Monday, November 19, 2018

Countdown to Financial Fitness: Live Well, Grow Wealth

Countdown to Financial Fitness: Live Well, Grow Wealth: At long last, I have updated my personal finance book and plan to release it on Amazon in time for Black Friday. What better Christmas gift...

Live Well, Grow Wealth

At long last, I have updated my personal finance book and plan to release it on Amazon in time for Black Friday. What better Christmas gift than a self-help book to get you started on your New Year's Resolutions?

Live Well, Grow Wealth was originally released on Smashwords as an e-book, Live Cheaply, Be Happy, Grow Wealthy. It can be described as Personal Finance 101, a commonsense guide to shrinking your financial footprint. Based on my experience of living frugally, investing, and retiring early, I compare achieving financial fitness to maintaining a healthy weight. In ten easy-to-follow steps, Live Well, Grow Wealth will show ordinary people how to build wealth by living within their means without compromising their values.

Here are the ten steps that will be discussed in detail in Live Well, Grow Wealth:
1.       Live Within Your Means
2.       Find the Best Value
3.       Get out of Debt
4.       Build an Emergency Fund
5.       Save for Retirement
6.       Begin to Invest (basics)
7.       Consider Relationships
8.       Teach Your Children
9.       Get Completely out of Debt (pay off long-term debt, like a mortgage)
10.    Invest More (stocks and covered calls)

I hope you'll check it out and share it with someone who can benefit!

Friday, October 5, 2018

Countdown to Financial Fitness: Time Management and Finances

Countdown to Financial Fitness: Time Management and Finances: When I was still working, I was good at time management. I had to be. Projects had deadlines. Meetings could not be missed. In one departme...

Time Management and Finances

When I was still working, I was good at time management. I had to be. Projects had deadlines. Meetings could not be missed. In one department, our manager gave us all Franklin Planners and sent us to a class to teach us how to use them.

Before I entered the corporate world, I worked for five years as an airport gate agent. Getting the flight out on schedule was my primary responsibility, and a myriad of perfectly-timed, integrated tasks had to be completed in order to accomplish that objective.

After I retired, I lost my time-management mojo. At first, it was a form of rebellion. I didn't have to wake up to an alarm or adhere to an agenda. I'd have oodles of free time that was all my own.

I had a long list of projects I promised my husband I would tackle once I retired. (Many of them involved cleaning and organizing.) They're not done yet. In fact, most haven't even been started.

At last week's Weight Watcher's meeting, we discussed time management and its importance to a successful weight-loss journey. Planning healthy meals so you don't grab high-calorie fast food when there's nothing in the refrigerator. Carving out time for a good breakfast so you're not tempted by sugary snacks mid-morning. Fitting exercise into your daily routine.

Time management is also important to achieving and maintaining financial fitness. By paying bills on time, you avoid unnecessary late charges and interest—not to mention keeping your credit rating high, which can save you money next time you apply for a loan or credit card. Filing your tax returns and estimated payments by the deadline to avoid penalty. Funding IRAs and HSAs to maximize tax savings. Ordering and reviewing your free annual credit reports. Using up flexible spending accounts so you don't leave money on the table. Taking advantage of gift certificates, sales, and coupons before they expire—provided they offer a discount on products or services you plan to buy anyway.

Without proper time management, so many good intentions can slip through the cracks.

For many years, I bought Franklin Planner refills. But as Microsoft Outlook grew more robust, I started managing much of my time electronically. It was cumbersome and inefficient to mark appointments in more than one calendar. After I retired, I didn't have as many meetings to keep track of, so I started to view the Franklin Planner refills as an unnecessary expense.

But now my system has disintegrated into a free pocket calendar and to-do lists jotted on scraps of paper. The lists sometimes get misplaced before everything has been checked off, and some incomplete tasks never make it to a fresh list.

Part of my frustration with my time management failure has to do with unrealistic expectations about how much I can accomplish in a day. The vision of unlimited time available in retirement was a mirage. Still, I believe getting a handle on time management will make me more productive… or at least, make me feel more productive.

The first step to time management is planning. Every day. You might argue that you don't have time to plan your day, but if you don't take a few minutes to set goals and figure out how you're going to achieve them, how will you know when you've accomplished them?

The next step is to divide long-term goals into manageable tasks. When you set your goals and timeline (which should be done before you get to the day-to-day planning), break the project into bite-size pieces so the goal post doesn't seem so daunting. For example, if you want to write a novel by the end of the year, you might set a daily word count. Or start with tasks like creating an outline, developing character biographies, researching topics that will be addressed in the book, etc.

If your goal is to build an emergency fund, your tasks might be: create a budget, set up a savings account, identify ways to fund the account, cancel that subscription to a service you don't use, etc.

Each day, prioritize your tasks. The Franklin Planner course taught us to assign tasks A, B, or C priorities, and then number each task in the category by the order in which you plan to work on them. Start with the A list. When it's complete, move to the B list, and then C. Tasks labeled A are the most important; they must be done today, and they usually support a long-term goal. (Often, they're the hardest and the ones we tend to put off.) Tasks labeled B are important, but could be postponed if you run out of time today. Tasks labeled C are nice to do but have no sense of urgency. Often, we fill up our days handling C-level tasks and procrastinate tackling the A-level tasks.

Sometimes writing down a task and assigning it a high priority might be the only way it will get done. Like exercise.

The same task could shift in priority from day to day. For example, if I'm home by myself, washing the dishes and vacuuming the floor might be considered C-level tasks. But if I'm having a dinner party tonight, those tasks rise in importance. At the beginning of the month, renewing your vehicle registration tag might be assigned a B priority; on the last day of the month, if it's still not done, it's an A.

You may find that some tasks should be deleted from your list, or perhaps handled by someone else. Looking at your prioritized list can help you say "no" or "help" without guilt—which is a great time-saver.

At the end of each day, it's important to review your task list and determine what has been completed, what needs to continue into the next day, what tasks should be deferred, canceled, or delegated to someone else. That way nothing is inadvertently forgotten. And checking off those A-level tasks can give you a great sense of accomplishment.

What tips do you have for time management? I'd love to hear your comments and suggestions!



Friday, September 21, 2018

Countdown to Financial Fitness: Paying Off Your Mortgage

Countdown to Financial Fitness: Paying Off Your Mortgage: Several months ago, I wrote a post about the pros and cons of paying off your mortgage early. I promised that in a future post, I'd tel...

Paying Off Your Mortgage

Several months ago, I wrote a post about the pros and cons of paying off your mortgage early. I promised that in a future post, I'd tell you how to do it. Well, here goes.

The best forty dollars I ever spent was to attend a one-day class at a community college near my Seattle home on how to prepay your mortgage. My husband talked me into going.

I had heard people mention "making double payments" to accelerate repaying their mortgages. But our mortgage payment was already over a thousand dollars a month, a big chunk of our income; how could we possibly make double payments?

Early in the life of a mortgage, the bulk of your payment consists of interest. "Double payments" simply means paying two months' worth of principal. When you make a principal payment before it is due, you cut out the interest associated with that payment.

When you purchase a house and secure a mortgage, you should receive an amortization schedule from your lender. If it's not included in the huge packet of papers you receive at closing, ask for one or create your own. An amortization schedule states the amount borrowed, the terms, and the total amount of interest that will be paid by the loan's end date (assuming you stay in the house and make regular payments throughout the life of the loan, without ever refinancing). There will be a breakdown of each month's payment showing how much of the total goes to principal, and how much to interest, as well as the loan balance after each month's payment.

Our teacher ran an amortization schedule for each student in the class, using the loan parameters we provided. We could then use this schedule to track our own prepayments and reconcile with our lender's statement at the end of each year. Now it's easy to create your own amortization schedule online, in Microsoft Excel, or using one of many other readily available computer programs or apps.

For example, let's look at a thirty-year fixed loan for $200,000 with a five-percent interest rate. The payments would be $1073.64 a month, and you would have spent a total of $386,511.57 by the payoff date, assuming you never moved or refinanced. After thirty years, the total interest paid would be $186,511.57, almost as much as the original amount borrowed. Those numbers can be quite intimidating the first time you sign your life away to acquire a mortgage. When my husband and I bought our first home, our interest rate was 10.5 percent on a thirty-year loan, so the figures were even more dramatic.

Here's what an amortization schedule for the thirty-year, five-percent loan for $200,000 with a monthly payment of $1073.64 would look like: 

Payment #
Amount
Interest
Principal
Loan Balance
1
$1073.64
$833.33
$240.31
$199,759.69
2
$1073.64
$832.33
$241.31
$199,518.38
3
$1073.64
$831.33
$242.32
$199,276.06
4
$1073.64
$830.32
$243.33
$199,032.74
5
$1073.64
$829.30
$244.34
$198,788.40
6
$1073.64
$828.28
$245.36
$198,543.04
7
$1073.64
$827.26
$246.38
$198,296.66
8
$1073.64
$826.24
$247.41
$198,049.25
9
$1073.64
$825.21
$248.44
$197,800.81
10
$1073.64
$824.17
$249.47
$197,551.34
11
$1073.64
$823.13
$250.51
$197,300.83
12
$1073.64
$822.09
$251.56
$197,049.27

If you decide to make double payments, you don't need to pay $1073.64 x 2. You simply pay next month's principal along with this month's payment: $1073.64 + 241.31. Now your loan balance has been reduced to $199,518.38 instead of $199,759.69, and you have saved $832.33 in interest. Next month, you will be on payment #3. If you send month #4's principal (243.33) along with it, you'll be on payment #5 by the third month of your loan. Continue these steps and in six months you'll have knocked a full year off your loan payments and saved almost $5000 in interest over the life of the loan. Notice how much faster the loan balance declines; in this example, your balance after six months is the same as it would have been after one year of normal payments:

Payment #
Amount
Interest
Principal
Balance
1
$1314.95
$833.33
$240.31
$199,759.69


$832.33
$241.31
$199,518.38
2
$1316.97
$831.33
$242.32
$199,276.06


$830.32
$243.33
$199,032.74
3
$1319.00
$829.30
$244.34
$198,788.40


$828.28
$245.36
$198,543.04
4
$$1321.05
$827.26
$246.38
$198,296.66


$826.24
$247.41
$198,049.25
5
$1323.11
$825.21
$248.44
$197,800.81


$824.17
$249.47
$197,551.34
6
$1325.20
$823.13
$250.51
$197,300.83


$822.09
$251.56
$197,049.27

Of course, when you use this prepayment method, the principal payments increase a little each month, which could become difficult to manage eventually if your income is not going up. But the beauty of this system is that you are not locked into making the additional principal payment, so if money is tight one month, you can skip or reduce it, or you can stop any time and go back to your regular payment schedule. The initial savings has still been realized.

Think about this option when you first apply for a loan; the sooner you begin prepayments, the more interest you'll save. As you can see from any amortization schedule, the lender collects the bulk of the interest up front, when the loan balance is highest. People who refinance over and over don't reduce their loan balance much over time; most of what they pay is interest, and they perpetually carry a mortgage. ("But it's tax deductible!" they argue.) If you're afraid you might not be able to manage the payments on a fifteen-year loan, take out a thirty-year loan and prepay it, using the double-declining principal strategy to cut your repayment time in half.

You can also customize your amortization schedule to prepay a fixed amount each month, for example, sending your lender an extra $100 toward reducing the principal. Every little bit saves way more interest down the road.

Have you ever thought about pre-paying your mortgage? I'd love to hear your comments.

Wednesday, September 12, 2018

Countdown to Financial Fitness: Saving Money on Conferences

Countdown to Financial Fitness: Saving Money on Conferences: Going to conferences can be a great way to advance your professional career. It's an opportunity to build skills, share best practices,...

Saving Money on Conferences

Going to conferences can be a great way to advance your professional career. It's an opportunity to build skills, share best practices, and network with peers. But unless you work for a company that pays your expenses, attending an out-of-town conference can be costly. Here are a few suggestions to reduce those costs while still deriving benefit from a conference.

When you register, ask about available discounts: early booking, senior citizen, student, affiliation with a sponsoring company or professional association, first-time attendee, etc. Some organizations offer scholarships to encourage their members to attend conferences. For example, I'm a member of Sisters in Crime, and they offer $150 scholarships for members to attend writers' conferences deemed to be educational. By attending Killer Nashville this summer, I qualified. The scholarship money is paid as reimbursement after the conference is over and I've submitted proof that I attended.

Staying at the conference hotel is usually preferable. No commuting involved, and you can slip up to your room during downtime to unwind. And of course, you're more apt to participate in after-hours networking activities. There are usually discounted blocks of rooms for conference attendees if you book early enough. But these often fill up quickly, or the conference hotel might be considerably more expensive than other accommodations.

Most hotel rooms have at least two double beds, so consider sharing with a colleague or friend headed for the same conference. At Killer Nashville, our conference hotel was the Embassy Suites, and we were able to fit three people into one suite, which further lowered our accommodation cost. If you don't know anyone who is going, contact the organizer or your professional network to inquire if there are other single attendees looking for a roommate.

If you have friends or family living in the area who don't mind hosting you, you can save a lot of money on hotel and meal costs, but you might not feel as connected to the conference and other attendees staying in the middle of the action. However, visiting with someone you might not otherwise have seen could make the trade-off worthwhile.

If you book a different hotel from the one where the conference is held, try to find something within walking distance, or with free, frequent shuttle service to transport you back and forth. Otherwise, transportation and/or parking costs could eat up any savings from staying "off campus."

Some conferences include meals, but with others, you must factor in additional costs for food. And in a high-end downtown hotel, nothing is free. It's ironic that the budget hotels often provide free breakfast, free Wi-Fi, free parking, but the upscale places charge extra for everything. If you're staying at a hotel with a breakfast buffet, and you'll be on your own for lunch, slip a couple pieces of fruit or a bagel in your bag for later.

Be on the look-out for receptions and hospitality suites where snacks are offered. For example, I just returned from Bouchercon, a conference for mystery readers and writers, and almost every day, various sponsoring publishers hosted the hospitality suite, laden with coffee and carbs.

A refrigerator in your room is a plus; you can store leftovers that might get you through another meal. (Just don't touch anything from the mini-bar!) If you don't have a refrigerator, check with management to see if one can be brought up. I'll drink tap water rather than spend money on bottled water, but I like it cold. Most hotels have ice machines so you can cool beverages in your room, but an ice bucket is not as flexible as a refrigerator.

Hotel restaurants tend to be pricey, so when you're going out for lunch or dinner, grab some new conference friends and explore the area. You might find a tastier meal for less money.

Educational sessions are wonderful, but most networking at conferences happens in the bar. Embassy Suites had a free happy hour for hotel guests, but most hotels gouge you on bar drinks. Having to pay ten to twelve dollars for a glass of wine keeps me from overindulging. Maybe that's a good thing… Learn to drink slowly and don't be afraid to ask for a glass of water instead of a refill.

Depending on your profession and whether you're a sole proprietor, a volunteer for a nonprofit, or an employee, many of your costs to attend a conference may be tax deductible. Save your receipts.

What are your thoughts on attending professional conferences? I'd love to hear your comments.

Wednesday, July 18, 2018

Countdown to Financial Fitness: Looks Like a Scam to Me…

Countdown to Financial Fitness: Looks Like a Scam to Me…: Yesterday I received a Priority Mail envelope from an address I didn't recognize. Inside was a cashier's check for $1930.00 and a j...

Looks Like a Scam to Me…

Yesterday I received a Priority Mail envelope from an address I didn't recognize. Inside was a cashier's check for $1930.00 and a job offer. Whoopee!

The enclosed letter told me I had been selected as a Wal-Mart secret shopper. What fun! How did they know I've always wanted to be a mystery shopper? I never applied for the job.

Pretty good money, too. Oh wait, the letter went on to say that my actual compensation would only be $300, not the entire $1930 that they'd entrusted to me. Still, $300 for a couple hours' work was not bad. I was instructed to deposit the check, then go purchase something at Wal-Mart for under $50, and then report on my interaction with the cashier.

The next part of the assignment required me to evaluate the Walmart2Walmart money transfer system by sending my new employer $1516 in two monetary transfers of $780 each. The person who wrote the instructions must not have been able to add, because $780 times two is $1560. And it sounded like there'd also be a $20 fee for making a transfer, but that would be covered by the $1930 check.

They emphasized that my task must be completed within three days of receiving the letter. (They especially want that money transfer made before their cashier's check bounces.)

I'm also supposed to send them a text or email to let them know I received the package, before I deposit the check. (That way, they'll have confirmation of live contacts for future phishing expeditions.)

My first thought—even though the letter warned me not to—was to contact Wal-Mart and make them aware of the scam. But then I just googled "Walmart Secret Shopper" and all kinds of fraud alerts appeared. Apparently, Wal-Mart does not even hire mystery shoppers, and they say so on their website. In case I'd missed all the red flags, some of the stories in the online reports sounded exactly like my scenario.

Guess I won't be taking this job after all…

Just curious, I went to the USPS website and checked the tracking number on the Priority Mail envelope. It was real; the response showed the date and time the package was delivered to my address. According to the label, the crooks had paid $9.90 postage to insure and send the bogus check via two-day service. I wonder if it was mailed by some poor soul who was duped by one of those phony "work-from-home" scams…

I dropped by my local police station with my paperwork. One of the detectives does periodic public service presentations to promote awareness about fraud. I figured he could use my letter and check as a visual aid.

"I hope you're not out any money," the receptionist said as she studied my letter. When I assured her I didn't fall for it, she added, "The chief gets these letters from time to time. Addressed to him here at the police station!"

Have you ever been the target or victim of a scam? I'd love to hear your comments.