Budgeting

5 of My Favorite Personal Finance Books

May 6, 2021 By Rachel Slifka Leave a Comment

People sometimes ask how I got into personal finance. The simple answer is by reading. Admittedly, I didn’t know much about money as a young adult. It wasn’t until I graduated college and found myself struggling to pay off my student loan debt that i decided to pick up my first personal finance book. Since then, I’ve been hooked! Here are 5 of my favorite personal finance books.

1) Rich Dad, Poor Dad by Robert Kiyosaki

Rich Dad, Poor Dad is unique for it’s conceptual descriptions. If you’re interested in wealth building versus simply earning more money, then this is the book for you.

Kiyosaki describes growing up with his father (the Poor Dad) and his friend’s father who was a business owner and mentor (the Rich Dad). In his book, he compares the thinking of his Poor Dad versus his Rich Dad and the lessons he has learned from both.

What I like the most about this book is the story behind it. It’s not a book that spews advice and facts to you. It’s concepts are very simple, but they are effective, and it’s an enjoyable read.

2) Total Money Makeover by Dave Ramsey

Although he can be controversial, there’s no doubting Dave Ramsey knows his stuff when it comes to money. Total Money Makeover was one of the first books I read when I was paying off debt, and I used most of his tactics to pay off my student loans.

If you’re struggling financially and aren’t sure where to start, this is a great book. Ramsey’s “baby-steps” map out the exact next step to take. His snowball method for paying off debt has helped thousands of people become debt-free. Defi8nitely worth the read!

3) Hustle Away Debt by David Carlson

Looking to make more money? Or, start a business in your spare time? Then read Hustle Away Debt by David Carlson.

Carlson, who runs the popular personal finance site Young Adult Money, has been a side-hustler for years. In his book, he talks about how to leverage a side hustle along with your day-job to pay off debt.

Personally, I was inspired by the site Young Adult Money to start my freelance writing side hustle in order to pay off debt. Eventually, I actually started writing for Young Adult Money as part of my side hustle! Without Carlson’s site and book, I wouldn’t have been able to pay off my student loans as soon as I did!

4) The Psychology of Money by Morgan Housel

Most people think about the math behind the money, but what about the psychology? The Psychology of Money by Morgan Housel discusses the behaviors associated with personal finance.

If you understand the basics of money, but are interested in why we spend the way we do, then this is a must-read for your list. It’s fascinating to understand the behaviors behind our relationship with money.

5) You are a Badass at Making Money by Jen Sincero

Jen Sincero has a few books in this series, but You are a Badass at Making Money is one of my favorites. If you are looking to increase your income but aren’t sure you can, Sincero’s book is for you. It’s an easy and fun read, and Sincero is genuine and approachable. If you doubt your ability to make more money, then give this book a chance!

Weekly Financial Wrap: Rental Cars Prices, Copper and Job Scams Rise As Video Game Stocks Decline

May 1, 2021 By Max Erkiletian Leave a Comment

The Latest Shortage – Rental Cars

Rental car prices are skyrocketing. It’s getting so bad in Hawaii, some vacationers have started renting U-Haul trucks to get around.

What’s causing all this? The pandemic, of course. Last year, with travel restricted, car rental firms had vehicles, but drastically fewer customers. As a result, the rental companies sold much of their inventory.

Several major brands including Hertz, Advantage, and EZ went into bankruptcy.

Higher Demand, Lower Supply

Now, with vaccinations on the rise and the economy rebounding, more people are traveling. That means demand for rental cars has suddenly increased. That has sent rental prices soaring.

“Car rental companies with bare-bones fleets are now struggling to meet the crushing demand from a growing number of folks who suddenly want to travel,” writes Jonathan Weinberg, CEO of Autoslash, a website designed to save on rental cars. “That’s leading to skyrocketing car rental rates and, quite frequently, travelers getting shut out of renting any car because they are completely sold out in a given market.”

Not Getting Any Better

Orlando, Tampa, Phoenix, and Denver sold out of rentals over President’s Day, according to Weinberg.

“Got your vaccinations and want to fly down to San Juan for some sun and surf?” asks Weinberg. “I hope you don’t mind cabbing it everywhere. And it is only going to get worse as we head through spring and into summer.”

No Simple Solution

Ordinarily, rental companies would only have to purchase more cars to meet the demand. However, the new car supply is down due to COVID plant closings and the semiconductor shortage.

For this summer, the best advice the rental companies can offer is to book your rental early. However, you may want to make that booking with U-haul.

All That Glitters Is Not Gold

Investors are beginning to take a shine to Copper. The highly used element being gobbled up as manufacturing revitalizes.

Sunday SA will look at this copper boom and how it may impact your wallet.

Job Scams on the Rise

With more jobs than qualified applicants and unemployment heading down, you might think job scams would be declining. However, the opposite is true.

Last year 16.012 people reported losing over $59 million to employment fraud, according to the Federal Bureau of Investigation’s Internet Crime Complaints Center (IC3). Meanwhile, 2,349 people have already reported losses of over $5 million in the first two months of 2021.

Let’s take a look at three of the most prominent hiring scams.

Money Laundering Scam

The online advertisement or email promoting this fraud says the employer needs to process payments through your personal checking account. You are given a small percentage of each check. Typically, the crooks will say they can not process certain payments because they are in a foreign country.

What your doing is processing stolen money or bad checks. That is money laundering. It is a crime and you could go to jail for doing it. On top of that, you are responsible to the bank for its losses.

Phishing Scam

These rip-offs tell you they need more information to determine if you qualify for a top-paying job. They direct you to a website where you fill in personal financial information.

By doing that, you are sending them your identity and access to your money. At best you are giving them information they will sell to online marketers.

Shipping Scam

This scam offers to pay you to receive, repackage and reship packages. Why would a company need you to do that?

Here, the fraudsters are getting you to ship stolen goods. On top of that, they may direct you to label the packages as “gifts”. By doing that, you would be falsifying government documents. That is a crime you can add to mail fraud.

How To Spot a Fraud

There are several red flags in employment scams. Here are some:

If It sounds too good to be true, it probably is. There aren’t many jobs that pay a lot for little or no work.
The company has no website.
They want personal information upfront.
You have to pay for training or make a deposit.

Do Some Research

Here are a few ways you can check for employment fraud before sending personal information or accepting a fishy job,

Do an online search adding the word “scam” to the company name. For instance, let’s say you get an email job offer from “Get Rich, Do Nothing”. If you Google “Get Rich, Do Nothing + scam” you will get information on any shady activities.

In addition, you can also contact the Better Business Bureau for a free report on the company. One of the best sources regarding consumer fraud is the Federal Trade Commission.

Video Games Stocks Stumble

Some businesses benefited from the pandemic shutdown. Manufacturers of hand sanitizers and masks certainly did. Another sector that increased profits as a result of COVID concerns is video game companies.

However, with the kids returning to school and parents getting back to the office, video games may go back in their boxes. As a result, video company stocks may not make it to the next level any time soon.

February Highs

Major video company stocks peaked in February. However, since then, they have been on a downward slide.

“In our view, one of the big risks is the return to normalcy,” John Patrick Lee, VanEck ETF product manager, told Investors Business Daily.

Seasonality

Video game purchases peak during the holidays. However, they also tapper off in the months afterward.

One gauge of the industry’s health is E3. That is the Comic-Con of the video gaming world. Last year’s event was canceled due to the pandemic. This year’s E3 will be online June 12-15.

Some new releases to be unveiled at this year’s E3 include “Halo Infinite” from Microsoft and a new “Call of Duty” from Activision Blizzard. The consumer response to those and other releases will indicate where video game stocks are headed.

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Budget Burnout: How To Keep Your Goals Realistic

April 27, 2021 By Vicky Monroe Leave a Comment

If you’re struggling to stick to your budget, it might be because you’ve set unrealistic goals for yourself.

We all want to max out our retirement accounts and aggressively pay down our debt. But it’s important to create a budget that accurately reflects your financial means.

If you only make $30,000 per year, it would be prohibitively difficult to save $1,000 or more per month. Building your budget around that kind of objective would be setting yourself up for failure.

Here are some tips to help you keep budget goals realistic so you don’t burn out and give up.

5 Tips to Keep Your Budget Goals Realistic

Go Through Your Bank Statements

When you make a budget, it’s important to use numbers that are based on your current spending. Creating your budget without looking at your bank statements is a recipe for frustration. If you guess how much you spend every month, you won’t know if the savings targets you’re aiming for are realistic.

Get out your calculator and bank statements from the past few months. Add up your fixed monthly expenses like rent first—they’re the easiest to calculate because they don’t fluctuate.

Then figure out how much you spend on discretionary expenses like groceries, eating out, and travel. You can do this by adding up how much you spent on each category over the past three months. Then divide it by three to find the average.

Don’t forget to account for semi-annual expenses like car insurance and miscellaneous things that pop up, such as car repairs and maintenance. Then record all of these numbers in a spreadsheet so you can easily reference them.

Cut Your Expenses Gradually

If you haven’t crunched the numbers before and figured out how much you’re really spending, you might not like the results. There may not be much money left over at the end of the month to meet the financial goals you want to achieve, like buying a house.

Experts recommend that you save about 20% of your income every month, which is a good benchmark to keep your budget goals realistic. If you’re not hitting that number, you may want to trim your expenses so you can set some money aside instead of living paycheck to paycheck.

However, it’s important to start cutting back gradually. If you reduce your eating out budget by half, you might find it too difficult to stick to and give up.

Instead, challenge yourself to reduce your spending on restaurant meals by 10% every month until you reach your goal. That way you won’t go through lifestyle shock.

If you have multiple spending categories you need to reduce, focus on just one or two every month so you don’t get overwhelmed. And if you mess up and overspend, don’t beat yourself up. You can always borrow money from another category or save a little less, which isn’t the end of the world if it’s just for one month.

It’s going to be hard to change your lifestyle, but in the end, it will be worth it.

Include Fun Money in Your Budget

If you’re a natural saver, you may have the opposite problem—well over 20% of your income is going toward saving and investing every month. While this isn’t a bad thing, it’s important to set aside some fun money to enjoy your life and keep your budget goals realistic.

You can’t always say no to drinks with friends or pass up that new pair of shoes you have your eye on. Denying yourself everything you want and sticking to a spartan budget will eventually lead to frugal fatigue.

So make sure you account for discretionary spending. Experts say it’s ok to spend about 30% of your income on things like shoes, clothes, takeout, and subscriptions.

Revisit Your Budget Regularly

Your budget is a living, breathing document. As your income and circumstances change, it’s important to revisit your budget to make sure it’s still working for you.

I like to review my bank statements and budget spreadsheet once every three or four months. But you may need to adjust your budget more often during the first few months of following it.

It’s unlikely you’ll get your budget 100% right the first time, so take a look at it every month or so and reevaluate it. Use apps like these if needed.

App	Fees and Minimum	Best for:
Personal Capital	Free	Monitoring wealth and spending
Simplifi	Free	Personal budgeting
YNAB	$84 a year or $11.99 a month (after a 34-day free trial), free for students for 12 months.	Personal budgeting

Reward Yourself for Sticking to Your Budget Goals

Sticking to a budget isn’t easy, especially if you’re used to living paycheck to paycheck. So when you nail it, make sure you have a reward planned to celebrate your financial progress.

Your reward doesn’t have to cost a lot of money—it could be something as simple as a cup of coffee at your favorite cafe. But do something to mark this achievement. Recognizing the hard work you’ve put in is key to avoiding budget burnout.

We all want to achieve our financial goals quickly, which can make it hard to set a realistic budget. But creating an aspirational budget that doesn’t reflect your current spending is setting yourself up for failure and frustration.

So make sure you base your budget off your bank statements and cut back your expenses gradually so you don’t get burned out.

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Check out these helpful tools to help you save more. For investing advice, visit The Motley Fool.

Will Supply Shortages Cost Consumers More

April 25, 2021 By Max Erkiletian Leave a Comment

Production cuts during the pandemic, drought in Asia, increased demand, and a shipping bottleneck. All are factors in current and coming supply shortages that have exposed the frailty of supply chains around the world. To you, that means a scarcity of some goods and higher prices.

We will examine supply shortages that have and will lead to price increases in general. However, let’s first take a look at three resources in short supply now that are pushing prices upward.

Gas Prices Increase

Despite an increase in demand, prices at the pump have remained fairly steady, according to the American Automotive Association (AAA). So far this month, a gallon of gas has averaged $2.86 reports AAA. However, that is about $1 higher than this time last year.

One of the reasons gas prices have climbed is OPEC production cuts. The cartel decreased production earlier this year. However, on April 1, it announced gradual production increases. That may stabilize prices for now, but future production changes could increase what you pay at the pump.

Outlook Steady

“For all of 2021, we expect U.S. retail prices of regular-grade gasoline to average $2.66/gal and retail prices for all grades to average $2.78/gal,” states the U. S. Energy Information Administration, “which would result in the average U.S. household spending about $480 (31%) more on motor fuel in 2021 compared with 2020.”

Traditionally, demand for gas increases as people hit the road on vacation. That didn’t happen much last year. However, this year is expected to be different. More vaccinated people with more money are expected to increase their travel this summer. That will increase demand. If supplies do not keep up, prices will increase.

Rubber Supply Shortage Expanding

Natural rubber climbed to a four-year high this week, trading at $2.20 per kilogram. The price increase is attributable to a rubber supply shortage. How nice, you say, for those traders who bet on rubber. But how does that affect me?

It means you will pay more for many things you use every day.

Rubber Used in Many Products

As you go through your day, take note of the rubber in all the products you use. Do you walk across a floor? There is rubber under the carpet or wood. In fact, your shoes probably contain rubber. Do you go to a doctor? Those gloves they wear are made of rubber. Do you drive or take public transportation? Rubber is used in the tires and belts of those vehicles. It is also used in adhesives, clothing, and many other products.

Tire Prices Rising

Because rubber is used in so many products it is hard to break down price hikes in each one. However, one of the most noticeable products being affected by the decreased rubber supply is tires.

Major tire manufactures have raised prices an average of eight percent in recent months.

The China Factor

Contributing to the rubber supply shortage was a drought in Thailand and Vietnam. However, China has had an impact. It began stockpiling rubber in 2012. As rubber made its way to the market this year, China has been quick to make purchases.

Wood Growing Scarce

If you are building a new home, you will pay on average $24,000 more this year than in 2020, according to the National Association of Home Builders (NAHB). The increase is due to increasing lumber prices.

“The escalating lumber prices are largely due to insufficient domestic production and extremely large lumber mill curtailments that lasted well into the 2020 building season,” says the NAHB.

Other Causes of Supply Shortages

Though there are specific causes for some shortages, there are some general causes that impact almost all products.

The Pandemic

Many companies cut production in anticipation of reduced demand during the height of the pandemic. They also reduced production capacity by exercising safety precautions. Those safety measures, such as social distancing, reduced the workforce. As a result, fewer goods were produced.

Jammed Seaports

Consumer demand has increased as the economy recovers. As a result, international shipping has accelerated and ports are clogged.

As many as 41 container ships have been forced to lay at anchor waiting for a birth in the Los Angeles/Long Beach port, according to a report in the Seatrade Maritime News. Other ports are also jammed. As a result, there is now a backlog in rail shipping.

Economic Recovery and Consumer Spending

Some factors such as drought in Southeast Asia or a deep freeze in Texas are unpredictable forces of nature. However, they may not be as big as human actions.

People and computer models trying to forecast supply needs did not anticipate the economy rebounding as quickly as it has.

The ramped-up vaccine rollout and increased stimulus money have got more people out and spending. Consequently, we are buying more gas and ordering more products than businesses planned for.

Light at the End of the Funnel

One person who thinks the supply shortages will not last is Federal Reserve Chairman Jerome Powell.

“It’s not like the supply side will be unable to adapt to these things,” Powell said at a March 17 press conference. “It will—the market will clear. It just may take some time.”

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Weekly Financial Wrap: Workers Want Flexibility; Banks Earnings Explode; and Supply Shortages Push Prices Up

April 24, 2021 By Max Erkiletian Leave a Comment

Most Workers Do Not Want the Old Office Routine

With vaccinations increasing and the economy opening up, more people are talking about the workforce returning to normal. But, what will the new normal be?

A recent survey by Harvard Business School (HBS) found that 81 percent of those forced to work from home during the pandemic want to continue working remotely in some manner. Of that number, 27 percent want to work from home full-time. Another 61 percent favor a hybrid of two or three days in the office and two or three days at home.

Only 18 percent of those surveyed wanted to return to the office full-time. Parents with children at home and married people wanted back in the office more than singles and those without children.

More Flexibility, More Productivity

“The past year has been difficult for everyone, but what’s surprising is how well people feel they’ve performed at work, while at home,” said HBS Online Executive Director Patrick Mullane. “Now, as we’re preparing to get back to ‘business as usual,’ it seems professionals don’t want ‘business as usual.’ Instead, they want flexibility from their employers to allow them to maintain the new work/home balance and productivity they have come to enjoy.”

Other Findings in the Survey:

1-in-3 felt both their overall performance and quality of work was better than the year prior
1-in-3 were actually able to better focus on work from home.
35 percent read more for professional growth.
29 percent continued their education.
34 percent took online courses for career development.
70 percent spent more time with loved ones.
1-in-3 drank more alcohol.
1-in-3 used more recreational drugs.
14 percent bathed less.

Big Banks Boom

Earning season, when companies began reporting earnings, major banks took the lead. Many hit levels not seen since the 2008 financial crisis.

JP Morgan Chase notched record revenues of $33.1 billion. That pushed earnings up 477 percent to $4.50 a share.

Revenues of $17.7 billion for Goldman Sachs almost doubled first-quarter earnings last year. That moved earnings per share to $18.60.

Profits for the first quarter at Bank of America (BofA) doubled. Citigroup’s profits tripled.

Two factors contributed to bank profits and earnings.

Increased Stock and Bond Trading

Stock and bond trading moved at a fevered pace in the first quarter of 2021. That included an explosion of Initial Public Offerings (IPOs) and Special Purpose Acquisition Companies (SPACs). That meant more investors were buying and selling. The result was more profits for the big banks.

Goldman increased equity-underwriting revenues 40 percent over the last quarter. In addition, Citigroup’s investment banking revenues were up 50 percent.

Improving Economy

Lenders began predicting a brighter economic future earlier this year. Much of that is due to stimulus from the federal government.

Spendmenot, a website covering financial trends, estimates Americans are sitting on $3.9 trillion savings. Much of that accumulated from stimulus checks. In addition, the research firm says consumers may be poised for a spending spree. That will boost the economy and banking.

Release of Reserves

The banks brought billions of dollars out of reserve in the first quarter. That also bloated their bottom line.

The uncertain pandemic economy led banks to stockpile reserves of cash in 2020. However, with loans performing better than expected and the bright economic outlook, those reserves are no longer needed. For example, JP Morgan now expects $4.2 billion loans it had anticipated would default to be paid. In addition, BofA added $1.9 billion it had put in reserve to its bottom line. Other big banks made similar moves.

Short Supplies, Higher Prices

It’s not just the pandemic. A host of problems have clogged the supply chain. As a result, there are more shortages coming. That will lead to higher prices of many items we use every day.

Sunday, SA takes a look at supply shortages and their impact on the goods you buy in the future.

Jobless Claims Decline

Unemployment insurance claims continued downward Thursday. The U. S. Department of Labor reported 547,000 people filed for unemployment insurance for the first time last week.

That figure is 39,000 below last week’s revised figure. In addition, it was the lowest initial claims report since March 14, 2020. At that time 256,000 people filed unemployment claims for the first time.

Unemployment Rate

Unemployment stayed at six percent. However, that is well below the peaked of 14.7 percent in April 2020. That month 6.2 million made their first application for unemployment benefits, according to the Labor Department.

Conclusion

The new normal in the work environment may be a lot like the COVID work environment if employees have their way. Regardless, strong banks with more people working and spending are accelerating the economic recovery. Although prices may be higher until the supply chain catches up to consumer demand.

Buy a House in These States and Student Debt is Forgiven

April 22, 2021 By Allen Francis Leave a Comment

When you borrow money today, you are robbing your future self of funds you may need. And you may then perpetuate a debt cycle where you generate money by assuming more debt.

And as someone who has struggled with debt, I am not judgmental or pompous. The truth is that many of us start life with crushing, unimaginable debt without appreciating the long-term consequences.

Consider the unremedied scourge of student loan debt. Student loan debt is not bad within itself.

The problem is that young people become psychologically mired in a self-perpetuating debt cycle mindset before they even graduate.

Over 43.2 million Americans collectively owe over $1.7 trillion in student loan debt. The average American college student owes over $40,000 in student loan debt.

When students enter working life saddled with student loan debt, buying a car or house, rites of passage in achieving the American Dream become cost-prohibitive mirages.

The average cost of a new car is $40,000 – most Americans are now buying used cars in the aftermath of the pandemic.

And the typical price of a new house is $350,000.

What if I told you that, under qualifying conditions, several states would pay off your student loans if you moved there and bought a home?

Illinois Smart Buy Initiative

The typical cost of a house in Illinois $223,000. If you qualify for Illinois’ Smart Buy program, you may only have to worry about raising $180,000 of that estimate.

Smart Buy is a $25 million mortgage program initiative that is designed to help shed up to $40,000 in student loan debt if you buy a home in the state. If you qualify, you may get a 30-year fixed-rate mortgage and an additional loan for $5,000 at 0% interest.

The sweetener to this deal is the student loan forgiveness portion. A Smart Buy affiliated mortgage lender will pay off your student debt by $40,000 or a 15% equivalence of the home’s value, whichever is lowest.

To qualify for this program your credit score must be 640; you must live in the home for three years. And you can only apply the Smart

Buy program to a new home purchase. In other words, you cannot use this program retroactively for a home you already own or recently bought.

There are also income limit and home price limit qualifications relative to the Illinois city or county you plan to reside in – you can check that out here.

Maryland Mortgage Smart Buy

The average cost of a house in Maryland is $349,000. If you qualify for Maryland’s Mortgage Smart Buy initiative, then you will only have to raise $319,000.

Suppose you qualify for the Maryland Mortgage Smart Buy initiative. In that case, an affiliated mortgage lender pays off $30,000 of your student loan debt or discount 15% of the home’s value relative to that debt, whichever is lower.

However, one catch is that this student loan forgiveness is only viable if at least two borrowers apply. And at least one of you must have paid off all of your student loan debt before applying.

Consider Your Options

If you consider these are other student loan forgiveness programs via mortgage discount, always remember there are qualifications and limits. Even if you qualify, these programs won’t pay off all of your student loan debt if you owe more than $1,000 to $40,000, depending on the program.

Talk to a financial advisor if you are struggling with student loan debt.

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