Foundations of Finance Building a solid foundation of financial security Mon, 30 Jan 2012 19:46:33 +0000 en-US hourly 1 Top Stock Picks Mon, 30 Jan 2012 19:46:33 +0000 Meggan Walsh works with the Invesco Diversified Dividend A and has done so for nine years.  Her top stock picks are…

  1. General Mills: She says that General Mills is a strong brand.  The stock has a 3% yield which is inexpensive compared to the value of the company.
  2. Kimberly-Clark: This company has  a 4% yield and the dividend seems to increase each year.
  3. SunTrust Banks: Meggan believes that as the economy recovers the management will be able to grow profits.

She says that in order to be successful it is important to not focus on just the payouts.  Instead, it is important to focus on the total return between the stock’s dividend and the change in share price.  She said that it is important to find a company that will provide a 35% total return over the next two or three years.

As you are investing in stocks you have to ensure that you are wise about the choice of stocks.  Take time to do your research and ensure that you are completely comfortable with the stocks that you are investing your hard earned money in.

The Real Price of Your Credit Card Debt… Tue, 18 Oct 2011 17:16:43 +0000 "Credt Card Picture"

In a society where credit cards are mailed to nearly every person on their 18th birthday, Americans often overlook the burden of debt.  The use of this high interest rate loan is something that is expected in today’s culture, just like paying for gas in your vehicle.  Especially for families that are just starting out, credit card debt can seem like something they’ll be able to pay for in the future.  I’m here to remind you this isn’t necessarily true.

Credit card debt is one of the leading causes of bankruptcy in the United States. This should be no surprise. It allows people to spend money they don’t have and have not earned, hoping that one day in the future they will be able to pay it back. While this may be an optimistic outlook, a lot of different factors play into your ability to pay your bills, some of which you will not control such as health and loss of job.  Have you ever calculated how much those $100 jeans you charged on your Visa will cost you 5 years from now? It might be scary.

One of the reasons credit card companies are so successful is through deception. A total debt of $10,000 is not uncommon in America these days, and neither is a $150/month payment accompanying it. Wow, how generous MasterCard must be! “I have $10,000 in debt, but only have to pay $150 this month? This is great!” Here’s what most people don’t realize: paying the minimum payment ensures you pay the most interest.

Pretend you have $10,000 dollars in a saving account along with $10,000 dollars in credit card debt.  When should you use your savings account to pay off your debt?  The answer: almost always. A savings account is already earned money and gains a positive interest for you. With that said, it is usually only 2-3% whereas the common APR for credit cards is currently 15%. Therefore in 5 years, your savings account amount will be just over $11,000 (assuming you don’t add more money) and your credit card debt will be just over $20,000. Look how quickly debt interest increases!

Put simply, a $10,000 loan from MasterCard will cost you $25,000-$30,000 and take 20 years to pay off if the minimum monthly payment is paid on-time each month. This all sounds quite obvious when put like this, but you’d be surprised at the number of people who have more money in their savings account than their debt amounts, but still have substantial credit card debt.

The exception: The only time you should not spend your savings on your credit card debt is when you can use your savings account money on an investment in which the return interest is greater than the interest on your debt, therefore you would be making more money than you’re spending simply through interest. In using our example earlier, the interest on your investment must be greater than 15%. As good as that sounds, ten years ago this might have been possible, but in America today this is not very realistic.

My post is a warning to those struggling with finding the desire or ability to pay off credit card debt. Make sure you are informed about your card’s APR, late-payment penalties, and fees for cancellation. The more you realize what things will actually cost when you swipe that glittery card, the wiser you will be using your card next time.

Looking to Relocate for Work Mon, 03 Oct 2011 17:47:56 +0000 If you are looking to relocate to find a good job, you may want to consider moving to North Dakota. Surprisingly, there are a ton of companies that are hiring like mad in this city. The little towns in North Dakota does not have enough people to fill the jobs that they have recently had open up. The little tows have many different oil fields surrounding them that have recently been tapped by different oil companies.

As the oil keeps pouring out of the Earth the oil companies are hiring more and more people to man the oil fields. This means that there has been a boom in the current job market that has enabled people from all around the nation to move to North Dakota to find work.

If you decide that you want to move to North Dakota you should be sure that you take time to nail down some housing before you head out. There are people camping in every corner of the city and there are lines outside all of the public restroom bathrooms in the morning.

When you are looking for a job you want to make sure that you take time to understand how relocation can help you. Make sure that you take the time that you need to look into some of the cities that you can find a better job in.

Getting an Education Wed, 07 Sep 2011 15:22:47 +0000 One of the best things you can do to make sure that you stay financial stable throughout your life is get an education. An education will allow you to get better paying jobs. With a higher paycheck, it will be easier to live within your means. It will also be much easier to avoid and pay off debt. In addition, you may be better equipped to invest your money wisely. These things can all help you create a stable financial life for yourself.

Avoid Extended Warranties Mon, 05 Sep 2011 20:06:17 +0000 The extended warranty that you can purchase on most expensive technology is a waste of money most of the time. Choosing not to purchase this warranty can be one of the corners that you cut when you are trying to save your money. Most of the time, the machine that you purchase will break down either before the normal warranty wears off or after the extended wears off. As a result, the extended warranty does not save you money. It causes you to spend excess money.

Tracking Your Spending Thu, 01 Sep 2011 04:38:49 +0000

One of the most important things to do if you are trying to avoid debt is to track your spending. When you know where every dollar that you earn is going, it is easier to cut costs. In addition, it is much easier to stick to a budget. When you do not know where the money is going, it is easy to spend too much. This will lead to more and more debt. As a result, if you want to avoid debt, you will need to keep track of where your money is going.

Including Fall Back Money Mon, 29 Aug 2011 18:52:33 +0000 When you are creating a budget it is important to leave a little extra ‘fall’ back money in it. This fall back money will help you stay on budget, even if you accidentally spend a little more than you intended to. In addition, it will help you avoid withdrawing money from your savings for things that are not emergencies. If you do not end up using the fall back money, you can put it into your savings to help build up your emergency funds. This is a great way to stay on top and avoid debt.

Saving For A Rainy Day Thu, 25 Aug 2011 16:47:45 +0000

Realizing How Much You Spend Wed, 24 Aug 2011 17:47:25 +0000 One thing that you can do help yourself review yourself review your personal finances to make sure that you are on track is to take a look at how much you spend. Many people do not realize how much they spend because they use a card to make all of their purchases. However, when they sit down and write down everything that they have spent and on what, they realize that they have been spending a lot. Perhaps they have been spending too much. It is important to sit down and look at how much you spend on a regular basis as it can help you make the adjustments that you need to make to live within your means.

Avoiding the Debt Trap Tue, 16 Aug 2011 00:55:25 +0000 Debt is something that can destroy your marriage if you do not take care of it. There are many things you can do to pay off your debt so that you can protect your marriage.

  1. Talk with your spouse to make sure that you have the same financial goals
  2. Recognize your spending tendencies so that you can come up with effective ways to put limits on what you spend
  3. Read books and watch lectures about finances and how to budget
  4. Do not focus on your mistakes and do not give up
  5. Become committed to becoming financially free
  6. Stop spending wherever you can
  7. Recognize your efforts and give yourself credit for saving even a little bit
  8. Be realistic about how long it will take to pay off the debt so that you do not become discouraged