish to live. You can get the lowdown on neighborhoods, schools, housing, and everything else about an area. If you’ve ever done house searching long-distance, you know how hard it is to zero in on the right place to move. This site can help tremendously in that regard.

Realtor.com – This is a great general site that lists all homes on the MLS (multiple listing service). There are some sites that are better for local areas that give more information, but this is a great place to start.

Vacations:

Trip-Advisor – If you are going on vacation and want to pick an appropriate hotel, this is the site that will give you nitty-gritty information about the hotel, motel, cottage, or bed and breakfast. You must take review with a grain of salt because people are more likely to write up a report on trip advisor if they are unhappy, rather than happy. However, that applies to all hotels, so it is still a fairly accurate comparison. If you read ten complaints that the pool is too small at a certain hotel, and pool size is important to you, then you’ll know to steer away from that particular hotel. This is the type of information you will not get from reading a glossy hotel brochure.

Cruise Critic – A great site to read opinions if you are planning a cruise vacation in the next year or two.

Food Shopping:

Pick Your Own – If you like fresh fruits and veggies in your diet, then check out farms local to you that have pick your own crops. Many times they are cheaper than farmers markets since you are doing some of the work. If you buy large quantities for the freezer each year, this is the way to do it. This site lists pick your own farms for every state in the union. It is pretty comprehensive.

Money Saving Mom – This site regularly updates good deals at many grocery stores, and list other good deals and coupons that come out. Similar to this site and more comprehensive with regard to grocery stores is Coupon Mom. Membership at this site is free and matches up coupons and store sales prices. It doesn’t list every grocery store, but may have at least a few in your area. Use these sites in conjunction with each grocery store’s website, like Safeway before going food shopping.

All Recipes – You can have access to thousands of recipes on this site or others like it (although this is my favorite). No need to buy a cookbook. If you have random ingredients in your house and don’t know what to make, then plug them in to this site, and you will get some ideas. No need to waste money on takeout. The reviews of the recipe are honest and accurate. I have never been disappointed in recipes I’ve made with 4 stars or higher.

General Shopping:

Epinions – Before you buy, look up which product has gotten good reviews from the buying public, compare prices at different retailers, and learn more about what features you need and want. This is a great place to start for buying many products.

Craigslist – If you are in the need or want of purchasing something, check here first! After you’ve done your research and decided you really want to buy a certain brand-name popcorn popper, look on Craigslist before you buy new. You may be surprised how many gently-used popcorn poppers you will find for a fraction of the price of new. If you are not in a hurry for said purchase, then check Craigslist on a regular basis. It’s likely the item will come up if you are patient enough.

Public Library – Library websites are almost as good as being at the library itself. At least one of any reasonable size is. If I want to check out a book from our system, I can check the “card catalog” from the comfort of my own home. If a book isn’t available, I can put it on hold without wasting gas to drive there. This is cheaper and just as easy as buying from a brick and mortar store or online.
Other sites that pertain you – If you have a hobby or other interest, find other like-minded individuals online. You will become more informed and maybe learn how to participate in your hobby at a discount or how to turn your hobby into a money-making career.

Retail Me Not – If you are getting ready to make a purchase online, this is the site to check out to see if there are any discount codes available before you put in your order. There are many sites out there that do this. But this one seems to be the most comprehensive. And you can use this site in addition to a Google search that you might do.

Financial Products:

CNNMoney – This site is one I like to read periodically to learn about new financial products or to see what is going on in the financial world. It keeps me up-to-date on news and products in clear, easy-to-understand terms. It also has on its site comparisons of mutual funds, CD rates, mortgage rates, and the like. I also like the Kiplinger’s site that does virtually the same thing.

Other:

Swagbucks – While you can always Google sites that you need, sometimes it pays to Swagbuck it instead. If you do Google searches on a regular basis, then check out Swagbucks instead. For every few searches you do, you earn some Swag points that can be accumulated and then cashed in for giftcards or other products. In several months’ time I’ve accumulated about $20 worth of gift cards to Amazon – not bad for searches I’d be doing anyway.


In Real Life (IRL) – All of the sites listed above are ones I use regularly or when the time is appropriate. They are not all money-saving sites, necessarily but tools that I use to help me make wise spending choices and be more informed on items I am purchasing. Of course there are many other good sites out there, and not everyone will use the same ones that I do. But each one has helped me tremendously in keeping costs down or being informed on a product, whether it is a mutual fund, a new home, or a toaster.

I’d love to learn about more great websites out there that are useful for saving money or becoming informed before buying something. If anyone has any to share, please put them in the comments. Thanks!