Avoiding Lifestyle Creep

It almost seems like a rite of passage; you get a job and suddenly you need to 'prove' to everyone that you've made it. You need a new car, new clothes, the best apartment. This is known as lifestyle creep. As you make more money, you feel the need to spend this money on more expensive things. If you have fallen for it, and many of you have, there are important reasons why you should avoid or delay lifestyle creep as long as possible. (And don't feel bad if you have fallen for it, as I have too!)

Planning Your Future

There is nothing worse than having to delay your future. Be it delaying the wedding because you have to save up more money for it, or delay retirement because you just can't afford it. The greatest asset you have is time. By investing as much money as you can at a young age, you get to take advantage of time. You let that money grow and compound upon itself.

Do you need to buy nice things?

Being Unhappy

Maybe you are in the middle of your career and you hate every minute of it. But because you bought the McMansion and the new BMW, you have to go to work in order to pay the bills. Think of how great it would be to have the freedom to quit your job if you hated and spend your days doing what you really enjoy. How great would that be?

I recently had lunch with a friend who did just this. He hated (and I mean hated) his job. It was a lousy job ' I know because I worked with him for three years before I couldn't take it anymore). He is in his mid-40's. He just paid off his mortgage and has no major bills. His wife works and he will be covered under her health insurance. I've never see him smile so much.

Spending Time With Your Kids

The main reason I try to avoid lifestyle creep is because I want to be around to see my family grow. I want to go to the soccer game or the music recital. I don't want to miss those times because I have to work overtime to pay the bills. Avoiding lifestyle creep keeps the door open for me to attend these events.

Final Thoughts

Always remember that you don't have to show or prove to others that you've made it. In fact, the typical millionaire drives a late model car and lives in an average house. You probably wouldn't know he had money if he passed you on the street. Learn to be happy with what you have.

But, don't take this as me saying that you cannot buy any new toys for yourself or live unhappily while you plan for the future. What I am saying is to be reasonable with it. You can be happy now and later. If you really want something now and can afford it, by all means, buy it. Don't be so miserable now that you resent saving or planning for the future. Just make sure your current spending is in moderation so that you have to opportunity to take advantage of any situations that come your way in the future.

6 Expensive Things Every Homeowner Should Prepare For

BIO: Dominique Brown is a financial planner, landord, personal finance blogger and video blogger. He is the owner of YourFinancesSimplified.com where he talks about everything from being a new father to his worst financial mistakes. He is also the owner of InsiderRealEstateTips.com where he talks about real estate exclusively. You can find him either on Twitter, Facebook, Youtube or Instagram. 

Buying a home is an exciting time in your life, and it is a busy one as well. From getting every one of your worldly possessions moved in to signing mounds of paperwork, there is always something to be done. In this whirlwind of activity a few important things can slip through the cracks. This is unfortunate, since these things can cost thousands of dollars without even being considered a high priority.

Listed below are some of the six most expensive things every new homeowner should prepare for, and if you don't, you might find yourself in a difficult situation.

1. Property Taxes

When moving into a newly constructed home, the property tax can suddenly skyrocket in the first year or two into the range of thousands of dollars. The last time the property was evaluated it was most likely an empty lot, which means that the property taxes were much lower. Now that a house has been constructed on that lot, its value and its property taxes have increased.

The initial property tax payment can sometimes triple in the small span of a year. Property taxes are also affected by state and even by county.

2. Window Coverings and Treatments

Windows are usually a big selling point for a house. The bigger the windows, and the more light that comes in, the better. However, those big windows will need things such as curtains, screens, blinds, and shades. The windows of old homes especially will usually need to be treated to make sure there are no gaps where hot and cold air can leak out.

The price for all of this can easily reach upwards of a couple thousand dollars. To minimize costs, you may want to purchase materials and simply do the job yourself. In some cases, the previous owners will leave things like blinds, and you will want to see what the homeowners are doing in your specific situation so that you can add the window treatments into your contract if possible.

3. Insurance

Every homeowner requires homeowner's insurance. The cost can vary greatly depending on your state, the size and value of the house, and size of the lot. Insurance can cost anywhere between seven hundred to two thousand dollars annually. However, basic insurance may not cover every sort of disaster. If your home is damaged by an earthquake, flood, hurricane, or landslide, you may be stuck holding the bill for the repairs. Then there's the matter of insuring your belongings. When all is said and done, you may be paying more than you expected.

4. Landscaping and Groundskeeping

That front lawn may be beautiful and immaculate when you first buy that house, but it didn't get that way overnight. Worse yet, it won't stay that way for long if neglected. Even if the front lawn is amazing, chances are that the backyard isn't as well kept. After all, most owners focus on curb appeal. Depending on the lawn, you may be spending up to thirty thousand dollars on irrigation, sprinklers, and landscaping materials. Even more if you wish to build a patio or deck. When faced with a barren or unkempt backyard, always try to use it as leverage to negotiate a lower price with the seller. Otherwise, you may be spending most of your time and money outdoors.

5. Utilities

Utilities are perhaps the most variable cost of a home. Things such as the size of the house, the companies supplying them, your state, and your actual usage all affect the price of utilities. All things considered, the price can be upwards of three hundred dollars a month. However, the cost doesn't have to be a nasty surprise. You can always ask utility companies for the history of the property, and always remember that the cost usually rises during the summer, so never budget using winter's bills.

6. HOA Fees

No matter what your opinion on HOAs, whether you believe they're controlling or are a necessity, most neighborhoods have them. They are usually charged with making sure the neighborhood is kept clean, safe, and overall a pleasant place to live. They also cost money, and the rate can be anywhere from one hundred to one thousand dollars a month, depending on the neighborhood. Make sure to know the dues before you buy the home and be aware that the cost may change on an annual basis.

While there are many things to do when buying a home, every little detail must be considered because every little detail adds up to a lot of money. Don't be caught off guard, and remember to always do your homework when making such a huge purchase.

Were there any unexpected costs when you bought your home? What was something you ended up paying for?

Financial Carnival for Young Adults ' 36th Edition

Welcome to the thirty six edition of the Financial Carnival for Young Adults. My purpose with this carnival is to create an easy-to-find place for information about finances for young adults. The carnival is hosted here at 20's Finances almost every week and features the most recent articles from around the web. I hope you enjoy this edition of the carnival.

As I review the submissions today, I am also getting ready for the severe storm headed towards the Northeast. I've already been notified that my work has been closed for Monday and Tuesday no matter what and have taken the necessary steps to prepare for the worst. I hope everyone in the path of the storm stays safe. Now, on to the submissions for this week:

SB @ One Cent at a Time writes 15 Ways you Can be Scammed via Craigslist ' 100's of people are getting scammed on on Craigslist every day. This article talks about typical Craigslist scams and how to detect a scam. Protect yourself from being scammed on Craigslist.

Suba @ Wealth Informatics writes Early retirement strategy on one income : Can we still retire early with our income cut in half? ' We want to retire by 40. The goal just got more challenging with me quitting my job, thus cutting our household income in half. Is it still possible for us to achieve this dream?

Sani @ Well Kept Wallet writes 5 Tips for Living a Fun College Lifestyle and Staying out of Debt ' Creatively managing resources is essential if you want to have more fun with shopping, socializing, and enjoying down time. Just as time management is a huge factor, so is budgeting the bill! You need to juggle resources to pay for the cost of living, books, student loans, and still have money left to kick back and rejuvenate doing something fun.

IMB @ Investing Money writes How To Start Investing ' Find out how you can start investing without knowing anything about investing.

Wayne @ Young Family Finance writes Is Buying a New Car Worth The Higher Costs? ' Getting a new car may feel nice, but is it worth the higher cost? Find out now!

Mr. PoP @ Planting Our Pennies writes How Do You Go From Minimum Wage To $80K In A Year ' Mr. PoP started from a minimum wage job, and within a year of moving into commission sales positions was making $80K/year. He's not your typical extroverted sales person and wrote this to help others consider giving sales a chance ' even if they don't think they're 'sales-y' enough.

Don @ MoneySmartGuides writes The Myth of Diversification ' Discover the myth about diversification and my take on it.

BARBARA FRIEDBERG @ Barbara Friedberg Personal Finance writes HOW TO RENT AN APARTMENT ' Before you rent an apartment, improve your credit, perpare your rental and job history. Look professional.

TDB @ Tax Deduction Blog writes Should You Do Your Taxes Or Go With An Accountant? ' When it is that time of the year when taxes have to be done, many are struck with a tough decision to be made every year, on how to go about getting them done. Should they do their taxes by themselves or should they consult an accountant? The answer depends on the situation of an'

JP @ My Family Finances writes How to Make a Bad Financial Situation Worse for Your Family ' If you are in a difficult financial situation, these behaviors will make a bad situation worse.

Miss T. @ Prairie Eco Thrifter writes How to Ask for a Raise and Actually Get It ' Asking for a raise is a game of negotiation, and you have to bring something to the table that convinces your employer you're worth the extra bucks.

Glen Craig @ Free From Broke writes Using a Roth IRA as an Emergency Fund ' Pros and Cons ' Using a Roth IRA as an emergency fund? It's not a recommended practice but it can be done. See the pros and cons and whether it's a good idea for you to try.

 

Updating My Financial Goals

It was just about 11 months ago that I wrote down my first financial goals for the first time. Before that point, my goals and ambition had been recorded in my head. I was successful with this, but it didn't motivate me the same way that it did when I actually wrote them down. For those who have been following my progress, you can see that I have been pretty diligent in achieving my financial goals. It has been nearly a year now and I am happy to say that I have completed almost all of the goals that I set out to achieve (and am still working on the ones that are impossible for me to have finished by this point).

Financial Goal Updates: February 2012 Update, April 2012 Update, July 2012 Update

Updates on My Financial Goals

While I won't bother copying and pasting my original goals (you can see them here), I have made a lot of progress. I have already updated you on many of these goals, but there has been some huge progress since July. Here are a couple updates.

Net Worth Update - In November of last year, I started tracking our net worth. My goal was to increase our net worth by 50%. As of the end of September, our net worth has increased 67.5%. Not too shabby, eh? For those of you who are curious what the dollar amount is, let's just say it is much easier to increase your net worth by that much within 11 months when it is small. Regardless, I am really excited!

School Update - I will be (hopefully) finishing my degree in the next couple of months and that means that I have already paid for my last semester of graduate school. Yes, that's right. We paid for it. We didn't finance it. We paid for it in cash. Not to bad for someone who was barely making ends meet a couple years ago. Unfortunately, my wife is still working on her degree and that means much of our extra cash is directed towards paying for her school bills. While part of me thinks how much faster our net worth could grow if we weren't paying for her school, I know that this ultimately means a better paying job for her in the very near future, so it's more of an investment than anything else (and I strongly believe in investing in yourself).

What are you climbing towards?

What I have Learned From Financial Goals

As a result of setting financial goals, my wife and achieved almost every single one. For the ones that are not complete yet, it was because it was either out of our control or the original goal had a longer time frame than 1 year (like paying for my wife's school). This, perhaps more than anything else that I do with budgeting, has taught me a lot about myself.

I Love Goals - I hate those cliche new years resolutions as much as anyone, but goals is another story. I realized through this process that I thoroughly enjoy setting, working towards, and reaching my goals. While some people set goals reluctantly, I stay up late at night getting excited about new goals that I can set for myself. Some may call this an illness or addiction, but I am genuinely happy in working towards attainable goals.

Financial Goals Motivate Me - Financial goals not only get me excited, but they motivate me. There is something about writing them down (typing them out) and the accountability associated that makes me work hards toward achieving them. I guess the difference is ultimately about living your life intentionally instead of just floating through life. Maybe it's just my friends, but too many young adults take too long to set any financial goals.

My New Financial Goals

With a new year and a new season comes the need for new goals. I have decided to create another list of goals for the short term to motivate me for the next year. I've included the ones that I am currently working on from last year and added some to it.

1. Pay for Mrs. 20's graduate school in CASH
2. Max out roth IRA's in 2013 (2012 are already maxed out)
3. Contribute 10% of Gross Income from day jobs to 403(b) accounts
4. Invest Extra Cash in Real Estate
5. Invest $800 per month in a taxable brokerage account
6. Increase net worth by another 50% by October 2013
7. Save up 20% down payment for a home (this will probably take us 2-3 years)

Readers, are you using financial goals to motivate yourself?

What Would You Do with Extra Money?

It was just yesterday that I received an email from my supervisor, asking if anyone in our department wanted to work a midnight shift during finals week at the University where I am currently employed. Being a young, ambitious employee (I like to play to my strengths that my youth provides for me) I had already volunteered for another shift. I was extremely hesitant to work a 6 hour shift from 2am-8am, but I decided to do it because a little extra money is always nice.

The true incentive was that they are paying me close to double my hourly rate AND giving me 6 hours of 'comp time,' meaning that I can take a full day off with only using 1 hour of vacation days. I elected to take a Sunday morning shift with the intention of working until 8am. Then, I will come home and sleep for 4-5 hours until lunch time. I will use my extra time off the following Monday to recuperate. In other words, I am working a 6 hour shift instead of a 7, using 1 vacation hour, and getting paid for two shifts (or 3 shifts since it's nearly double my hourly rate). Not a bad deal at all.

The big dilemma when it comes to agreeing to work this shift is what to do with my extra money. It's a question that I've asked before as my wife and I have received raises over the past couple of years. It's an important question for any young adult to ask, because it will determine your financial success for the future. While it's no large figure, I will net a fair amount of money considering the time trade off. Like any young adult who loves technology, I couldn't help but react with this question going through my mind: What can I buy with this extra money?

What to Do with Extra Money?

We all face similar decisions when we get bonuses, raises, or eliminate debt. As we come to these points in our lives where we are forced to decide what to do with this surplus of money, I would guess that we often spend it irresponsibly. We have been dying to have this or that and so we use this as an excuse to reward our hard work. It's not an entirely irresponsible approach, but I couldn't help but ask if this is the best thing to do with my money. Before I go into that, let's explore some of my possibilities.

Night out for Mrs. 20's and I

It's probably no surprise to many of my loyal readers that my wife and I rarely go out for fancy, expensive date nights. It's not that we don't enjoy doing nice things together, it's just that we value our time together more than spending lots of money to commemorate a special event. In light of this, one of the things that we could spend this extra money on was a night into NYC. We live just a train ride away from New York City, so we could hop on the train and go see a show on Broadway or something. I'm not a huge fan of musical performances, but I do like concerts. My wife recently tried to get me to acquire mumford and sons tickets (mostly because she has always been a huge fan and has noticed they are all over the radio now days).

Buy Backpacking Gear

One of the areas that I splurge (in addition to biking stuff, which is a trade off from the gas and train tickets that I don't spend money on)is backpacking stuff. For those who have been backpacking, you know that every ounce of weight matters. Companies and their marketing departments know this, making sure to point out how a $400 sleeping bag is worth its value because of its low weight and temperature rating. I'm a sucker for this type of stuff. On my imaginary wish list is a new backpack as mine is one of the older and heavier ones (light in comparison to many, but still) and doesn't have some of the features that I want. This extra money would give me enough to buy a new pack and then some, but I have been backpacking less and less due to moving away from college friends. (If you are into backpacking, this is the backpack that's on my wishlist: Osprey Packs Atmos 65 Backpack)

Save and/or Invest

Another great option would be to pocket the extra money for either a rainy day or for future income. While the extra money won't be that much, if I were to invest it somewhere where I could get a decent return (susceptible to more risk, but since it's 'extra' money, I'm going to be less upset about losing it) it could really turn into something over time. For example, if I got an average annual return of 12%, over 30 years it could be worth approximately 30 times what it is now. That sounds pretty good to me. (1.12^30 = 29.96)

How to Decide Where to Put Extra Money

Lately I have been coming to the conclusion that there are two ways that I can spend extra money. I can save it and invest it for my future, thereby giving me more flexibility in my future, or I can spend it on an evening or things here and now. It's really a matter of setting financial priorities. I'm still undecided of what exactly I will do, but odds are I will pocket the money so that I can set myself up for a better future.

What do you do with extra money?

Money and Relationships

It's a fact that money causes the most turmoil in a relationship and that it is the leading cause of divorce. Because of this, it is important to sit down with your partner and talk about your beliefs and ideals surrounding money. If you do this, you can save yourself many headaches later on. I have listed a few items that you should discuss. This list is not complete. I urge the readers to add anything else they think would be beneficial to talk about when it comes to money and relationships.

Joint or Separate Accounts?

Back in my parent's day, combining everything was the norm. Joint accounts were the rule. If you had an individual account it was questioned. Nowadays, things aren't so cut and dry. Many people are electing to have both a joint and individual account. My girlfriend and I talked about this and came to this conclusion.

We will have a joint account for all bills and savings for vacations, home improvements, etc. We will also have individual accounts for buying whatever we want. By doing this, we don't have to 'ask permission' from the other person to spend money in the joint account. Also, this makes it easier to buy gifts for each other without that person knowing what it is when the statement arrives or they check the joint account online.

College Expenses

If you plan on having children that is something that certainly needs to be discussed. But after that decision, you need to discuss how and if you will help pay for college. I spoke about this topic with my girlfriend and we are in agreement that retirement comes first and then college. We realize that there is no loan for retirement; we need to save everything we can to live the life we desire. We expect to be able to save something for college, just not enough to cover four years' worth of tuition.

Vacations

Sounds crazy but everyone's idea of vacation is completely different. Some people want to do nothing more than lay on the beach for a week. Others want to go exploring and be active. Included in this is the cost of said vacation. You might think that $5,000 is right for vacation while your spouse may think that is way too much. It's important to make sure that you are both on the same page so that you can both enjoy your vacation to its fullest.

Cars

Buy new or used? Lease or finance? This might not be a big deal to you, but your spouse may think otherwise. While it is usually a good idea to buy a used car over a new car, there are times, including now, when buying new might be a better deal. This is due to low interest financing and favorable pricing.

My girlfriend and I are on the same page here. We are open to a new car over a used car, but will only do what is financially the best move. We are both against leasing a car, so that is not an issue.

Debt

Lastly, there is debt. Some hate it with a passion, others are OK with it. You will need to understand where each other is coming from. In my case, my girlfriend hates debt because of her upbringing. I have to take this into consideration when I talk about buying a new car. In my ideal scenario, I have the cash for a new car, but take out a low interest loan. The cash I have is invested in short-term bonds or a savings account that earns a higher interest rate. She is opposed to this and doesn't understand why I wouldn't just pay for it outright since I have the money.

Had we not discussed this, it could have created an issue, not only when buying a car, but further down the line when the possibility of debt came up.

Make sure you discuss money with your significant other. If you don't agree on a topic, it doesn't necessarily mean the end of the relationship. Step back and see where they are coming from. Then assess whether you are OK with doing things that way. After explaining the whole 'take a loan for a new car' logic above, my girlfriend is opening up to the idea. But I have decided that if she isn't OK with it, it's not the end of the world for me to pay cash.

How Does the Stock Market Work?

The stock market plays a part in everyone's daily lives, yet Wall Street is still one of the most mystifying places on planet earth.

The stock market serves three vital purposes:

1. Helps companies raise capital ' Companies raise money by selling shares in an IPO or secondary offering in which the company sells shares of stock in exchange for cash needed by the business to expand, pay down debt, or simply cover on-going expenses.
2. Provides liquidity ' The stock market serves as a place where people can buy or sell ownership of companies quickly and inexpensively. Whereas you might spend years trying to find a buyer for a 50% stake in a McDonald's franchise, billions of dollars of McDonald's stock is sold each day on the stock market. You can find a buyer for a partial share of a company listed on a stock exchange much faster than you can for a private company.
3. Gives reference point to investors ' The stock market is a great reference tool for investors to examine what private companies might be worth. It also provides a historical guide for what's 'normal' in valuing businesses.

 

The Business of Wall Street

Every company starts out small. Walmart was once a single store with only a handful of employees. Now it is one of the largest companies in the world.

As businesses grow, they need capital. Typically, small businesses get bank loans or investments from friends and family. Friends and family and small bank loans are a great source of financing from day one, but a growing business will need more and more money for expansion.

Today, most businesses start selling stock privately before doing it publicly. Young businesses start selling shares to venture capitalists, who fund risky new businesses. Venture capitalists are in the specialty of investing in small startup businesses. The venture capitalist's' goal is to invest in fast-growing young companies for eventual sale to another investor.

Selling out of a billion-dollar company is difficult if you cannot raise funds from hundreds of thousands, if not millions or billions, of people. So once a company starts to mature and no longer matches the desired traits of early investors, it goes public. It sells shares to the public, not private investors, to raise capital or to pay off early investors on the stock market. When companies go public, they do so on Wall Street.

There are three reasons a company goes public:

1. Bring in more investors and potentially more capital.
2. Allow early investors to sell their stock.
3. Use the stock market as a mechanism to manage a growing base of shareholders.

When companies list on the stock market, they often do so by selling shares of the company to raise new money. Also, early investors who want out of the company sell their shares as part of an initial public offering.

Companies may later issue more stock on the stock market as part of a secondary offering in which they issue new shares to raise much needed cash. (This usually happens when companies cannot borrow money for whatever reason ' bad financial history, weakness, or simply for the fact they already have all the debt that the company could possibly manage.)

How Stocks Work

When you buy a share of stock, you own partial ownership in a company. Having ownership in a company gives you a right to vote on shareholder proposals, and a right to the profits that the company earns.

You are part owner in any company that you invest in. This does not give you the right to make decisions like a dictator; you'll need to own 51% for that. Rather, owning part of a company gives you part of the influence in how a company is ran and managed. Most importantly, owning a share of stock gives you part of the company's future profits.

There are two ways that stocks can make money for their owners:

1. Dividends ' Companies can pay out all or part of their earnings to shareholders in the form of cash, known as a dividend.
2. Capital appreciation ' Companies often rise in value as they grow and accumulate assets. Thus, stocks rise proportionately with the rise in the value of the whole company.

In general, fast growing companies do not pay dividends as such businesses would prefer to reinvest that money in growing their business. Investors will profit from the appreciation in the company's value, however, as it grows.

Older and more mature businesses usually pay dividends because they cannot invest all of their earnings into continued expansion. Investors in mature businesses will profit from dividends and increases in the stock's value as the company slowly grows or accumulates assets.

Participating in the Stock Market

The stock market is as American as apple pie. It gives everyone the opportunity to participate in the beauty of capitalism by investing in businesses that provide goods and services to the public for the potential profit of the investor.

By investing in the stock market, you are buying part of a company's future earnings and growth. It gives everyone the chance to be a partner in a business. You might not have the time or money to start an oil company, but the stock market allows you to be a part owner in Chevron. You might not have the prowess to be a retailing king, but through the stock market you can be a part owner in well-known brands like Target, Walmart or Amazon.

Participating in the stock market by investing in individual stocks, or funds of multiple stocks like mutual funds or index funds gives you the chance to profit on the world's future superstars of business. It's the only place where individuals, rich or poor, can be a partial owner of a business.

Financial Carnival for Young Adults ' 35th Edition

Welcome to the thirty fifth edition of the Financial Carnival for Young Adults. My purpose with this carnival is to create an easy-to-find place for information about finances for young adults. The carnival is hosted here at 20's Finances almost every week and features the most recent articles from around the web. I hope you enjoy this edition of the carnival.

Lance @ Money Life and More writes Should I Pay Off My Car Loan Update ' In August I asked my readers 'Should I pay off my 0.9% car loan?'. There were many different opinions on what I should do. After a few weeks of considering the facts I've finally come to a decision.

Martin @ Studenomics writes What High School Students Need to Know About Making Money ' I look at my best and worst jobs back in high school.

Jon the Saver @ Free Money Wisdom writes How I Paid off $6,000 In Credit Card Debt ' Paying off debt is no easy task. Learn how I paid off over six thousand dollars in consumer debt and finally escaped to freedom!

Daisy @ Add Vodka writes How to Ask For a Raise ' The below post is a guest post. I work in the public sector where we can't ask for raises. Well ' we can, but we would be denied.

Hank @ Money Q&A writes Why Your Stay At Home Spouse Needs Life Insurance ' Far too many families forget to purchase life insurance for a spouse that stays at home and takes care of the children. This can be a tragic mistake should the stay at home spouse die unexpectedly.

IMB @ Investing Money writes Common Investing Mistakes ' Find out if you are making these common mistakes and what you can do to increase your retirement funds.

PITR @ Passive Income To Retire writes Which Path to Early Retirement? ' Self-employment has inherent risks, but working a day job that I don't like is even more difficult. Which one should I choose?

Don @ MoneySmartGuides writes Class Warfare Heats Up ' With President Obama continuing to call for those making over $250,000 to pay their fair share of taxes, class warfare is heating up just in time for the election.

Little House @ Little House in the Valley writes And the Worst College Major Is. . . ' It's hard enough for high school students to think about next month or next year, but with a little guidance, it might help a senior save money, get just the education they need for the job they want, and be aware that with every choice there is a consequence ' good or bad.

TRL @ The Retired Landlord writes Best Ways to Buy a Rental Property ' Find out the many ways that you can pay for a rental property. There are more ways than the traditional mortgage.

Robert @ Entrepreneurship & Life writes Leaving Your Old Job Gracefully ' When you do decide to leave, you should leave your old job gracefully. Don't give your boss the finger. Don't make it difficult on your company or co-workers to adjust when you are gone. Make it as easy as possible on them and be very gracious as you leave.

Teacher Man @ My University Money writes My University Money Interactive Student Budget ' My University Money is proud to offer its own unique original resource with its interactive student budget. We understand that you're busy and don't have time to fuss around making excel spreadsheets (all you accounting students out there aside), so we went ahead and set up a colour-coded model that even an humanities guy like me can figure out!

Young @ Young And Thrifty writes A Woman's Perspective on Engagement Rings ' As a woman who has been dating her boyfriend for the past 7 years, bought a home and moved in together for the past 1.5 years, my perspective on an engagement ring is simple. I think I just want one.

MMD @ My Money Design writes Maxing Out Your 401k Matching ' Don't You Dare Leave Money on the Table! ' Do you really know how much money you're losing if you're not getting your full 401k matching contribution from your employer? You might be shocked!

Miss T. @ Prairie Eco Thrifter writes Time for a Career Change? ' Finding the perfect career for you isn't necessarily out of reach. Here are some tips on how to handle a career change.

John Schmoll @ Frugal Rules writes 4 Simple Ways to Save Money on Taxes Before Year End ' Tax season is quickly approaching us. Don't fall behind and wait til the last minute to prepare for it. There are numerous things you can do now to help save you money and give less to Uncle Sam.

Buying Your First Home: How to Save Up a Down Payment

I grew up in a family that owned homes. My parents found this to be one of the ways that they could get ahead financially. My parents both worked, but with neither of them having a four year degree, they were forced to rely on their hard work and experience in their fields. To earn some extra equity in the homes, they personally remodeled their first three homes. They did pretty well for themselves this way. This is the environment that I grew up with.

As a result of my parents owning a home, I have always know that home ownership is for me. That and the 4 years of renting is enough for me. I've had enough. While it is our only option at the moment (and will be for the next 2 years or so), my wife and I are looking forward to buying our own home.

The house that I can afford today' It's time to save!

How to Prepare for Buying Your First Home

Buying your own house is no small decision. It requires a lot of preparation and financial security to do it safely. That is why we are preparing years in advance, to make sure that we do it properly. What some people don't realize is that buying a home is a huge change. It's not just like buying a car or an iPhone 5. This has huge implications on your future, so you better do it right.

In order to appropriately prepare for buying your first home, without even including the selection process, there are several things you need to do.

• Learn about the Home Buying Process - I've heard lots of stories of people jumping into buying a home without doing adequate research. Maybe I am a bit old fashioned, but I am going to read several books and blogs about buying a home before I commit. I don't want to get in the middle of the process only to realize I owe more than I expected.
• Determine the Amount You Can Afford - One of the first things you will want to do when thinking about buying a home is get approved for a loan. Lenders will use a formula based on your earnings and other debt to determine how large of a loan you qualify for. Don't mistake this amount for how much you can afford. What you can afford and what you are approved for are two different things.
• Add Closing Costs to Your Calculations- Too many people are surprised by all of the fees associated with buying their first home. It isn't just a down payment and monthly mortgage payment. There are inspections, appraisals, and all sorts of other fees that I don't have memorized yet.
• Get Life Insurance - This may sound strange, but if you don't have any life insurance and you are getting ready to take on a lot of debt, you should make sure that you are adequately covered. The last thing that you want to happen is to have something happen to you and leave your loved ones with the burden of a home they can no longer afford.
• Save Money - After doing a lot of planning, there's perhaps no more important aspect of preparing than actually doing the work to get your finances in order. This means saving up a down payment and enough for the closing costs. It won't hurt to be over-prepared.

Different Paces to Saving a Down Payment

Saving up money for your down payment can be a challenging task, especially for first-time home buyers. You are already paying for your day-to-day expenses which includes your rent. How are you supposed to be able to afford saving up 20% for a down payment on your first home. This aspect is often what keeps people from buying homes. It's hard to do. Difficult, but not impossible. Depending on your time frame, there are three major tracks to saving a down payment for your first home.

• Aggressive Saver ' Call it aggressive or desperate, but these are the people who are on a tight schedule. Whether it is trying to get in your home for a baby on the way or you are just that ambitious, this is the fast track to buying a home. If you are following this pace to saving up a down payment, you put all other savings and investments on hold. You prioritize saving up the down payment over everything else, including unnecessary expenses because you know that the faster you save, the quicker you are in your own home and building equity.
• Diligent Planner - This is how I would classify myself. This pace has a clear goal in place, but the time frame isn't as tight. You have time to still invest while you are saving up extra money for a home, but you may reduce some expenses to expedit the process a little bit. Depending on your time frame, you may even use some conservative investments to grow your down payment faster. The longer time frame takes away less stress, but delays the time to build up equity in a home.
• Noncommittal Saver - These are the people who have no concrete plans to buy a home. It's a loosely-defined goal of theirs, but it is nowhere in the near future. This means that there is no special account to house the money for the down payment and there is probably no specific monetary goal formed. This person will eventually buy a house, but probably years or decades later than the other two alternatives.

How to Save A Down Payment

As you can tell from the different tracks to saving up a down payment, there are lots of different approaches to saving a down payment. But, that doesn't mean that there aren't universal tips for those who are starting to save up a down payment.

• Keep the Majority of the Down Payment Liquid - While it may delay your savings, if you hoping to buy a home anytime soon, don't invest too much money in risky investments. Being too greedy when you need the money is never a good investment strategy. If you choose to invest some of the money that you plan to utilize as a down payment, keep it to a minimum. I plan on investing some money because I don't want to give up investing for my future while we save for our future home. But, I am not counting on that money for the home. If everything goes to plan, I will be able to save up enough to cover the upfront costs AND have money invested for the long-term.
• Use High Interest Bank Account - Another great option to consider is to use a high-interest savings account. My main account at Chase doesn't offer the best interest, so I am also using a high-interest savings account that gives me nearly 1%. This means the difference of hundreds of dollars over a couple of years. While it's not a huge difference, every bit helps.
• Automate it - A great way to stay on track is to force yourself to save money each and every month. Setting up an an automatic deposit into your high interest savings account is a great way to save up the down payment. Tell yourself that it is already saved and keep yourself on track.

I have already started researching and have a small amount already designated for the upfront costs of buying a home. I estimate that it will take us 2-3 years to save up enough money while also still investing for retirement. Any extra money from potential promotions or raises will be put towards this goal. I am really excited to be able to buy our first home and I am going to do everything I can to make sure that we are adequately prepared.

Readers, if you have already bought a home, how did you save up to cover the upfront costs of buying your first home? How long did it take you?

 

How Did You Learn About Money?

Most people have a distinct memory when they learned about money. Mine was when I was eight years old and wanted a tent. My Mom took me to Kmart to look at the selection. I found an awesome six person tent that I had to have. The only problem was it cost $100. (Side story, I have a vivid memory of learning about taxes too. I saved up all of my Christmas money for a Nintendo NES. Back then it cost $99.99. I saved up $100 and had my parent's OK to buy it. Then they asked me about the 6% sales tax. I needed another $6! I thought it was outrageous that I had to spend $6 extra for my Nintendo.) Back to my tent story, my Mom wasn't buying me the tent. I needed to buy it myself. But she did offer to put it on layaway.

The idea was that I would do my weekly chores and when I got paid, she would take me Kmart to make a payment on the tent. The first week I earned $10. With the $20 that was put down to hold the tent on layaway, I needed another $70. At $10 per week, it was going to take me all summer to earn that tent! By the time I got it, summer would be over and I wouldn't be able to use it.

So I ended up doing some extra chores the following week and earned $15. This continued for the next few weeks until I earned enough to pay for my tent. I still remember the smell of the tent and laying in it on summer afternoons creating comic books with my friend.

Not the actual tent, but a pretty cool one nonetheless -Corey

I consider myself lucky in that I had a foundation for personal finance when I was young. Sadly, most others do not. We learn our bad money habits from our parents and continue with them simply because we don't know any better. If you are one who was not taught good personal finance skills, it is never too late to learn. You can become a better money manager and be able to afford the things you desire, be it a vacation, a house or retirement without unnecessary stress.

Going back to my Nintendo story, that money experience also had a profound effect on me. I can remember handing the cashier my $106 and getting a penny back. I think I realized more that $100 was a lot of money then as opposed to the tent. With the tent, it was $20 here, then $15. By making it a smaller amount, it didn't seem so big. But handing over the $106 did seem like a big deal. Don't get me wrong, I loved playing that Nintendo and blowing into it and the cartridges trying to get it to work. In fact, I'd love to get my hands on one again!

I urge you to learn all you can about personal finance. You will be better equipped to save money and make smart money decisions that will benefit you both now and in the years to come.

I'm interested to hear how you learned about money. Looking back, do you realize anything now that you didn't then?

Where to Keep Your Savings: Factors to Help You Decide

As I have mentioned on my blog before, young adults struggle with handling their money because of inexperience. We often don't want to admit it because we want to prove our independence, but there are so many times in my life that I feel like I could do better if I had someone to bounce ideas off of. (Since starting this blog and being more open about my financial struggles and successes, I have had more opportunities to talk to people close to me about money and it has helped tremendously. In other words, it never hurts to ask.)

Young adults struggle not only with earning money, but managing their money once they have it. Many will spend it thoughtlessly on iPhones or other technology, but there are some that have a priority to save. For those who are saving money, you might be asking yourself what the best place to keep your money is.

Factors of Deciding Where to Keep Your Money

Many financial experts, when asked this question, will often tell you a high-interest savings account and call it a day. It's the easiest place to get a decent interest rate while also being guaranteed. But, I think we all know that life is a little more complicated than that. In fact, there are several things to consider when deciding where to keep your money.

Security

The first and foremost is whether the location is secure or guaranteed. I'm not talking about a $20 safe that you can slide under your bed or put in your bedroom closet. That is not secure, no matter what anyone tells you. I'm talking about federal guarantees that your money is safe, no matter what happens. The only way to guarantee your money will be there in the future is to put it in a savings or checking account. But, there are varying degrees of security. Some investments or other funds are 'pretty secure'. Typically, conservative investments are less volatile and have more certainty.

The level of security desired will also depend on how likely it is that you will NEED this money. Will this money (or part of it) be considered an emergency fund and only touched in rare instances? If so, you may be able to take a few risks in where you put your money, but don't jeopardize your safety net too much. While it's important to keep your money active for you, you don't want to get greedy. If this money is in addition to your emergency fund, why not put it in a more volatile investment to increase your potential returns.

Interest Rates or Return

Another factor to consider is the rate of return. If you are putting you money in a savings account, it is as simple as determining the interest rate that the bank makes public. It's important to recognize that there are frequent changes in savings rates. A savings account that I own, for example, just jumped from .8% to over .9%. These are the types of changes that I can enjoy. Different banks offer different rates, so make sure to do your research. If you aren't putting your money in a savings account, you'll need to do a little more research on what type of return to expect. You can look at historical averages and expert projections to gauge whether it is worth putting your money there.

Location

Your location will also affect what type of accounts or funds you should be considering. While most of my readers are in the U.S., there are also regular readers from Canada and the U.K. For my readers in the U.K. a great option would be a cash isa, but it is going to depend on where you are located. It's important to figure out which accounts and funds are available to you. There are ways to invest in foreign markets, but there are certain regulations and fees associated.

While I would love to create a standard rule or regulation for where to put your money, I know that everyone's situation is different. It is up to you to weigh the different values for where to put your money and try to find a balance. Keep some money on reserve and make sure at least some of your money is in more conservative accounts/fund, but it is up to you to determine the amounts depending on your life situation.

Common Investing Mistakes to Avoid as a Beginner Investor

Over the long haul, the stock market tends to make most participants very wealthy. Very few people reach retirement without the help of the stock market to compound their wealth along the way.

While the stock market makes many people rich, it also makes many people poorer. If the long-term trend is up, everyone who participates should see their wealth grow, but some people end up lagging the market by making a few common errors.

Common Mistakes to Avoid

1. Managing your money before you're ready ' Investors who are new to the concept of the stock market would be wise to start first with broad market exchange-traded funds or index funds. Buying into an index fund lets you grab onto the powerful compounding power of a long-term investment in the stock market without interjecting your own inexperience into the results. If everyone could jump in and beat the market from day one, everyone would be doing it.
2. Failing to do the due diligence ' Managing your own money takes time and effort. Anyone who manages their own money will need to dedicate a substantial amount of time to following their investments. Individual stocks require the most time. Companies file quarterly reports three times per year (10-Q reports), annual reports every year (10-Ks), while releasing a myriad of other important releases (8-Ks) each year. To give an example of the amount of information an investor has to consume, Exxon Mobil's annual report from 2011 was 111 pages. The quarterly reports were roughly 30 pages each ' and we're only talking about one stock.
3. Making trends of things that don't exist ' During the dot com bubble of the late 1990s, one fund manager declared that he expected to make 40% per year for his investors for the next 10 years. Keep in mind that this person was college educated in finance, had the credentials to manage billions of dollars, yet still fell for the 'get rich quick' mindset that internet stocks would go up by nearly 5 times the historical average for a decade straight. When the market or your individual stocks are going up, it's easy to project that undeserved bullishness into the future, often to be disappointed with the results.
4. Ignoring the role of time ' Time plays an important part in deciding how you allocate your investment capital. While stocks have historically returned roughly 8% per year, their best years have been much higher performing and their worst years much worse than 8%. You should only invest funds in stocks if you see no need for the money for the next decade. Invest in bonds only if you won't need the money within the next few years. And if you need the money for a short-term use, then keep it in cash or CDs. Don't put your down payment on a dream home in your brokerage account!

Avoid Mistakes to Improve Performance

The best investors are the people who avoid making mistakes. Having some self-awareness helps a lot here; if you are not interested in watching the markets religiously, stick to index funds or hiring mutual fund managers. If you are up for the challenge and have an interested in all things accounting and finance, managing your own money ' after doing complete due diligence (see article on how to pick a stock) ' may be right for you.

Financial Carnival for Young Adults ' 34th Edition

Welcome to the thirty fourth edition of the Financial Carnival for Young Adults. My purpose with this carnival is to create an easy-to-find place for information about finances for young adults. The carnival is hosted here at 20's Finances almost every week and features the most recent articles from around the web. I hope you enjoy this edition of the carnival.

Glen Craig @ Free From Broke writes Know Your Spending Triggers To Change Your Financial Behavior ' There are certain spending triggers that we have that puts us in a buying mood. This can lead to disaster if we aren't careful. Learn to identify your spending triggers.

Lance @ Money Life and More writes Two Huge Problems with Dividend Stocks Right Now ' Dividend stocks have been quite popular lately and for a good reason. Most quality dividend stocks pay out a consistent amount of money on a fairly set time schedule. I have two problems that make me wary of dividend stocks right now so make sure you pay attention.

Mrs PoP @ Planting Our Pennies writes What Room Bucks Taught Me About Economics ' Thinking back on a classroom simulation she participated in when she was 11, Mrs. PoP realizes that she might not have changed as much as she thought in terms of finances over the subsequent years. Either that, or she learned more in that class than she thought!

Todd @ Financial Mentor writes The Smart Alternative To Retirement Planning ' It's so 'old-skool' to work like a dog for 40 years scrimping and saving so you can retire and do nothing of substance for the remaining 30 years. The New Retirement'.

Corey @ 20s Finances writes How Your Starting Salary Affects Your Career Earnings ' Find out how what you make when you are starting out will affect your career earnings. You'd be surprised how different it is.

Pete @ Personal Finance Online writes MBAs: Top 20 Programs or Bust ' The Masters in Business used to carry a lot of weight at a time when very few people had bachelor's degrees, let alone a master's degree. Students have to be much smarter about how they spend their money on an MBA.

TRL @ The Retired Landlord writes Things to do before Buying a Rental Property ' Find out what every real estate investor needs to know before buying their first rental property.

JP @ My Family Finances writes Which Families Lost the Most Wealth in the Great Recession? ' Average household equity dropped by 25 percent and stock investments by more than 50 percent. Most families lost wealth, but some were hit harder than others.

Hank @ Money Q&A writes Why I Am Considering Refinancing My Mortgage ' Here are a few things to consider when looking at a refinancing and what I look for when refinancing my mortgage. There is more to consider than just a lower interest rate.

Wayne @ Young Family Finance writes Are You Cut Out to be a Landlord? ' I was talking with my brother the other day and the conversation moved towards real estate. My brother had a unique opportunity to buy his own house when he was in college. He lived in a fairly affordable area of town and spent the last two years and then two years in graduate school fixing up the house.

John @ Married (with Debt) writes Wealth Has Little to Do With Income ' For me, the definitions of 'rich,' 'poor,' and 'middle-class' have very little (if anything) to do with income. And before you roll your eyes, this is not a sentimental post about how wealth isn't measured by money, because YES VIRGINIA, it is measured in money.

Would You Rather'Buy a Second Car or Travel?

Welcome to my first installment of, 'Would You Rather'?' Since this is my first time starting this new series, I thought I would explain how this process will work.

Each month, I will pose an interesting debate between two similarly priced items. I will pose the question to you, my readers, and ask for your valuable feedback. You will be asked to tell me two things:

1. What you prefer out of the two choices
2. Why you would choose that item over the other

One more ground rule. In order to make this a productive conversation, PLEASE stay on topic. If I ask you to choose between A and B, please don't tell me that you would rather have C. It may be more realistic, but I think the conversation will benefit more if we stay on topic.

Why this is Worthwhile

I believe this will be a valuable way to start a conversation. Whether we realize it or not, I believe that we make these decisions, both consciously and subconsciously ALL THE TIME. We regularly choose to spend our money on one thing over another. When you are in the grocery store, you are forced to choose between store brand and name band. While some of it comes down to priorities, we often make these decisions without knowing why. I know that I have spent more money on one thing, only to wish I had my money back and could use it towards something more meaningful.

We Make These Choices Everyday

Sometimes, it's not as easy of a choice as deciding between two options. When we go car shopping, for example, there are hundreds of different models, produced by tens of different makes. How do you decide which is best? Sometimes it comes down to just pure chance. You see a commercial and are persuaded to buy that car. I hope, however, it comes down to calculating what is important to you. If you are going to be financially successful, it starts with spending your money wisely.

We Can Help Each Other

That's why I have started this new (fun) series. It will not only give you a chance to give your feedback, but also convince other people that you are right. Who doesn't like a little debate every once in a while. I think the end result will be that we all learn from each other. We can help each other make smarter decisions with our money if we talk about our everyday expenses.

Would You Rather Buy a (Second) Car or Travel?

The first installment features a pretty basic household budgeting dilemma. It is one that my wife and I are forced to make over and over. We currently have one car, but we love to travel. I hate taking the train in the Winter, so I am tempted to buy a second car. Here's the question:

Assuming the costs are basically the same, would you rather buy a second car or take an annual vacation to an exotic place?

Let's expand this question a little bit before I open it up for debate.

Expenses of Car / Annual Vacation

Some of my observant readers would probably be quick to point out that a new or even used car is going to cost more than an annual family vacation. This is definitely true, but a car will last more than 1 year. My wife and I take decent annual vacations each year. We don't stay in the nicest hotels or pay for expensive tours, but we still spend a good sum of money each year. If I had to average it out, I would estimate that a nice annual vacation for two (traveling by plane) will cost $2,000-$3,000 at minimum.

The prices of different cars will have different price tags. But that doesn't mean we can't find some figures to compare it to. When my wife and I bought our wagon in 2009, we paid just under $10,000 for it. We expect it to last us at least seven years (if not 10), without putting any significant amount of money into it (fingers crossed). Like anyone else who owns a car, we pay for maintenance on the car. For the past three years, we have probably spent $500 a year on maintenance issues (getting new tires, oil changes, minor repairs, etc.). If we assume that our car will last 7 years, that means our annual expenses are somewhere around $2000. (This is some fuzzy accounting, but for sake of simplicity, just go with me on this one).

For my situation, the annual expenses for buying a second car and taking a vacation are nearly the same. Sure, there would be additional costs like fuel costs, but I already incur public transportation costs, so I have ignored it. What that means is that if I can afford to do only one, I have to choose. And so do you!

It's up for debate: What means more to you? Having the luxury of a car to drive to work? Or taking an annual vacation to see the world?

What's NOT up for debate: Just as a friendly reminder, it's not my intention to argue about the financials. I know that you could find a cheaper car, but you could also choose to find a cheaper vacation.

Readers, I want to hear from you!

 

Blog Update at 20's Finances

While I tend not to divert my attention and offer very many blog updates, I thought I would take today to offer a quick update on some of the changes that you have already seen take place at 20's Finances over the past few weeks. For those who don't know, I recently attended a blogging conference in Denver. Many of my non-blogging friends questioned my purpose in spending hundreds of dollars to attend a blog conference, but I knew that I paid for the trip because I am serious about building up a site that makes a difference in people's lives.

Defining My Focus

Over the past month, I have done some reflecting on what my site offers young adults, who may or may not be graduating college. If you haven't noticed already, I have focused on key challenges that every young adult faces when they transition into adulthood. Everyone has their own time frame when they make this transition. Some make it right out of high school. Others do it gradually in college, while the remaining few make the leap sometime after graduating college. The time frame is not the important part.

It's the ability to overcome these challenges successfully that sets young adults apart from the rest. That's what I hope to provide my readers. I want to help others learn to manage their money. I want to help others with their career. I want to help others invest for their future. These are great aspirations and I have been working diligently to accomplish these goals.

The Value of Other Voices

Yet, in my reflection, I also came to an important realization. I can't do this alone. If I provide worthwhile information to change people's lives in radical ways, I can't do this alone. I need help. The first place that I have begun to do this is by hiring staff writers. At this current point, I am paying two staff writers to write once a week. I contacted both of these writers directly because I knew that they could contribute something worthwhile. Many of you will already recognize their names, but here is a little bit more about each of these writers:

JT

JT is the investing guru. He writes for his own personal finance blog, Money Mamba, but has been hired on to write about some of the investing aspects that simply go over my head. While I am slowly learning everything I need to know about investing, JT is a master (at least in my book). It took a little bit of persuasion on my part, but he has signed on for the purpose of contributing to this community.

Don

Don has been writing for 20's Finances for some times as well. He's an excellent writer and has a lot of different experiences that make his contribution worthwhile. Don was the first writer that convinced me that my site would be better with staff writers. He did so because of his writing on his personal finance blog, Money Smart Guides.

I am happy to have both of these writers contribute here. Not only do they write great stuff, but in case you haven't noticed, it has allowed me more time to provide much more interesting and researched content. Instead of having to produce several high quality content each week, I can focus on one article a week. For example, in the coming weeks, I am going to be writing a series on buying your first home. I know this is a huge interest of many of my readers and I want to do everything that I can to prepare everyone for this challenge. In case you are worried, this doesn't mean you will lose my personality or voice. I just want to add more value for my readers. (Side note: I may be looking for more writers in the future, so if you think you have what it takes to writer for us, feel free to drop me an email at 20sfinances *at* gmail *dot* com. We only hire the best!)

Moving Forward

The best way to get ahead is to not only invest in yourself (in this case, invest in the blog), but also move forward with a vision and a specific plan. I now have a clearer picture of what it will take to bring this site to the next level and I can't wait to do so with the support of the awesome community that is forming. As always, if you ever have any questions or suggestions, don't hesitate to email me directly at 20sfinances *at* gmail *dot* com.

Oh, and did I mention that I created a new newsletter?? Make sure to follow along. Sign up below or in the form on the sidebar. There will be additional information for all of my loyal email subscribers.

Dumb Things I Do (or Did) With Money

Nobody's perfect in anything in life. I really enjoy writing about personal finance and decided to blog about it. Not only does the writing provide me enjoyment, but so does helping out others that are going through hard times or are unsure of the right financial decision to make given their circumstances. While I have studied finance throughout college and post college and have worked in the financial services industry for over 10 years, I still do dumb things with my money. I admit it. Below I summarize a handful of dumb money moves I have made and some that I still make. The important part is learning from the mistakes so that you don't make a habit of repeating them.

Spend More to Save More

I cannot say that I have officially conquered this one. It's a hit or miss sort of thing. Sometimes I catch myself, other times I don't. The kicker is how good advertisers are at getting you to buy into it. This past weekend I was out shopping at an outlet mall. I found some great deals at a store: I purchased a merino sweater and three dress shirts for $75. The clerk told me that if I spend $100, I'll save 10%. He asked if I wanted to take a look around. I decided to look and as I was doing so I stopped myself. There wasn't anything else I needed. Why spend $25 more dollars just to save $10? I walked back over and finished my purchase without adding anything new.

Now had I actually needed more things, then the spend more, save more deal would have made sense. But since I didn't need anything else, it didn't make sense to me. Make sure you stop and think things through before buying more to save more.

$10 for $10 Sales

This is along the same lines as the previous point. I always fall for this one. The deal isn't that you have to buy ten things. They are $1 regardless if you buy one or ten. Yet there I am, loading up on ten boxes of brownie mix. I can't resist! It's a deal!! Not for brownie mix it isn't. When the greek yogurt is 10 for $10, then buying ten makes sense since I eat that every day. But not for brownie mix.

The same logic applies to this one. Step back and think about how often you eat the item and how good of a deal it really is. If you occasionally eat the product, then only buy a few, not all ten.

Spending Future Money

I don't do this anymore, but when I was younger I did this regularly. Here is an example of how it worked for me. I would be applying for a new job or a raise was coming up. I would go out shopping and spend more money than I had (I put it on my credit card) because I was budgeting for the increased income that was headed my way. Sometimes the increased income did come through, but other times it didn't. As the old saying goes, 'don't count your chickens before they hatch'. Learn to live on what you have. Once you actually do get the raise or promotion, then you can revise your budget.

Spending Money to Feel Better

When I was younger and got myself into credit card debt, I did so because I was depressed. Buying shiny new things made me feel better. It took me a while, and a decent amount of credit card debt, to realize that the 'high' I was receiving was only temporary. Buying new things didn't make me happy long-term, just for the moment.

When you get the itch to buy something, take time to understand why the reason is you are feeling the way you do. If you have a good reason, then go ahead and buy it. But if you are doing it out of boredom or unhappiness, it's time to figure out the root cause so you can save yourself time and money in the long run.

Chasing Investment Returns

When I was younger (back around 1999), by grandfather gave all of us grandchildren a gift of $2,000. I bought myself a computer and invested the rest. I chose a tech mutual fund. I chose it because for the past few years it was returning anywhere from 50-75%. I knew I had to get in. I was going to be rich within a month! Luckily for me, the stock market crash happened relatively quickly and wiped out about 60% of my money. I decided to do exactly what I shouldn't have done, I sold out and kept my money on the sidelines. The markets rallied for some time after that. I missed it all.

When it comes to investing, look at the long-term. Don't invest because this stock is hot today. I have since completely changed my investing approach. I now invest in index funds and don't sell when the market drops. I focus on the long-term and do my best to tune out the 'doomsday' reports that are all over the news.

Readers, what have you or do you still do that you consider to be dumb when it comes to money?

Tips for Selecting Life Insurance

Obtaining life insurance can be a very difficult process, especially for young adults who have not had to do it before. The first time for everything is almost always the hardest and finding affordable life insurance is no exception. I originally got life insurance for the first time last year. Luckily, I had a strong recommendation of both the company and type of plan to get from a family member.

If you don't have such a recommendation, it's important to know what you are looking for. While I could recommend specific companies, I have found that there are a lot of companies out there that offer competitive rates. In other words, it's in your interest to shop around once you have a basic idea of what you are looking for.

Will Your Family be Covered?

Death Benefits

Death benefits are one of the first things to consider when finding the best life insurance plan for you. This is one of the most important considerations because it will mean the difference between providing your family with financial security and not. This is an important difference. When you are looking for life insurance, make sure to consider your needs. Do you have a sizable mortgage that would need to be paid off? Are you the primary bread winner, thereby making replacing your salary a priority? There's no secret formula, except to include everything that makes your financial situation unique. For my wife and I, we are both currently working with no plans for kids in the future. We also don't have a mortgage at this point, so we don't need any large death benefit. When we start talking about buying a home, we may consider adding a couple term life insurance plans that would cover the mortgage though.

Premium

This is the other big consideration when getting your plan. Almost every company is going to offer similar death benefits, but they are going to be at different premiums. The reason this is the case is because each company has different people who assess the risk of insuring your life. One company may feel like you have significantly less risk while the other more. My experience has been that the premiums have been close to the same, but my situation is unique again. I am a young male with no history of major medical conditions, so there aren't a lot of variables to compute. Make sure to shop around before buying life insurance.

Discounts

The last major tip that I have for you is to shop for discounts. One of the most popular discounts is multiple plan discount. This means that you get multiple types of insurance from the same company, and as a result of your loyalty, they offer you a discount. When looking for this type of discount, you need to determine whether the company offers multiple forms of insurance. For example, GIO Insurance offers different plans. While I don't know that they offer a discount, you are more likely to get one. The best place to look for a discount is your current insurer. If you already have a car insurance plan, check with your provider to see if they offer life insurance. It can never hurt to ask.

Getting life insurance, just like any other major decision, comes down to weighing your options. Luckily, we have lots of options made available to us. It is up to you to be responsible with these options and find the best policy for you and your family.

Warren Buffett's Investing Strategy

Virtually everyone ' investor or not ' knows the name Warren Buffett. Known as the best investor of all time, he's a household name and the second wealthiest person in the world.

Buffett achieved incredible success as an investor. Can ordinary investors deploy the same strategies as Warren Buffett today to find the same success?

Buffett's Early Years: The Buffett Most Don't Know

Warren Buffett's best years were his earliest years when he managed only a small amount of investment capital. His earliest investments were among his least noteworthy. His strategy then, as his partner Charlie Munger often jokes, was to buy companies, remove the cash from the company, and then raise prices.

It was hardly pretty, but it was effective. When Buffett could not own the whole company, he often bought large stakes to seek board seats for him and other investors. Buffett's ability to influence corporate policy undoubtedly added to his total returns. In several occasions, he purchased shares of companies that sold for less than their net current assets. In effect, he bought businesses for less money than they had in the cash registers ' the business was free.

Buffett's early performance would naturally be the most difficult to replicate. First, it requires a significant amount of money ' enough to buy a stake large enough to have influence over corporate decision-making. Second, it requires confidence. At one point, a single company, Sanborn Map Company, made up 35% of his partnership's investment pool.

In his own portfolio, Buffett was even more aggressive. He admitted later in life that at one point he had 75% of his entire net worth invested in GEICO, then a publicly-traded insurance company. Few investors would tolerate that kind of investment concentration.

Buffett Worked Hard

Replicating Buffett's work ethic might be the most difficult part of duplicating his early success. This was in the days before computers, when 'stock screening' was little more than reading through annual report after annual report. To this day, Buffett is well known for his famous stock screening advice which is to 'start with the As' and that the best way to read an annual report is from 'front to back.'

His obsession with the markets strained personal relationships, and virtually ended his marriage. Accounts of his earliest days as an investor are littered with references to his constant research ' reading nothing but annual reports from dawn to dusk.

The Later Years: The Buffett We Know

After years of investing success and incredible performance, Buffett was exceptionally wealthy. He also managed a very large amount of investment capital. The tiny companies that had made him wealthy were no longer good investments ' he simply could not deploy enough capital in each company to make it worth his time.

So Buffett moved on to a 'new' kind of investment strategy ' buying better companies at higher prices, banking on growth.

He sought out companies that could compound his wealth over time. He favored companies that could retain earnings, and use those earnings to invest in the business for more compounding. Buffett's willingness to lose money never changed, however. He looked for businesses that could defend against competitors and grow from an 'economic moat.'

Replicating Buffett's Late Performance

Buffett's later years are undoubtedly the most repeatable by individual investors. His investment goal is to buy a company and hold it forever, preferably buying companies that can reinvest their earnings into future growth along the way.

Here are a few common traits of Buffett's later investments:

1. Underappreciated, but simple information ' When Buffett invested in Coca-Cola in the 1980s, it was priced for growth ' Wall Street knew that Coke would be big. It didn't know how big. While other investors focused on growth from sales to new Coca-Cola customers in emerging markets, Buffett focused on another important trend: growing per-capita consumption. Not only was Coke growing by selling its product to new customers, it also grew by selling more and more product to the customers it already had.
2. Reinvestment potential ' Buffett looks for companies that can reinvest in their business. He's not looking for dividends ' he wants compounding in perpetuity. McDonald's, a huge Berkshire holding, could reinvest its earnings to build out new stores and seek new franchisees. The same is true of Walmart, Coca-Cola, and banking giant Wells Fargo, which could reinvest retained earnings to grow their respective businesses.
3. Economic moats ' Buffett looked for companies that had a 'moat' to insulate it from competitive forces. Coca-Cola has a distribution network that protects it from a new drink company. American Express and MasterCard have a network that protect their businesses from new card processing competition. GEICO has a moat in being a low cost producer as it does not have salespeople and can sell insurance at a cheaper price than competitors. Wrigley's has an intangible moat in that is has an established brand.

Being the Second Buffett

Can you be the second Buffett? Unlikely. Few people are willing to ruin a marriage over their investments. Few people will have access to other people's money and earn management fees like Buffett did in his early years ' a variable that put him on track to billions.

Most people will never be billionaires. However, most people, with dedication to their investments, can mimic Buffett's later investment strategy ' buying good businesses insulated from competition with reinvestment potential. It isn't a matter of intellect, though Buffett is a very intelligent person, it's a matter of dedication to investment research and analysis.

In Buffett's own words, 'To invest successfully does not require a stratospheric IQ, unusual business insights, or inside information. What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding the framework.'

Financial Carnival for Young Adults ' 33rd Edition

Welcome to the thirty third edition of the Financial Carnival for Young Adults. My purpose with this carnival is to create an easy-to-find place for information about finances for young adults. The carnival is hosted here at 20's Finances almost week and features the most recent articles from around the web. I hope you enjoy this edition of the carnival.

Lance @ Money Life and More writes What Would You Do? Pay Off Higher Interest Rate or Variable Rate Loans First? ' My girlfriend has a few different student loans as I discussed in our debt pay down strategy. They are at different interest rates and to complicate things further some have fixed rates and others have variable rates.

Green Panda @ Green Panda Treehouse writes Where Should You Live After College? ' Have you thought about where you'll live after college?

IMB @ Investing Money writes Real Estate Investing- A Viable Investment Strategy? ' Find out if real estate investing is a great option for you. It may take more time, but it has a lot of benefits.

Aloysa @ My Broken Coin writes Why I Chose To Live in a Small Home ' Our homes tell our stories. They tell us who we are, what we value, what we care about, who we love, and what we dream about. Our homes expose who we are. About a month or so ago, I finally admitted to myself that our one-bedroom condo is a perfect place for me. It probably comes as a surprised to some of you because you know me as a spender and a shopaholic. Read my thoughts as to why I choose my small house!

Daniel @ Sweating the Big Stuff writes Lifestyle Inflation ' What To Consider Before Telling Yourself Yes ' Thinking about upgrading your gadgets? Ask yourself these 5 questions before you take the plunge.

PPlan @ Provident Plan writes Does God Want You to Drive a Hybrid? ' Hybrid cars are becoming increasingly more affordable and popular. Find out why you should consider buying one.

PITR @ Passive Income To Retire writes Real Estate Limited Partnership ' Limited partnerships can be quite confusing. Find out the basic qualities of a limited partnership and the benefits of a real estate limited partnership.

JP @ My Family Finances writes Yes. Parents Should Open a 529 Plan for Their Children ' The simple fact is that if college costs continue to grow at current rates, you'd have trouble saving too much money. Don't let the magical final number get in your way of starting a 529 Plan.

Don @ MoneySmartGuides writes Being Frugal and Dating ' Being frugal and dating is hard to do. It's a fine line that you have to walk. Step too far to one side and you come off as cheap.

Invest It Wisely @ Invest It Wisely writes Explore All of Your Options Prior to Attending College ' I have seen this first hand as an educator and I have developed a hypocrisy that is ill-fitted for my career path. I, no longer feel that a college education is the most logical step post-high school.

Teaching Children about Money

A lot of things have changed in the past four years, and not just for me. While a lot has changed for me personally (my wife and I have finally founds some ground to stand on financially and in our careers), even more has changed in our society. The recent recession caused many people to re-consider their finances. While it was a difficult time, I think many people are starting to recover from the huge losses that they faced.

Even though the stock market is back up (for the most part), everything isn't back to normal. There's an increased awareness of financial responsibility if you look around. Not only among adults, but also among adults teaching their children about money.

My Nephews Learning about Money

While I am far away from most of my family, the popularity of Facebook has allowed me to stay up to date with my nephews' lives. It was just a couple of months ago that I saw this picture (above) posted by my sister-in-law. It's a picture of my two oldest nephews learning to deal with money. While I didn't get a chance to talk to my brother and sister in detail about their plan to teach their children (my nephews) about money, I did gather that they are implementing two big changes as my nephews get older.

Allowance

They are issuing them an allowance. It isn't just a free gift to their children, but they are letting them earn money by helping out around the house. My nephews are now eagerly doing the dishes and any other chores that they can do to earn the precious dollars. It's really amazing what kids will do for a few bucks, isn't it?

I remember when I was a child, my brothers, a friend of ours, and myself would all work together to wash cars in the neighborhood. We would get $5 per car and those precious five dollars would go toward our next Nintendo video game. In one summer, we accumulated a lot of games just from our entrepreneurial efforts. While we spent all of our earnings that summer, I wouldn't trade that experience for the few dollars that we could have saved. It taught me more about setting and reaching financial goals than anything else.

Give. Save. Spend.

My brother and sister have also done a remarkable thing, with simplifying the budgeting process. As you can see in the picture, they have designated a certain percentage for giving, saving, and spending. 10% in the giving jar, 50% in the saving jar, and 40% in the spending jar. It's simple and effective. Not only does it teach them about how much to save, spend, and give, but I imagine it is teaching them about percentages and basic math calculations. The clear jars helps them visualize their success as well. I imagine them receiving a few dollars for their chores and racing to put their money in their jars ' whether that happens or not, I will have to see next time I go visit.

How to Teach Children about Money

While I am no expert, there are many ways to teach your kids how to manage their money. Here are several tips to keep in mind when you are making your plan.

• Keep it simple ' A plan that is too complicated may make them lose interest. You have to remember that it will take years to teach them everything. Don't try to do too much at once.
• Make it Fun - There's nothing worse than making kids bored with dealing with money. By creating games or showing your excitement, it can help them also feel excited about learning how to use money.
• Let them DO something - The best way to teach children about money is to let them actual do something with it. Whether it is giving them dollar bills to visualize and put in a jar or something different entirely, the key to remember is that they should be using it. If it's not real or tangible, it will be more difficult to grasp financial concepts.
• Help them Set Goals - I love financial goals. I think a great way to teach money to children is to help them realize their goals. Whether it is saving up to buy a video game or to help build a well in Africa. Kids need a goal to get them motivated.
• Personalize Your Plan - Make the plan for YOUR kids. Don't just find a plan on the internet and use it if it isn't relevant to your children. Telling your kids that they are going to save up for a skateboard when they don't like skateboarding will teach them the wrong things. It has to happen organically.

For those of you who have kids, what other advice can you lend to readers wanting to teach their children about money?