The Honey Do Weekend Roundup

Image by autan via Flickr
Another great weekend coming up and there is plenty to do around the house. The grass needs cutting and the bushes need trimming. If it doesn't rain I can get a lot of work done. In my spare time I'll be ready some great posts that came in this week. Here we go.


The Biz Of Life asks Are You Saving Enough for Retirement?

Consumerism Commentary has Life After Salary: One Month Without a Paycheck

My Money Blog  writes No Time To Budget? Track Your Expenses In 15 Minutes

Man vs. Debt adventure begins How to Drive Like A Grandma, Dominate Charades, Lose a Wedding Ring, Get 7 Miles Per Gallon, and Bet $15,000…

Bargaineering writes Are Certificates of Deposit Obsolete?

Five Cent Nickel  tells us Personal Finance Books are Keeping You Poor

Free By 50 writes Rewards Cards Impact on Spending & Debt

DINKS Finance wants you to know Our Financial Personalities

Clever Dude wants to Keep an eye out for these changes to your Form 1040

20 Something Finance writes Billy Walters: The Most Feared Sports Better in History Tells 60 Minutes why he Avoids Wall Street

Money Under 30 says 30 Years, 30 Things I’ve Learned About Money

Financial Highway writes Money and Ignorance

Invest it Wisely Falling Prey to Temptation: Self Control in an Age of Excess

Here's some nice carnivals I was lucky enough to participate in. The quality of these good stories was great this week, as usual.

Carnivals I have participated in.

Carnival of Wealth #21 – Jan 16 2011 Edition

Carnival of Money Stories 89 Happy Birthday Dr. King Edition

Totally Money Blog Carnival #2

Festival of Frugality – Spend It Edition

Also Mentioned on:

DINKS Finance

Enjoy your weekend. I'm going to go and click on some links.

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Rewards For Good Grades: Right or Wrong

It's getting to be that time of year for report cards to come out. Do you ever use money or rewards for good grades? Is it an effective way to encourage a good report card. On the flip side do you punish when grades are not where they should be?


When I was young, my mother would reward me with quarters and dollar bills depending what grade I received on my report card. It was a wonderful reward but really didn't encourage me to do better in school. A fear of punishment was a greater motivator.


It seems parents try to use any kind of motivator to get their kids to do well in school. Even the public school system in some states use a cash reward or gift reward to encourage the students to improve their grades.


Many say we are harming our children by teaching them to do things just for money. To give them money is just wrong and sends the wrong message.


Using money as an incentive can be appropriate if you give small amounts under the right circumstances. For example, rewarding your kids after the fact for behaving well at the supermarket instead of promising them money ahead of time if they don't throw a tantrum. This is not the proper use of the money reward function. Those kids just need a good spanking to encourage proper behavior. The reward comes only from work, not behavior.


Rewarding our kids with money is teaching them the work structure they soon will grow up to be in. That working at your job, producing a service or product for a boss is what you are compensated for. Work for compensation is what we all do everyday. The payment for grades, if done right, will instill in them the equation of Work=Money.


The proper execution of rewards for grades are important. Only top grades are rewarded. Money, if substantial, must be saved for later needs. If the reward money is small then they can spend it on their needs.


The message we are trying to send is that work produces reward. No work or poor work results in zip or punishment. The reward is not a bribe, it's an incentive.


What do you do if junior just refuses to work. We all have one in the house that's like this. Hopefully it's not for long while you adjust behavior with punishment. You have to find a way to promote good actions with a positive reward.


This reward for good grades has been a tool for encouraging hard work for many years. Only when it's used in an extreme way does it get a bad reputation. In moderation it works.

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My Financial Planner Makes House Calls

No, not really. But I wish it was true. To be able to have someone who you could go to whenever you needed some financial advice. That would be fantastic.

I came close once when I met a young man just starting his career over at Ameriprise Financial. He talked me into coming down to his office for help with planning my financial future. I did go and he helped me get organized and made me a nice financial plan.

It's interesting how relationships and your money are the most personal parts of your life. A stranger has to know your needs and plans for your future to help you form a game plan for your financial security.  They need to know all about your plans for your children and wife. They need to see your investments and know how much money you have. If you own your home and all about your debts.

Why do they have to be so nosey in your business? The answer is that they want to give you the best possible financial plan for your life. They want to show you what your doing wrong and also what your doing right. 

This getting to know you meeting lays the basic foundation of your financial plan. I was asked many questions like how much I save and where I save it. He wanted to see my tax returns to see my income and deductions were correctly done. I needed to show my insurance policies and asked if I had a will. All these things were necessary to share if I wanted a complete blueprint for success. 

When we go it alone it's possible to miss something or we just don't have the expertise in the field. when I received my plan it was complete in every way. It covered investments, insurance, cash flow planning, and debt payoff plans. It was complete and I was quite satisfied. It was 3 years ago yet I still refer to it today.

I highly recommend you see a financial planner for a money checkup. They will give you their professional opinion of what you have with any recommendations for improvement. I suggest you chose a planner that has expertise in the details of your life. Whether it's divorce, young families, or elderly. 

The way a financial planner is compensated is payment by the hour, flat-rate, or percentage of assets. I went with the flat-rate because it was right for me. I'll never regret seeing a financial planner because they put me on track and are working hard to keep me there.

If your looking for a financial planner in your area check out the National Association of Personal Financial Planners at www.napfa.org.

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Pay Your Mortgage Biweekly and Skip the Extra Fees

Biweekly mortgage payment plans are back in the spotlight. If your not doing this maybe it's time to check it out.

I have noticed ads by Citibank for their "Citibank's Biweekly Advantage Program". It's a convenient mortgage budgeting plan that can help you save thousands of dollars in interest and pay off your mortgage early.

My mortgage is with Bank of America they solicited me through the mail to setup a biweekly mortgage payment plan. Naturally I was shocked that they wanted to be so nice. Just a few years ago it was hard to track down anyone that would even do it. Additionally a large fee was accessed for the privilege. The deal they offered me was that they would automatically draw the biweekly payments from my Bank of America checking account all for no charge.

If you have never heard of bi-weekly mortgage payments, they have been around for decades. They simply got mothballed when consumers were more interested in adding to their debt with home equity loans than paying off their debt faster. 

What they do is simple. They divide your monthly mortgage payment in half and then automatically debit your account for those half payments every other week. Because there are 52 weeks in a year you make 26 half payments which end up as 13 full payments by the end of the year.

Making that one extra payment annually, which feels relatively painless when done through this gradual process, means you payoff your loan faster and save thousands in interest.

Someone who has a $200,000, 30 year mortgage at 5 percent, could pay off the loan five years faster and save $33,000 in interest by paying bi-weekly. Not bad for such a little amount of effort.

What's the drawbacks? Some lenders charge for this service. This is what makes it tough to decide to do it. Citibank requires a $375 upfront charge and takes $1.50 for each transaction. That's 26 transactions per year equaling $39 total per year. If you stay with the program for 25 years you will have paid $1350.

That may sound like a small price to pay for a $33,000 savings, but there is really no reason to pay for these programs. Why not do it yourself? At the end of the year you could just make one extra payment, this will accomplish the same thing. 

Another way to do it for no fees is divide your mortgage payment by 12 and pay that much extra per month. If your mortgage payment is $1200. Divide that by 12 and you would get $100. When you make your mortgage payment every month just increase it $1300, being sure you designate the extra $100 goes to principle.

 The benefit of the informal plan is you can start and stop it at anytime if you need the money. The formal plan keeps you disciplined when you get a little lazy. 

Remember paying of your mortgage early is great, but its foolish to pay extra on your mortgage when  you have credit card debt at a higher interest rate. Take care of the credit cards first.

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Social Security Can't Be Eliminated and Here's Why

Image via WikipediaSocial Security is necessary part of any modern civilization. Without it a portion of the population would live below the poverty line and worse. 

The standard rhetoric is that you should be responsible for your own retirement years by saving and preparing. I agree with this premise because through your working lifetime you should live within your means. Setting aside the necessary money in IRAs and other saving instruments. In a perfect world this should be the goal.

We don't live in a perfect world. We have members of our society that will never save a dime. Never prepare or give a thought of what would happen if they became disabled. They may never have the income to save. What should we do, let them live in poverty? No, that's where Social Security comes in.

We know where Social Security gets it's money, us. But do you know who the money goes to. 

The facts are that without Social Security many retirees would be living below the poverty line. Under the current circumstances that is not going to change. The policy makers in Washington must remember these issues.

• Social Security benefits are quite modest.

• The majority of beneficiaries have little significant income from other sources.

• For most seniors, Social Security is the only income they will receive that is guaranteed to last as long as they live and to provide full inflation protection.

• Social Security benefits in the United States are low compared with other advanced countries.

• Future retirees already face lower benefits (relative to their past earnings) than current retirees as a result of a rising Social Security retirement age and escalating Medicare premiums.

In the United States Social Security benefits as a percentage of income are quite low.

The facts are that Americans 65+ live richer lives thanks to Social Security. According to AARP 54.8% of retirees are in no danger of poverty because of Social Security and retirement savings. There are 35.5% of retirees not living in poverty because of Social Security. Sadly, 9.7% of retirees taking social security are still living below the poverty line.

When Franklin Roosevelt enacted the Social Security Act in 1935 he called it" a law that will take care of human needs". For 75 years, starting from the Great Depression when more than half of American elderly couldn't support themselves this coverage has provided a economic safety net for retired and disabled workers and their dependents. Today Social Security puts out 50 million checks every month. If it wasn't for those checks at least a third would live in poverty.

To fix Social Security doesn't just require acquiring more funding. We have to address the great need that requires it's existence.

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7 Things to do Before I Retire.

Image by The U.S. National Archives via Flickr
Because my nest egg will never be as big as it should be to retire on, I have made myself a list of the things I must accomplish before the big day. Yes I am talking about the day when I go to work for the last time. When that day comes I will be ready because I have eliminated money drains from my budget. 

Mortgage. This is my biggest item on the list. To finally pay off the monthly principle and interest payments eliminates a huge expense from my retirement budget. I know I will still have to pay insurance, maintenance, and property tax. But that can be budgeted and made affordable.If these costs are high in your area, you'll have a hard time affording them in retirement. You may consider downsizing if this will save you money.

Credit Card Debt. You don't want to use your savings to pay for expenses you incurred while working. I don't like to have credit card debt now and when I retire,too. I am still paying of some balances today, but will be done well ahead of retirement and I'll keep it that way. 

Second Car. With my wife and self not working anymore a need for a second car is eliminated. Going to one car saves money in fuel, insurance and repairs. Sure you lose some convenience, but you save the cash. It will work for me. But if you have to have a second car, make it a used, low mileage model. And remember no payments.

Home Repairs. Get all your home repairs done while your still working. Whether it's a new roof, carpet or washing machine get these thing taken care of before retirement. Also try to anticipate things that will need attention late, take care of them before time or set aside the money to be used later. 

Expensive Investments. Make sure all your investments are in accounts that have the lowest possible fees. Even a one percent difference in fees will make a big difference over the years. This is something that should of already been done.

Unnecessary Services and Utilities. If you have a cell phone and a land line why not consider closing the land line. If you have Internet and cable, why not consider canceling the cable and watching TV online. There may be other unnecessary items you don't really need, so why not cut them off and save some money.

Taxes. If you have some taxes to pay when withdrawing money during retirement, it may pay to hire a financial planner, accountant, or estate planner to help you tap your investment accounts in the correct way to minimum the tax implications.

I am planning ahead today so I can do the right things later. Also consider preparing for  insurance, health care, long-term care, and estate planning in you retirement. Take care of these thing today and get organized.

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