Free Money Finance

Box of Books #20
Reader Profile: MJD
The New Parents' Guide to Managing Money

Posted: 15 Dec 2011 12:45 PM PST

The box of books giveaways through my giveaway newsletter have been very popular, so below I'm detailing another set of them that will be up for grabs this month (if you want a chance to win, be sure to sign up for my newsletter here.) For now, here are the books I've received from publishers and a bit about them (from Amazon):

The Sound Mind Investing Handbook - A Step-By-Step Guide To Managing Your Money From A Biblical Perspective 5th Ed - Investment adviser Austin Pryor has carefully created the "next step" guide that helps you put Godly principles of finance into motion. Whether you're a beginner or an experienced investor, you'll benefit from stepping across this bridge between "theory" and "action". Each user-friendly lesson is written in everday English and filled with helpful visual aids.

What Would Ben Stein Do: Applying the Wisdom of a Modern-Day Prophet to Tackle the Challenges of Work and Life - Delivered with the dry, honest wit that millions of people have come to know and love, Ben Stein's next work What Would Ben Stein Do? will provide advice on any question imaginable – from the man who has all the answers.

What Color Is Your Parachute? Guide to Job-Hunting Online, Sixth Edition: Blogging, Career Sites, Gateways, Getting Interviews, Job Boards, Job Search ... Resumes, Research Sites, Social Networking - Shows you how to quickly find the data that will be most helpful to you, how to identify and research the places where you will most enjoy working, how to leverage the power of social networking sites, and how to use your Internet time most effectively, avoiding the common pitfalls and setting you up for success.

The Questions and Answers on Life Insurance Workbook: A Step-by-Step Guide to Simple Answers for Your Complex Questions - Need help facing the constant barrage of information from competing life insurance companies? With twenty years of experience in the life insurance business, Tony Steuer delivers a practical, one-of-a-kind resource for choosing the best life insurance policy for you or your family, whether you currently have a policy or not. Step-by-step, he leads you through the process of making key life insurance decisions.

Congratulations You're Hired! The must read Career Guide to land the job of your dreams, College Edition - This book provides useful, practical, and easy to apply advice from a Human Resources Director.

A Simple Book of Financial Wisdom: Teach Yourself (and Your Kids) How to Live Wealthy with Little Money - This easy-to-understand book gives specific steps you can take right now to become more financially secure.

21 Days to a Thrifty Lifestyle - In 21 days you can turn your spending habits in a brand new direction—one that can have a profound, positive impact on your personal finances.

FYI, a few of these have my handwritten notes in them, so if you eventually win the set, don't expect completely new books.

Reader Profile: MJD

Posted: 15 Dec 2011 07:45 AM PST

The following is the latest post in my "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.

If you're interested in contributing to this series, then drop me an email. The series seems to be very popular with readers and I need a steady stream of new ones to keep it going.

Next in the series is FMF reader MJD. He answered my questions (in red below) as follows:

Please tell us a bit about yourself.

I am a 22 year old recent college graduate. I graduated in May of this year, 2011, and was lucky enough to have a job lined up for me upon graduation. I have a position in the finance industry and have always been very interested in finance. I know people frown on working in the "finance industry" however I love my job and love what I do. I do not work for a big bank so please refrain from any criticism here and respect the fact that I am following my dreams and doing something that I want to do. I use spreadsheets galore to track everything from the money going out, money coming in, interest on accounts, you name it, I track it. I use charts and comparison figures to see where I overspend, where I can invest more, my asset allocation, my monthly budget breakdown, and my monthly expenditures. I find myself always looking for a way to add another chart or tab that will allow me to analyze my finances more in depth and get a more robust foundation for my financial well-being.

Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).

I was lucky enough to have very gracious parents that paid for my undergraduate degree (on my own for any post-grad unfortunately!) and can never thank my parents enough for this. My parents struggled with their finances when I was younger and I believe that is why I am so conscientious of my own because I witnessed how finances can be a such detriment and cause so much pain to a family. I have 0 debt and have a car that I have completely paid off. I live with 2 roommates in an apartment with all of my monthly expenses including rent, utilities, phone, cable, internet, and car insurance totaling around $800/month, while bringing home around $3500/month after taxes. I am lucky enough to work for a company with a 50% 401k match which I have maxed out to this point since beginning work. I contribute monthly to a roth, emergency fund, and other investments. I have built my 401k to $4,000 in a few months, maxed out my roth this year, built emergency fund of just less than $5,000 and have other investments totaling $7,000. I currently have 1 credit card that I never use, however, after reading articles on here I am looking into getting one that offers rewards.

What are the current financial issues you're facing (saving, paying off debt, etc.)?

Currently my concern if my credit score. Unfortunately while in school, I had an outstanding doctors bill that somehow slipped through the cracks and got sent to a collection agency. Although I finally paid it off, it still negatively affected my credit score. I am still unsure of how the credit score works, and quite frankly find the whole system very flawed and silly. I am worried about this for the future when I go to buy a home. I want to get a credit card to start using more often to boost my credit, however, I have been denied cards in the past and worry this could happen again (I have also heard that the more cards you apply for this lowers you credit score more). My dream would be able to save up enough cash in the next few years to simply pay cash for a house so I can can stick it to the man in charge of these erroneous "credit scores" but this could be a bit optimistic on my part. I have no intention on buying a large house, and intend on living well below my means for the time being. Any thoughts on easy short term ways to boost ones credit score?

What are your plans for the future (retire early, build your career, etc.)?

I would love to retire early, however, I have many goals that I would like to accomplish before retiring. I would love to start and run my own business one day. This has been one of my goals since childhood and one that I plan on achieving. After this though, I would love to be able to live on coupon payments, dividends, and savings. Through one of my many spreadsheets I have ran the numbers and at my current savings rate I will be in fine shape come retirement time. Now I know I will have a family one day and my current savings rate will not be sustainable, however, I believe with a shared income it will be able to remain fairly sustainable. I love traveling and that is one thing that I plan on doing throughout my life including retirement. Traveling and doing what makes you happy is an investment in yourself which I believe always results in a positive ROI!

What's your best piece(s) of financial advice and/or your general philosophy on personal finances?

My best piece of advice is to start as soon and as early as possible! I am only 22 but wish that I had started 10 years ago. Every little bit helps and I have tried explaining this concept to friends and some just do not get it. Save as much as possible but at the same time, live a little. It kills me reading some of these blogs and articles about people eating ramen every night in order to retire early and save every single penny. Yes I love the idea of retiring early and I love saving, but I also draw the line sometimes and realize life is too short to eat ramen every night and pass up a night out with your friends because it may cost you a few bucks. Yes money is always nice and it will be nice to retire early knowing your family and kin will be financially sound, however, it is your life to live and at some point you have to reward yourself!

The New Parents' Guide to Managing Money

Posted: 15 Dec 2011 01:29 AM PST

The following is a guest post from Elle at Couple Money.

My husband and I recently became parents for the first time this summer. We have a healthy baby girl and are absolutely loving it. When we first found out we were expecting, like many parents to be, we wanted to get an idea of what we're getting into. One of the first things that struck me was how many people mentioned how expensive kids could be. The good news is that it probably won't cost you as much as the USDA estimates, but raising kids does affect your finances. If you're a first time parent it can be hard to know what you need to do to handle the changes. I wanted to share what has worked for us and what I wish we knew earlier.

Set Your Family's Financial Priorities

Many well meaning family, friends, and strangers will have plenty of advice to give you for your family. I've found some helpful information among the comments, but the truth is only we know what will probably work for our family. While our baby girl is loved by many, we're responsible for taking care of her and no one loves her like we do. The two of you have to sit down and discuss what's important for you as a couple and what's important for you as a family. What goals (financial and other) do you have? When do you want to achieve them? For us, having me being able to work from home was important. That meant, though, that I would cut back on taking on new work for a bit as I adjusted with having a baby at home with me. I also had to save up some to take care of my 'maternity leave'. For the months leading up to the birth, I made sure that money was being allocated to savings so there wouldn't be a huge change to our cash flow.

Hold Off on That College Fund

I've had several people tell me that we should get started with saving for our kid's college fund. They don't want their kids to go into debt for a college education. My husband and I want to set aside a bit of money for college, but we also realized that there are a few financial milestones we need to have in place before we start socking away money for her. The first thing we wanted to do before she arrived was increase our emergency fund. Not knowing how much the first year of baby expenses will cost us made us realize we wanted a bigger buffer. For estimates on a ballpark figure I checked and asked friends who have kids how it went from them. We also took into account our health insurance deductible. While my husband's job offered a partial reimbursement, we planned into the budget that the reimbursement may be delayed. (Happy to say that the company paid it promptly.) We also want to make sure that our retirement contributions weren't going to be sacrificed for the college fund. Some parents may question putting our retirement ahead of our kid's college savings. However we'd rather our kid working for scholarships and grants instead of her going to college for free, but having to financially support us when we get older.

Accept Help and Gifts

I will tell you right now that the best gift we received was the 3 weeks of help we received from our family when we brought the baby home. Our mothers took turns and helped us make the transition. We prepared a few meals, but hardly had to use them the first month because our family and friends took care of it. I will admit I was nervous about having family live with us for an extended time, but it was a blessing. We got to bond with our daughter without stressing out about day to day stuff. We saved a bit of money as well since we didn't have to grab a quick dinner. So if your friends and family offer to help you, please talk it over and consider if it's a good move. It can be a huge stress relief. Accepting help also means that you're open to finding deals by shopping around and being frugal. We've had several friends of ours share some of their favorite places to pick up baby gear and supplies. We have a consignment shop nearby that has fantastic deals on baby items. I've also learned from other personal finance bloggers about the good deals I can for baby items like diapers with Amazon Mom. I've saved 20% compared to local stores and I get it delivered to our place.

Start Planning Ahead

Being a parent means making long term decisions and tough choices, that includes preparing a will, living trust, and life insurance. We want to have enough money in the policies to cover paying off the mortgage and have some money to cover living expenses for a period of time. We've also talked about the possibility of who we would like to be guardian of our daughter should something happen to the both of us. We haven't made a decision on who to ask to cover this precious responsibility, but we're not going to make this decision lightly. Planning ahead for the baby also meant having health insurance for her. My husband checked with his company's Human Resources Department to see what we needed to do to get our daughter covered under his health insurance policy. It meant an increase in premiums, so we had to budget accordingly. I didn't realize how quickly it jumps when you add a child.

Lead By Example

My baby has no idea of our financial circumstance and won't for awhile since she's just an infant, but we still want to lead by example.

Budgets: We've had a family budget since we were married. Our plan has basically been to keep all our necessary expenses under 1 income and use the second to pay off debt, save, achieve family goals. We'll continue to adjust the budget as our circumstances changes. We will include our daughter in discussion when's she old enough so she can be comfortable dealing with money.
Giving: We feel that money shouldn't be hoarded; it's merely a tool to use. If the opportunity presents itself to help someone we believe that we should help. We hope our daughter feels the same way and we'll work on being transparent with our giving so she can see the benefits of sharing.
Saving: Before we make big purchases we save up the cash for it. Yeah, we missed a few great deals, but I don't want our daughter to get into a "buy now, pay later" mentality with her spending. I'd rather she see the effort involved in saving up so she can appreciate yje value of money and her purchases more.

Will we get this right on the first try? No; we understand that we'll make mistakes and have to change up how we teach our daughter based on her own personality and needs.

Thoughts on Becoming Parents

Are we perfect parents? Most definitely not, but we're willing to do our best. One of our goals is that our daughter will be able to be a financially responsible and independent person. I hope some of these tips can help other new parents. This is definitely a topic that needs more input - too many things to mention. I'd love to hear your perspectives on what new parents need to know. What were some of the biggest surprises and lessons you had as a parent? What advice would you pass on to other parents? For me, I'm so excited at how much FUN it can be hanging around our daughter. I also have learned to be more productive with my free time; putting things off is less of an option now.