Making Mature Money Decisions: 3 Examples of Spending Less

In some ways, people don’t change. When it comes to our core personality traits, I’m convinced that most of us stay the same over the long-term.

That being said, sometimes our preferences and habits might change as we get older gain life experience. Some of this simply comes with maturity, and some of it might come via hard-earned wisdom.

One area in which we can make different decisions as we get older is spending money. Now, I think this can go both ways. Sometimes people spend a lot more money on things as they get older, but other times they might decide to spend less. There are probably very legitimate reasons for going in either direction, but what gets me most excited is the latter: spending less!

Here are 3 types of expenses for which I have grown accustomed to spending less:

Cars

Admittedly, I was never a big spender here.   However, I did buy an SUV about a decade ago. It really wasn’t needed, but it just seemed like the right thing to do at that point in life. When you become a parent, there seems to be – for many people – a sudden willingness to spend more money on things you think you need, but truly don’t. I call it first-time parent syndrome.

No, an SUV was not needed. Certainly not a nice, brand new one. You could just as easily do well with a Honda Accord, Toyota Camry, or some other seemingly reliable, practical smaller vehicle. And you don’t need to buy brand new. That’s the route I ultimately took, and am now driving something less expensive and more practical financially.

I know one other person who has downscaled even more, going from a new BMW in his 20’s to a beat-up, 10+ year old car as he reached 40. And actually, his means greatly increased during that time, but his spending sharply declined. This is in sharp contrast with many (most?) others I run across, who ultimately decide to buy nicer, more expensive vehicles as they get older.

Clothes

When younger, I have to say that I dressed well! My professional wardrobe was almost entirely from Nordstrom. Really.

In days gone by, I would go to that very nice retailer, and buy everything for work from there. Some of my casual/weekend wardrobe was from there too. I rationalized it by focusing on shopping at a few of their big sales – I believe they were the Anniversary Sale and the Half-Yearly Sale.  Also, by thinking that dressing really well correlates to success.

Fast-forward to today. From buying really nice stuff, I’ve gone to buying simply pretty good things that are on sale. The difference in cost between really nice and pretty good can be quite significant. As in, maybe 75% less costly!

Honestly, I think that for most of us, it really doesn’t matter. Very few people in most jobs or walks of life need to be dropping big bucks on clothing. One can look good on a budget, and retail therapy is not a way to maintain self-esteem anyway!

Home Amenities

My first home purchase was a brand new condo with all the bells and whistles. The place had nice hardwood floors, granite countertops, and marble baths. Yes, marble.

I have no idea why I cared so much about such things back then. I guess I’m not really in the market to buy a new place at the moment, but I wouldn’t care about such features. Why I thought kitchen countertops needed to be expensive granite instead of something less costly like laminate is beyond me.

Don’t get me wrong: I like good quality stuff. However, I now recognize that just because I really like something, it doesn’t mean that I need it. Rather, we should prioritize and allocate our money to what’s most important.

And what is most important now?

Well, to me it’s a matter of taking care of the basics first and foremost – and that includes the basics in the present and the future. That means the ability to retire someday!

Aren’t retirement and financial freedom more important than working many more years grinding away to pay for an lifestyle escalation? I think so!

My Questions for You

How has your spending changed – if at all – on the 3 categories mentioned above (cars, clothes, home amenities)?

Do you believe in spending on nicer things as you get older, or would you rather save the extra money for future needs?

 

Budget, Borrow and Buy: Top Tips for Acquiring Your First Home in Scotland

There is little doubt that the current generation of would-be house buyers are finding it much harder to even get on the first rung of the housing ladder let alone work their way up it.

Some places are more affordable than others when it comes to housing and there are definitely some ways that can help you to plan ahead and achieve that goal of owning your own home.

Here is a look at how you can work out the best way to become a property owner and what incentives and ideas you might want to look at in order to set you on your way.

Saving the deposit

Mortgage lending criteria has tightened and this has often meant that saving the deposit you need has become harder or takes a bit longer than before.

You can actually get a mortgage with just a 5% deposit but the more you can put down in cash towards your new home, the more affordable it will become in terms of mortgage payments and having a bigger deposit will often unlock a better finance deal in the first place.

Your aim should be to save the deposit you need within a one to five year timeframe, depending on your available salary and existing financial commitments.

Budgeting is important

There is no question that many first-time buyers do find the first few years of ownership quite a financial challenge, which is why working out a budget beforehand is so important.

Most mortgage lenders do now conduct affordability tests as part of the tighter lending rules, so make sure you know exactly how much you currently spend each month and do your own stress-test to see what effect a rise in interest rates would have when working out how much you can afford to pay each month.

Calculating how much of your salary you can commit to a mortgage will help to ensure you do not borrow more than you can afford even if the lender does offer you a higher sum than you expected.

Getting the right finance deal

It is very advisable to research all of your mortgage options so that you can find out which particular deals are available to you and so that you know how much you can borrow before you start searching for a property to buy.

You can deal directly with a lender or through a mortgage broker to discuss your options and ask to get a mortgage in principle. This means that your acceptability for a mortgage has been pre-qualified and having a mortgage agreed in principle will give you a much stronger position when you are making an offer on a property.

Finding a property and making an offer

You may already have an idea of the type of house and location that you want and once you have a mortgage agreed, you have a clear idea of what your budget is, which will help to narrow down the search options to a manageable level.

Almost every property that is for sale now, has to have had a home report completed by the seller. You can learn more at hdg.co.uk about what information is contained in a report, but you should ask for a copy of this information once you have confirmed that you may be interested in buying that particular property.

A bit of negotiation on the sale price is often expected by the seller and this is often factored into the initial asking price. When considering making an offer, make sure you put forward your suggested purchase price based on the information and valuation contained in the home report as well as basing it on local market conditions.

A well-researched and reasoned offer based on certain facts and figures that you can justify, is more likely to be considered than a figure that is seemingly designed to try and get the property at a lower than acceptable asking price.

Completing the purchase

Ensure that you take professional guidance from a solicitor or qualified conveyancer and be sure to understand all of the legal implications of making an offer and also be ready to advise your lender that you have found a house to buy, so that they are in a position to send the funds within the timeframe agreed.

Buying your first home is an exciting time but it can also be challenging at times, but by following some of these tips and being prepared financially for what lies ahead, you could soon be taking your first step on the property ladder.

Josh Henderson is always on the lookout for real estate news. A property investor of several years, he likes to share his experiences online. You can read his articles on various property investment blogs.

Measure Your Financial Performance and Ignore the Naysayers

measure financial performanceI’m sure many of us who read financial blogs, own one, or simply have a passionate interest in personal finance understand the idea of quantifying our finances. Here are 2 examples of this:

  1. Tracking Expenses. This should be a low-maintenance activity at this point, with the available options (such as Mint, for example) that are out there.
  2. Preparing Personal Balance Sheets. This entails looking at your assets and liabilities, to determine your net worth. This can be done periodically, to give you a snapshot at a given point in time of where you are.

I personally do both at this point. To me, it makes sense to know where your money is going, and how you’re doing overall in terms of money.

With respect to the later, the idea of tracking expenses has seemingly become a bit more mainstream, or at least so I thought. After all, as I mentioned it’s so easy to do – and quite responsible to do as well. The chatter on personal finance blogs – including this one – tends to support this view.

I had a conversation the other day where I brought up the topic of tracking expenses. Now, I’m pretty sure I bring up the idea of saving money more than the typical person out there, even though I’m not completely conscious of it at the moment. It’s just second nature, and a part of how I think.

There person with whom I was having a conversation looked at me and said “Seriously? You actually take the time to micromanage your money to that extent?”

At first I thought she was kidding, but I then stated that yes, I do actually micromanage money to that extent, and it also doesn’t take much time to do it either.

Her response: “Oh, I could NEVER do that. It takes the spontanaeity and fun out of shopping, I would think.”

I was stunned for a moment, finding it hard to believe that someone who was bright and well-educated could actually be stunned for the opposite reason: that I took the time to track expenses. It was almost like a totally foreign concept to her that she had never heard of. It was someone reminiscent of the epsoides I documented in a post I wrote on crazy things people said about money.

Anyway, It got me thinking that there is some real value to ignoring what many people might say about personal finance, even if they think you’re foolish for something you believe in.

It’s apparently not mainstream to do things such as track expenses. Who knew?

However, even if someone teases you for being frugal, measuring your financial performance, side hustles, personal finance blogging, or whatever – don’t sweat it. Ignore them. Do what you think is responsible!

They’ll be coming to you years down the road for advice anyway :)

My Questions for You

Have you ever encountered someone who basically rejected good personal finance habits?

What do you do when you have a discussion about money with such a person?

What are some financially responsible habits you have that you think others you know might not understand?

Starbucks and Buying a Home

As frugal as I aspire to be (and yes, I do want to get better at it!), I do have my spending weaknesses.  One of them is coffee.  Well, it actually might be tea.  Regardless, it manifests itself in occasional visits to coffee shops.

I enjoy going to them from time to time, in order to get some work done in a relaxed setting.  It’s not for everyone, and not even for me all the time, but sometimes I do enjoy getting a coffee or tea while accomplishing some things.  Had the opportunity to do just that the other day, when my oldest was at an event that took several hours (and parents weren’t allowed there).

Actually, I couldn’t imagine not living near conveniences such as this.  I realize that growing up, I never had anything like this.  However, with the hectic pace of daily life, these are the types of things that just seem to be a part of the landscape.  No matter that I’m actually eating most meals at home, and working on an otherwise healthy diet (more on that in another post).

Anyway, apparently others value these types of things too.  According to this interesting article on Yahoo! Finance, homes in close proximity to a Starbucks have been more likely to increase in value.

Now, with any analysis such as this, there could be any number of questions.  The first is the whole chicken or egg concept.  What truly drove these home prices to go up? Is correlation an indicator of causation?

There could a variety of variables that could factor into this correlation.  Maybe there are other amenities or a similar profile that tends to accompany Starbucks in a community (disposable income, etc.) that play a role.

Whatever the case may be, it doesn’t surprise me to read something like this.  I distinctly remember a conversation with a couple who was looking for a house some years ago, where they were describing why they liked a certain community that happened to be very different from where they had been living.  The guy said, when talking about what they really wanted (paraphrased): “It would be great to be able to wake up on a Saturday morning and just go the Starbucks a block or two away”.

No mention of anything else right away, just the idea of being in a cozy suburb with a little downtown that had a Starbucks within walking distance.

Personally, I would like to think I put more value on:

  • School systems (see discussion of good schools or nicer home),
  • Safety
  • Proximity to employment centers
  • Proximity to downtown (I live in the Chicago area)

But you know, even though they aren’t important, coffee shops such as Starbucks and other dining establishments do add to a community.  I think that going through my past expenses might attest to my past behavior being consistent with that sentiment!

So I have to ask you:

What attributes are important to you when evaluating a community?

Are you surprised by the results of this study?

Five Fundamental Tools for Trading Forex

Trading forex is a widely desired mode of investment for many with knowledge of the trade. And the word from such investors is that the trade needs one who is keen and level headed. However, regardless of one being a pro at the trade, there are tricks that need to be learnt. Tools for trading forex are the fundamentals that a forex trader needs when handling the forex market. They make you more aware of what to expect and make it easy for you to formulate viable predictions. Presented in this article are some of the tools that will enable you take your trading in the forex markets to another level.

Forex News and Articles

This tool is essential for both a pro and newbie in forex trading. The forex market is a volatile market depending on the changes that occur in other different markets. Due to this, relevant information and trading advisory are essential to give an investor all kinds of market information. There are many sources of forex information and articles that can give you this kind of in-depth understanding. This blog gives information on various market analyses and other related news. You should be keen on approaching viable and legit sources of forex market information.

Economic Calendar

Forex trading is suitable at given times and periods. It is not a trade one can get in randomly, but the markets have to be analyzed to make proper predictions. The economic calendar enables an investor plan his/her trading day. The specifics spun from reports about the economy, release dates, economic forecasts, and any foreseen volatility in the markets.

Trading Calculators

Trading calculators enable an investor calculate indicator values among other value outcomes using different variables. There are different calculators that can be applied to forex trading. They include the currency calculator, Fibonacci calculator, pivot calculator, profit calculator, and the carry trade calculator. All of these calculators have different values they calculate. You can find detailed info when you visit here.

Forex Brokers Insights

Forex brokers are a trading platform that investors can use to buy and sell foreign currency. Having sufficient insight on the available forex brokers is crucial. There are countless forex brokers available out there. However, not all of them offer what they promise. It is important to get sufficient reviews on the professionalism of the broker you intend to work with. This is crucial especially to a newcomer in the forex trading market.

Currency Charts

Forex trading involves many types of currencies. Therefore, as an investor, you need to be aware of the behavior of the currencies you are trading in at any given time. Information you should equip yourself with includes the market history and the trends different currency pairs have demonstrated over a period of time. Currency charts are meant to make this process easy for you. They employ the use of mid-markets and are available for a long period of time, say ten years.

With these tools, you will be on your way to an effective and efficient trading in forex. Alongside these tools, you can also implement techniques to strengthen your forex trading position. Click here to know more about these practices.

Why You Should Consider Negotiating Your Starting Salary

negotiate job offerSo, you’re about to start a new position. You’re all excited about it, and you should be! Landing a new job, one that will be great for your career as well as taking care of your family, is something to be proud of.

The job is what you want, it’s a great fit for you, and you can’t wait to get started on this new journey. All is good, except there’s one catch: the starting salary is lower than what you want.

What should you do?

You could jump at the chance to take the job, and believe that your future success will allow you to make up that difference through your strong performance. Confidence is good!

Or, you could take a moment to negotiate to make sure you get closer to the salary that you really want. You’ll still succeed on the job, but you’ll be at a more appropriate level of compensation. That is, based on your own perception of it. But regardless, the bottom line is that you’ll have more money in your pocket.

Why Don’t People Negotiate?

I suspect that there are a variety of reasons for this. Here are three that come to mind:

  1. Fear of negotiating. Some people simply don’t feel comfortable negotiating for anything. Whether it’s bargaining for a car, buying something off craigslist, or even something involving a small expense – negotiating is a problem for some.
  2. Fear of losing the offer. Now, I can’t speak for how this might technically work, but maybe some people are afraid that if they come back and try to negotiate, the offer might be rescinded.
  3. Fear of losing the “honeymoon period”. Perhaps the worry is not that the offer could be rescinded, but it could make it hard to start the job on the right foot in good graces.

Why Starting Salary is Important

Now, it’s certainly understandable that many people might be leery of negotiating that salary. However, it’s good to run the numbers to see why it matters.

Let’s say that you can negotiate just $1,500 more in terms of annual salary. Just for sake of example, let’s say this means you’ll keep $1,000 extra after taxes. If you don’t change your spending habits, that is!

  1. Compounding. If you just take that $1,000 and invest it over 30 years with an 8% annual return, you’ll have $10,000! That’s a pretty significant difference if you take a long-term view.
  2. Future Salary Increases. Keep in mind that future salary increases are calculated, quite often, as a percentage of your current base. For example, let’s say someone has a nice $100,000 salary (just for a simple round number). A 3% increase means the new salary would be $103,000. A $101,500 salary with that same percentage increase would result in a new salary of $104,545. Subsequent years would see increases on an ever-growing base.

Bottom Line: As you can envision, the long-term value of getting started with a higher salary can add up. It’s worth considering these benefits while you’re spending time thinking about your reservations about negotiating. Every situation is different, but whatever you decide, at least make your choice of what action to take based on not just those risks, but on the upside as well!

My Questions for You

How would you approach negotiating your salary with a job offer?

Do you think the benefits could outweigh the risks, or vice-versa?

The Frugal Super Bowl Party

frugal superbowl partySo, what did you do for the Super Bowl?

All over the country, I imagine that people everywhere were of course watching the game at the very least. It’s basically an event here in the U.S. for which most things simply stop. Many of us are watching with others, and some are hosting or attending fun parties for the big game.

I had plans to go to friends’ house during the afternoon, and was looking forward to a good day in general. However, those plans changed – not the part of the day being okay though, because it was. More on that later.

Here in the Chicago area, we had a massive snowstorm that pretty much altered the plans of tons of people. In fact, there was a blizzard warning for much of the day, with people hunkered down at home instead of venturing outside. Driving was not recommended, and it was easy to see why, considering the snow and wind.

Needless to say, this type of weather made people cancel get-togethers and events. In the morning, I spoke to someone who said that his wife had a baby shower to go to, but it was canceled because nobody could make it. Super Bowl parties? Yes, many suffered the same fate.

So, what to do in that case?

Over here, we didn’t leave home all day. Instead, we got things done around the house – which is a good way to spend what amounted to a “snow day” for everyone. And the big game? Well, we just stayed in to enjoy what turned out to be a really good game and an exciting finish!

No big party, no spending lots of money on drinks, pizza delivery, or anything of the sort happened. It’s not like we could go anywhere with the blizzard, so it was just a matter of making do with what we had at home.

And you know what? It turned out to be alright. More than that, it was a lot fun! Yes, it’s possible to enjoy the Super Bowl without spending a lot. I’d guess it cost about $6 per person based on the food at home – dinner, snacks, etc.

It’s yet another example, albeit small, of how spending extra money does not necessarily lead to more happiness.

My Questions for You

What were your Super Bowl plans?

Have you ever noticed that sometimes it doesn’t take spending a lot of money to enjoy a celebration, party, or other event?

Additional Note: Here’s something Super Bowl-related to check out for entertainment purpose – how the stock market performs after the super bowl, based on which conference’s team wins.

Save Hundreds by Going Virtual Over Material

Resources cost money. It’s a stipulation as old as civilization itself. If you want the benefits of a product or service you have to pay for it. If it’s an object like a mobile phone or an automobile, you’re paying for everything from the raw metal mining to the final factory polish. There’s only so much to go around and value revolves around supply and demand.

This is why it’s so important for families to do everything they can to forgo material purchases in favor of virtual replacements. Not everything can be replaced virtually, of course, but in today’s digital age less material goods are necessary for work and fun than ever before. The benefit of this is of course less dependence on costly products to get through the day.

Here’s some general ideas with examples to help get you started:

Home and Office

When the personal computer age first began, many industry analysts and insiders hailed it as the end of paper printing. What they didn’t factor was how easy it became to print off the computer, resulting in more printed material than ever before. Through ink, paper, files, paper clips, and all the labor going into getting these products to your home or office, it’s easy to spend hundreds in the course of a year.

At home we can easily cut the costs of materials by making better habits of using cloud storage to save and organize important documents, images, and other kinds of files. Most of these services are free via your favorite search engine service. Using your smartphone to extend this into your on-the-go lifestyle is another way to reduce a dependence on materials.

At the office or through your small business the potential savings of a virtual switch can be massive. Electronic invoicing services through sites like ADP.com are designed to eliminate the outdated need for physical supplies when it comes to managing payables.

Hobbies and Entertainment

Humans love to create and have fun. Historically these pastimes require an investment in supplies and toys. Many still do, but much do not. Adapting to digital means of artistic expression and forms of entertainment can cut household costs down tremendously in the long-run. In today’s computer age it’s never been easier.

When it comes to hobbies like gaming or art, skip the costly CD-ROMs and canvas. Opt instead for downloadable software. Services such as Steam offer virtually every computer game ever made for cheap download. They also offer software such as Photoshop, Final Cut Pro, and FL Studio for the creatives among us who wish to express themselves without having to spend a lot of money over the years.

Streaming movies, sports, and other forms of watchable entertainment are getting easier to view and cheaper with every passing year. Abandon the cable box or satellite dish in favor of online streaming services. Skip buying the marked-up cardboard-and-plastic medium for entertainment we know as DVDs and blu-ray. These are archaic means to access the movies and shows you love.

Not everything can be easily replicated digitally. But when it comes to keeping track of your household, running a small business, staying active or having fun, going virtual is the easiest way to save big in the long-run. Otherwise you’ll be investing in the supplies and material goods which don’t offer anything more than the ability to take up precious space and use your limited money.

You Don’t Have to Be Defined by Your Financial Past

financial storyA tiger can’t change its stripes. But can it change its financial situation?

Yes. Well, maybe not a tiger – but we certainly can. It may be easier for some people than others, depending on one’s circumstances, but it’s possible to turn around finances and make things a lot better. This could mean going from bad to good, or perhaps good to exceptional.

Case in point: someone I know who went from negative net worth about 15 years ago, to becoming a multi-millionaire now.

In looking at how he did it, I can point to several different factors based on what I’ve heard over the years:

Genuinely Working Hard

He was not someone who simply clocked 40 hour weeks. He absolutely strove to be excellent at his work. At times, that did mean working more hours than his peers or what we be “expected” on the job. But it also meant working smart, and putting in the time to know how to do the job well and efficiently – no matter what the job.

Focusing on Education

He went back to school to get a graduate degree, from a globally premier school. He invested his time and some money to do so, and just as he did professionally, he worked hard. What he didn’t do is spend an arm and a leg to do so, as I believe his employer might have covered a sizable percentage of the cost. Now that’s a setup for a good ROI! Clearly, he understood the importance of education and net worth. Also, he gets that we must always look to keep on learning and improving ourselves.

Marrying Someone Who Gets It

How many marriages feature someone savvy with money being paired with someone who just doesn’t get it – and doesn’t care to understand, either? Wouldn’t that be a bummer? Thankfully for him, this wasn’t the case. He married someone smart who also works hard and is a responsible person. In reality, I should probably re-characterize this as how “they” accomplished it.

Keeping Healthy

This guy is highly physically fit, and has tremendously improved in this regard. This helps in several ways. First, he looks the part, which I’m sure can only help out one’s career. Second, and likely more important, it probably gives him the energy to focus, be productive, and make good decisions.  Not to mention that later in life, if you’re not healthy, you might not be able to work at all.

Avoiding Materialism

At one time this guy was much more materialistic. From clothes to cars, he would spend money for nice things. However, he has become wise – and simply doesn’t care to impress anyone with material items. He just doesn’t care about that, and has avoided Big Hat No Cattle syndrome.   Rather, he realizes that one must save early and often.  It’s something that has come up in conversation.

Striving to Achieve Long-Term Goals

This guy talks about not wanting to work late into life, and to able to be young enough to retire and be healthy enough to relax and travel. There is clearly a vision, and I’m sure there’s a plan to make that happen. He has a strong sense of direction in his financial life, and it shows.

Bottom Line: There are plenty of examples of people who have not been held back by their financial past, and have made changes in order to eventually put themselves in a much better position. To be fair, people can go the other direction too. But thinking positively, we can rewrite our financial story if we put our mind to it, work hard, and perhaps get some good luck to help us along the way.  We have to believe in ourselves!

My Questions For You

Have you ever thought about how your past experiences with money have shaped the way you think about it today?

Has there been a time when you have consciously tried to change your approach to managing your money?

Do you know anyone who has broken free of past financial situations to become very successful in this area?