Saving Without A Budget

How Stores Trick You Into Spending More

While scouring over Digg, I came across a very interesting (and popular) article from MSN Money which talks about the different ways that stores trick you into spending more money. Upon first glance, these tricks seem pretty subtle, but the more you think about them the more obvious they become.

For example, have you ever noticed that as you’re walking through the grocery or department store that the most expensive items (usually name brand items) are placed at eye level, while the less expensive items (usually generic) are placed on either the top or bottom shelves?

Or how about the fact that all of those small, “impulse items” like candy, soda and magazines are always placed right around the register?

The MSN Money article goes on to list 13 additional ways in which stores trick you into giving up more money than you anticipated, as well as 10 ways that you can fight back - like not using a shopping cart, or simply never deviating from your shopping list.

Anyway, it’s a great read and I recommend that you take the time to check it out.

Posted in Bargain Hunting | 4 Comments »

Do a Little Spring Cleaning

While today’s topic really isn’t too much about saving money - although it might help you make a couple of bucks - it’ll help you declutter your home and make your living space much more presentable.

If you’re anything like me, you’ve got tons and tons of stuff around your house that you don’t use, don’t need, yet feel some strong desire to keep around just in case you might ever need it. Do yourself a favor, stop cramming it into the last couple of inches of closet space you have left and simply get rid of it.

The other weekend, I decided to go through all of the junk that had accumulated in the unfinished section of my basement; five hours and four big boxes worth of junk later, I had successfully decluttered most of my basement, and finally had shelf space for the stuff that really needed it.

Most of the stuff that I got rid of, I had completely forgotten that I had, or why I even still had it. I would imagine that you can find at least a box or two of similar stuff scattered throughout your home.

Whether you have a yard sale, sell the stuff on eBay or donate it to a local church or thrift store, is completely up to you, and shortly after giving up your stuff you might feel a sense of remorse, but in the long run you’ll be much happier once you get all of that needless junk out of your house.

Posted in Around The House | 1 Comment »

Real Estate’s Coming Death Rattle

Lately there’s been rampant speculation on where the housing market will go from here; you’ve got the optimists who say that we’ve hit the price floor and the market will only go up from here, you’ve got the pessimists (like me) who say that the worst is yet to come, and you’ve got a whole lot of people in between that are just going a long for the ride.

The one thing that we can all agree upon is the fact that the housing boom is over.

If you were to look at rest estate as a business, you would probably see something that you would never invest your money in: the number of homes for sale continues to increase (in business terms, this means rising inventory), while the prices for the homes that are selling continue to fall (in business terms, this would mean decreasing revenues).

In looking at the real estate market this way, I think you’d be hard pressed to say that this would be a business that was in good shape, and more than likely you’d say that this business was on the verge of imploding.

And on that note, here’s what I see happening in the real estate market over the next three to five years. Keep in mind, I’m certainly no expert but I don’t think it takes an expert to see what’s coming:

Because the economy is beginning to show major signs of slowing (economic growth rate is down, unemployment is beginning to rise, etc.) the Federal Reserve at some point in the not too distant future - probably within the next six to 12 months - will gradually lower the prime interest rate. In turn, this will cause the real estate market to show a plateau in prices or, quite possibly, a slight rebound (less than a few percentage points).

However this will be short lived for two main reasons:

1. Because of the inflationary pressures brought about by the ever increasing energy costs (face it, energy prices are NEVER going to go down) the Fed will be unable to keep prime low, and will be forced to raise the rates to help ease inflation
2. Because the dollar continues to fall, the Fed will have to raise interest rates in order to keep foreign investors from dumping our currency.

So, when the Fed realizes it has to raise interest rates, look out below. Real estate prices will resume their decline due to the fact that “cheap” (low interest rate) mortgages will be a thing of the past and people won’t be able to afford mortgages at the substantially higher rates. This will cause housing prices to fall to levels that people will actually be able to comfortably afford at significantly higher interest rates.

Putting this all together, I don’t think it’s unrealistic to see another 10% to 15% drop in home values over the next couple of years.

Will the market eventually bottom for good? Absolutely. At some point we will return to our typical 5% to 8% annual increase. Unfortunately, I don’t think this is going to happen for quite some time.

Posted in Miscellaneous | 3 Comments »

How to go About Getting a Raise

First off, I apologize for the amount of time between posts - last Saturday I thought it would be a good idea to go ahead and strip and restain my deck. I thought that I would be done in a day or two, but unfortunately I was off by about a week. So, needless to say, my energy has been focused on my deck as opposed to my websites.

Anyway, while I was waiting for some of the stain to dry, I came across a pretty interesting article on Yahoo! Finance, which talked about the correct ways to go about asking your employer for a raise.

(As a side note, for those of you who are serious about getting up to speed on your personal finances, I highly recommend that you check out Yahoo! Finance and MSN Money each and every day. There are a lot of great columnists that will give you plenty of fantastic ideas to help you save money and then help you grow what you’ve saved.)

The article, written by Liz Ryan of Business Week Online, gave a pretty good overview on how you should go about asking your boss or employer for a raise so that you are compensated in line with your education, experience and skill.

One of the interesting points brought up in the article was the fact that not all compensation has to be related to your salary. Compensation has to do with all of your job’s perks- your salary, benefits, paid time off, etc., so when you go to ask for a better compensation package, you don’t always have to focus on money.

Aside from that, here are some other key items that I took away from the article:

• Do some research before you open your mouth. Try and find out what other people with similar qualifications are getting on the “open market.” Just telling your boss, “I think I deserve a raise,” probably isn’t going to be enough to substantiate getting one.
• Know when to bring up your compensation package. It probably isn’t a great idea to talk to your boss about your salary after you’ve just been asked about why you showed up at 8:15 that morning. Wait until you’ve received some praise for your consistently good work and then feel free to bring up the subject.
• Don’t get low-balled because your previous job underpaid you. When switching jobs, your salary history is bound to come up. If you feel that you were underpaid and your previous job (and it’s going to be the basis for how much your new employer is going to pay you) be sure to bring it up during negotiations. Remember, try and have some numbers to back up your claims though.

I’ll be perfectly honest, I think it takes some pretty big onions to be able to walk into your boss’ office and tell them that you deserve a raise, and it’s not something that I think I could ever be able to do.

That being said, if you truly are underpaid, it’s only right that you get what you are worth, and the only way you’re going to get there is to simply ask.

Posted in Miscellaneous | 2 Comments »

Rollover Your Retirement Plans - Don’t Touch the Money!

The other day a buddy of mine was asking about what to do with his 401k - he had recently switched jobs and wanted to move all of his money from the old company’s plan to the new company’s plan. Simple enough.

However, when he told me how he planned to do this, I just about had a heart attack.

His initial plan was to get a hold of his old company’s 401k provider, ask them to cut him a check for whatever was in his account and then go ahead and write the new company’s 401k provider a check for the same amount once he got their information.

While this plan is perfectly legal, it’s probably one of the worse financial decisions you could ever make due to the severe tax consequences.

By having the old 401k company cut him a check, my buddy was essentially getting a distribution, which would be considered taxable income, and would get hit at whatever his current tax rate is.

On top of that, there would be an additional 10% penalty tacked on to the taxes because you are not allowed to touch money in your retirement accounts - with very few exceptions - until you’re 59 1/2 years old.

After explaining this to my buddy, I told him that the best thing for him to do would be to do the research prior to requesting the check, contact the new 401k provider and get all of the necessary rollover information from them. Once he gets this information, then he can contact the old 401k company, give them the name of the new financial institution and request that his “distribution” be made to the new company.

You see, as long as you rollover the money from one account to another without taking possession of the money (i.e. the distribution check is made out to you) you won’t incur any penalties or have to pay taxes on the money.

By following my advice, my buddy probably saved at least 35% of what his 401k is worth. And no matter how much money you have, 35% of it is a pretty big chunk of change.

Posted in Investing, Retirement | No Comments »