40 Money Habits That Can Leave You Broke

40 Money Habits That Can Leave You Broke

By Alaina Tweddale November 19, 2020

Don't fall victim to these bad financial habits. Big or small, some financial habits can zap a solid financial plan and leave smart savers with empty wallets. To avoid buyer’s remorse and similar guilt about neglecting your finances, you need to know what habits might be costing you extra.

1. Your App Addiction

In the list of things to waste money on, smartphone apps are a big one. Those $1.99 purchases seem inexpensive enough, but they can snowball — especially if you have kids who are adding to the overall purchase price or frequency.  Consider free app downloads exclusively or cap yourself and your family with a monthly app budget.

2. Paying Bank Fees

Many banking fees can be avoided, so there’s no reason to pay these if you don’t have to. Instead, find a financial institution that will allow you to avoid certain fees.

With the right checking account, you can avoid the monthly fee with a monthly direct deposit or minimum daily balance of $500 or more. When it’s that easy to avoid a fee, you should always take advantage so you can keep more of your money in your account.

3. Not Checking Your Credit Report

People with top-tier credit ratings qualify for the lowest finance rates when car or home shopping. Over a 30-year term, a quarter of a percentage point can add up to thousands of dollars.

Check your credit history regularly and clean up any problems as soon as they arise.

4. Having Wine With Dinner

Buying wine with dinner is a pricey proposition. Restaurateurs routinely mark up bottles by about three times the wholesale price — sometimes more. Consider a BYOB-friendly restaurant instead or, if you can bear it, skip the wine altogether when dining out.

5. Leasing Your Car

A 2019 cost-comparison report by car cost site Edmunds found that the overall cost of leasing a compact SUV can be over $5,000 more than the cost of buying a similar car used, and it is about $7,000 more than buying the same car new when you take equity into consideration.

Drop the lease and invest the difference, and you can boost your overall financial scenario.

To continue reading, please go to the original article here:
https://www.gobankingrates.com/saving-money/savings-advice/money-habits-that-can-leave-you-broke/

Savings Tricks From Regular People Who Are Sitting on Millions

Savings Tricks From Regular People Who Are Sitting on Millions

Saving $1 million is possible with good financial habits.

By Joel Anderson

One million dollars is a major milestone for almost anyone. It’s the sort of nest egg that can fund a generous lifestyle in retirement or even build your dream home. However, for many, it’s also a pipe dream. Understanding how to make a million dollars is a question for the wealthy, not the average American.

However, in many ways, that’s a dangerous misconception. In fact, building up your savings to $1 million certainly isn’t easy, but a lottery ticket or huge business deals aren’t the only paths available. For plenty of people, smart budgeting, strategic investments and just good old-fashioned horse sense can combine to create the sort of habits that will put $1 million well within reach, even if you’re living a relatively modest life.

 If that seems implausible to you, it shouldn’t — especially after reading these real stories from a few normal people who have hit that $1 million goal. You’ll probably notice an absence of lofty advice about sparking a huge windfall or a series of get-rich-quick schemes. Instead, these people stress that the answer to the question of how to save a million dollars involves core financial habits, which are as valuable when you have $1 to your name as they are for those who have $1 million.

Carl Jensen, Blogger at 1500 Days to Freedom

Carl Jensen, the writer behind the blog 1500 Days to Freedom, has a net worth that is the source of considerable consternation for many of his neighbors who note his modest home and thrifty ways. However, Jensen puts his net worth at about $2.3 million, including approximately $1.8 million in investments.

“The best story about our situation is that a neighbor once told another neighbor that she thought we were poor because she saw me working on my car,” Jensen said.

So how has Jensen managed to save that much money?

He Made a Conscious Choice To Downsize

To continue reading, please go to the original article here:

https://www.gobankingrates.com/saving-money/savings-advice/savings-tricks-normal-people-sitting-millions/

Here’s How Much Emergency Cash You Need Stashed If an Emergency Happens

Here’s How Much Emergency Cash You Need Stashed If an Emergency Happens

Are you financially prepared for a national emergency?

By Jaime Catmull December 17, 2020

You’ve probably heard time and again that it’s important to have a rainy-day fund set up “just in case” something unexpected were to happen. But we’re now at a time when having an emergency fund is more vital than ever.

The coronavirus pandemic has already had devastating effects on the economy at large and, on an individual level, it has led to job loss and reduction of hours for many workers around the world. Even if the coronavirus’ financial impacts haven’t hit you personally yet, here’s how to be prepared in case it does — plus how to set up a fund for unexpected future national emergencies.

Why You Need a National Emergency Fund

Part of being prepared for any contingency, big or small, is having a reserve of emergency cash at your disposal at all times. When you can’t rely on accessing your funds electronically, you’ll need some legal tender to buy food, gas or other necessities.

“Whether it’s Mother Nature or some other disaster out of your control, you always want to be prepared by having some emergency cash on hand,” said Annalee Leonard, an investment advisor representative and president of Mainstay Financial Group. “Banks and ATMs may not be up and running for days after a strong storm. I recommend my clients have three to five days’ worth of spending money, just in case.”

How To Decide How Much To Save

To decide how much to save for an emergency fund, you’ll need to ask yourself a couple of questions:

How much will I need for an extreme catastrophic event? How much can I afford to save?

To continue reading, please go to the original article here:

https://www.gobankingrates.com/money/financial-planning/how-much-physical-cash-need-hand-case-national-emergency/?utm_campaign=1024531&utm_source=yahoo.com&utm_content=5

Tips To Keep Your Finances in Order Without Sacrificing What You Want

Tips To Keep Your Finances in Order Without Sacrificing What You Want

Cameron Huddleston  Wed, January 20, 2021,

If you’re trying to live on a budget, you might not feel like you can have the things you want. But you don’t have to resign yourself to living a bare-bones existence if your budget is tight — it’s possible to live on a budget and get some of the stuff you want.

Create a Budget That Prioritizes Needs

If your income is limited, make sure it covers your needs first. “Food, shelter, clothing and utilities are needs,” said Donna Freedman, author of “Your Playbook For Tough Times. “The rest is just a series of wants.”

Creating a budget can help. List the expenses you have to pay to survive. Add them up, and then subtract them from your income. If there’s not much left over, you might have to make some sacrifices. Don’t think of cutting out wants to cover needs as deprivation, though — think of it as a smart use of available funds, Freedman said.

Build an Emergency Fund

If you’re living on a budget, you might not think you can afford to set aside money each month in an emergency fund. But would you be able to afford an unexpected cost without savings?

“The thing that keeps you out of debt is to find room in your budget to grow your savings,” McClary said. You won’t be able to build your savings quickly, but if you can stash away a little each month, you can fall back on your emergency fund rather than go into debt when something unexpected happens.

Tackle Your Debt in Smart Ways

When you’re struggling with debt, you don’t want to just keep paying the minimum balance on what you owe. However, you may not be able to afford much larger payments, so you should look at other smart ways to tackle your debt.

Discover® Personal Loans could be worth checking out if you’re dealing with high-interest debt. A personal loan could consolidate that debt into one set regular monthly payment. And with Discover’s annual percentage rates of 6.99% to 24.99%, you could potentially save money on interest over the time it takes to pay off your higher-interest debt.

Take Advantage of Tax Breaks

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/tips-keep-finances-order-without-100000892.html

Survey Says We're Keeping Too Much Money In Cash — Do This Instead

Survey Says We're Keeping Too Much Money In Cash — Do This Instead

Shane Murphy  Wed, January 20, 2021

A survey says we're keeping too much money in cash — do this instead

Despite the economic calamity of the past year, a recent study says just over half the country has managed to squirrel away some cash since the first lockdown.  That’s encouraging news — however, almost 80% of savers are planning to keep their money liquid by leaving it in their checking or savings account, the Franklin Templeton-Gallup Economics of Recovery Study reveals.  While it’s always a smart idea to maintain a healthy emergency fund — experts suggest keeping enough cash on hand for three to six months worth of expenses — dumping all of your savings into a bank account is rarely the best move in the long run.

It’s tempting to play it as safe as possible right now, but your future needs will still be there once the pandemic is over. Here are some things to consider before you bury your savings in the bank.

Interest rates for traditional bank accounts stink

The biggest problem with leaving your savings in a checking or traditional savings account is that your money won’t have a chance to grow.  Traditional accounts pay practically nothing in interest; as of January 2021, the average interest rate for a checking account is 0.04%. Any meager earnings you see will be obliterated by inflation.

However, it’s not hard to find high-yield savings accounts that offer 10 times more interest — and provide the same ease of access you would have with a traditional account.  And if you’re willing to give up some liquidity on a portion of your savings, even for a few months, you may be able to earn even more interest with a certificate of deposit (CD).

CDs offer higher interest rates than most other savings options but lock your money away for a predetermined period. If you run into some unexpected trouble, you can pull out your cash early; however, you’ll have to pay a penalty that could wipe out a big chunk of your earnings.

Investing a chunk of your savings can pay off 

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/americans-burying-savings-bank-could-150000131.html

10 Simple Habits of Money-Smart Individuals

10 Simple Habits of Money-Smart Individuals

Tracie Fobes  Wed, January 20, 2021,

Mark Cuban. Warren Buffett. Michael Bloomberg. Most people will never be as rich as the world’s wealthiest billionaires, but you can still learn from their smart money habits.  From ditching debt to paying bills on time, fiscally savvy folks have developed good habits and plans that keep them in financial shape. And with a little effort, you too can master their tricks for managing money. If you’re looking to break bad money habits and get on more solid financial footing, follow these fiscal tips from the pros.

Have a Written Budget

Many people have a budget — sort of. They know who they have to pay each month and how much. However, they don’t have anything in writing.

When you have a written budget, you see exactly where your money is going. Best of all, you can direct your money where you want it to go.

Your budget is your roadmap to financial success, so make sure you include every single expense. Don’t forget about that coffee you grab on the way to work or the money you spend on parking every day.

Pay Down Debt

Take the steps necessary to pay off your debts. You will need to create a debt payoff plan to make it happen.

Start by assessing the types of debt you carry and determining what might be paid off first. Your credit card debt should be the first thing you look at. In addition to possibly carrying a high interest rate, it typically has variable rates. Because credit cards are revolving debt, if you only make the minimum payment required each month, you may not be able to pin down an end date for your debt.

Consolidating revolving debt into a personal loan lets you lock in a repayment term. In other words, you define an end date to that debt. Plus, by consolidating higher-rate debt you may save money on interest.  A Discover® personal loan offers annual percentage rates between 6.99% and 24.99%. And with a fixed rate Discover personal loan, you won’t have to worry about increasing interest rates.

It might take some time, but you can pay off debt if you’re diligent.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/10-simple-habits-money-smart-100000987.html

Why We Go Wrong

Why We Go Wrong

John Lim  |  January 16, 2021

I’VE LONG BEEN flummoxed by the difficulty people have managing money. It all seems so intuitive: Save, invest, repeat. Buy more when the market falls and a lot more when it crashes. Rebalance by adding more to losing asset classes—which today means buying value and international stocks.

Now, don’t get me wrong: I’m no financial genius. I’ve made my share of blunders. But I also know that being a do-it-yourself investor has saved me boatloads of money. When I’ve encouraged colleagues to do the same—imploring them that “it’s really not that hard”—I’ve received only steely stares and blank looks.

It’s slowly dawned on me that the financial demons people wrestle with are real and of Herculean proportions. Finance is a minefield that few navigate without getting maimed. It’s replete with mirages—what you see is often not what you get. Our instincts hurt us more often than they protect us. Actions that are sensible in every other realm of life lead us astray in finance.

What follows is an exploration of eight key concepts that many—and perhaps most—investors struggle with. The biggest paradox of all: While managing money may appear simple, it’s anything but.

1. Compound interest is the key to wealth. We’re woefully ill-equipped to wrap our heads around the wonder that is compound interest. Warren Buffett described his eureka moment at age 10. “That’s where the money is,” he told himself, referring to the power of compound interest.

The miracle of compound interest is a collision of two intangible concepts—exponential growth and a long time horizon. It’s well known that people struggle when making decisions that have consequences well into the future. Economists refer to such myopia as “present bias,” a universal human tendency to favor the present over the future.

The abysmally low U.S. savings rate exemplifies this mindset. But it also reflects a failure to grasp the immense power of exponential growth over long stretches of time. In brief, we each need our own eureka moment.

Consider the story of the Lenape Indians. In 1626, they sold the island of Manhattan to Peter Minuit for a mere $24. That was the greatest swindle in U.S. history, right? If you compound $24 at 7% a year—which is the average after-inflation return of the stock market—what would it be worth today? Almost $10 trillion. Let that sink in.

2. Laziness is a virtue. Life teaches, and common sense affirms, that hard work pays off. Sloth was so disdained in medieval times that it was labeled one of the seven deadly sins. Yet lazy investing leads to superior, not inferior, results.

To continue reading, please go to the original article here:

https://humbledollar.com/2021/01/why-we-go-wrong/

Money Lessons From Dr. Martin Luther King Jr.

Money Lessons From Dr. Martin Luther King Jr.

By Dave @ Accidental Fire · Published January 18, 2019

Martin Luther King Day will be celebrated this coming Monday in America.  It’s a federal government holiday, so I’ll be off.  As a semi-retired and semi-quasi-professional blogger and graphic artist, I wasn’t planning on working anyway.

Sadly, many companies in the private sector do not recognize this holiday.  So many out there will be working away, fighting to pay off the loans on their ill-advised auto purchases.

Speaking of which, in a speech two months prior to his assassination, King had this to say:

Do you ever see people buy cars that they can’t even begin to buy in terms of their income? You’ve seen people riding around in Cadillacs and Chryslers who don’t earn enough to have a good T-Model Ford. (Make it plain) But it feeds a repressed ego…

You know, economists tell us that your automobile should not cost more than half of your annual income. So if you make an income of five thousand dollars, your car shouldn’t cost more than about twenty-five hundred. That’s just good economics….But so often, haven’t you seen people making five thousand dollars a year and driving a car that costs six thousand? And they wonder why their ends never meet. That’s a fact….

This was a different time for sure, and Cadillacs aren’t exactly perceived as the king of cars these days.  Although the Cadillac Escalade is a bloated monstrosity that does still have “repressed ego appeal” for so many out there. This person is on cloud 10, because cloud nine wasn’t big enough to fit this polluting debt-chariot

And the “half your annual income” thing for a car is bad advice if you, say make $120,000 a year.  Heck, it’s bad advice if you make the median household income in America which is now $60,000 a year. You don’t need to spend $30,000 to get a decent functioning vehicle.  But again, it was a different time so this is not King’s fault.

His point about people driving vehicles that cost the same as their annual salary is still valid, and still happens all the time.  I have a school teacher friend in Baltimore who’s very proud of her SUV that costs almost what she makes per year.

 He Warned Of Lifestyle Inflation

In 2018 Dodge infamously used some parts of that King speech to hawk their expensive pickup trucks in a Superbowl ad.  That didn’t go over well.  Because in the very same speech, King warned of the dangers of advertising and lifestyle inflation in general.  Dodge of course felt the need to conveniently ignore that part.

He said:

Now the presence of this instinct explains why we are so often taken by advertisers.  You know, those gentlemen of massive verbal persuasion. And they have a way of saying things to you that kind of gets you into buying.

In order to be a man of distinction, you must drink this whiskey. In order to make your neighbors envious, you must drive this type of car.  In order to be lovely to love you must wear this kind of lipstick or this kind of perfume. And you know, before you know it, you’re just buying that stuff. That’s the way the advertisers do it.

I’ve never been so proud to not be a man of distinction.  Because I’m definitely not.

To continue reading, please go to the original article here:

https://accidentalfire.com/2019/01/18/money-lessons-martin-luther-king/

Whole New Game

Whole New Game

Joe Kesler  |  January 19, 2021  Humble Dollar

BASEBALL USED TO BE a game where managers would go with their “gut.” But Brad Pitt changed everything. In the movie Moneyball, Pitt played Billy Beane, the first baseball general manager to use data analytics to great success—and suddenly it was all the rage.

Today, from a typical game, seven terabytes of data are gathered, everything from the arm angle of every single pitch to the exit velocity of hit balls. Teams then interpret these numbers using sophisticated algorithms, so managers have the insights necessary to make decisions based on statistical probabilities rather than intuition. Big data analytics now drive baseball decisions on and off the field—because the process has proven to work.

The traditionalist in me revolts at this dehumanization of baseball. But the investor in me sees an opportunity to learn from baseball’s experience. I see two key lessons.

Lesson No. 1: Be aware of cognitive biases—especially the Dunning-Kruger effect. What’s that? People who are the most ignorant about a topic tend to be the least aware of their ignorance and, as a result, often have the highest confidence. Bad things usually happen when we suffer from overconfidence.

We can see evidence of this bias in the rising number of day traders. New apps have made it easy and fun to trade stocks and options. With the market hitting all-time highs, new traders have—I suspect—been lulled into thinking investing is easy.

The media feeds into this belief. We’re bombarded with headlines like “8 Stocks to Buy and 5 to Sell,” making successful investing seem as simple as reading a monthly investment magazine.

I learned about investing by watching the popular PBS show Wall Street Week with Louis Rukeyser. The highlight of the show came at the end of the year, when the stock pickers would wear tuxedos and be either exalted or humiliated based on how their stock picks had performed that year. They would then confidently offer stocks for the next year, persuasively explaining why the new picks would be winners.

To continue reading, please go to the original article here:

https://humbledollar.com/2021/01/whole-new-game/

There Is No Such Thing As 100% Safety, There Are Only Trade-Offs

There Is No Such Thing As 100% Safety, There Are Only Trade-Offs

January 17, 2021 · by The Escape Artist · in Investing ·

Like many other people, I get emails. One thing I noticed about these emails in 2020/21 is that many of them ask whether I am “staying safe”?  Sadly not…I have been involved in that dangerous activity called “life”. Scientific studies show that 100% of lives end in death.

Perspective

When I was at primary school we learned about something called “history”, a place in the past where many interesting things happened.  For those not familiar with history, it was not always safe. There were wars. There were plagues. There were papercuts. I don’t have enough space in a 1,500 word blog post to cover everything in “history” but a lot of dangerous stuff happened, health & safety be ******.

This makes me wonder. Did we get more risk averse in recent years? Did we come to take safety, comfort and convenience for granted? Has a cult of safetyism, an extreme form of desire for safety, taken over our schools, universities and our public discussions?

The problem with safetyism

Jonathan Haidt and Greg Lukianoff say yes and wrote a book about it. In The Coddling of The American Mind, Haidt (a liberal psychology professor at New York University) and Lukianoff, a law professor, define safetyism as follows:

Safetyism refers to a culture or belief system in which safety has become a sacred value, which means that people become unwilling to make trade-offs demanded by other practical and moral concerns. “Safety” trumps everything else, no matter how unlikely or trivial the potential danger.

When children are raised in a culture of safetyism, which teaches them to stay “emotionally safe” while protecting them from every imaginable danger, it may set up a feedback loop: kids become more fragile and less resilient, which signals to adults that they need more protection, which then makes them even more fragile and less resilient”

The Coddling of The American Mind

Financial safety

If you are anything like me, you got interested in money motivated by a mixture of fear and hope.

In my case it was more fear than hope. Ever since my parents took out the biggest mortgage possible and interest rates then went to 17%, I’ve always thought of being in debt as a scary thing. After that, I spent much of my life visualising myself living homeless and eating catfood and cockroaches rice and beans to survive.

As someone smart once said: I have lived through many terrible things in my life…most of which never actually happened.

I can see The Dark Side

Monty Python famously sang: “Always look on the bright side of Life”.

But it was an ability to see The Dark Side that triggered me to save. It’s why I was always so keen to fix the roof whilst the sun was shining. You probably have enough to never work again when you have 25x your annual spending. Or to put it another way, a 4% withdrawal rate is probably safe. Sometimes this sparks debate and accusations of being TOO DANGEROUS. But when I see those debates, I can’t help thinking…what about this:

To continue reading, please go to the original article here:
https://theescapeartist.me/2021/01/17/there-is-no-such-thing-as-100-safety-there-are-only-trade-offs/

9 Financial Legends And The Habits That Made Them Wealthy

9 Financial Legends And The Habits That Made Them Wealthy

Ethan Rotberg  Sat, January 16, 2021

Want to be the next Warren Buffett or Oprah Winfrey? You would do well to imitate their habits then.  Sure, you probably won’t amass the same kind of wealth as those iconic billionaires, but you don’t become wealthy — and stay wealthy — without some smart habits and strict discipline.

Here are 10 spending, saving and investing tips you can apply to your own life, straight from 10 legendary financial experts and business tycoons.

1. Jim Cramer: Get to know yourself

While you’re growing as an investor, don’t try to find the perfect strategy for the perfect portfolio, says Mad Money host Jim Cramer. The key is to develop a strategy that’s perfect for you.

"The truth is, there’s no one-size-fits-all approach to investing, and anybody who tells you differently is either dangerously misinformed or flat-out lying to you," Cramer says.

That’s why there’s one rule Cramer follows above all others: Know yourself.

Try talking one-on-one with an expert about your goals and tolerance for risk. Today, you can work with a certified financial planner online to create a plan that’s optimized for you and only you.

2. Warren Buffett: Don’t look backward

Folksy billionaire businessman Warren Buffett once said "the investor of today does not profit from yesterday’s growth."

Investors often rely heavily on past performance when choosing what to buy and sell. That information is useful, but Buffett says following historical trends is less important than seeing new opportunities.

It takes time to develop that insight. If you’re not there yet, it may be better to take your bias out of the equation entirely by using a robo-advisor.

To continue reading, please go to the original article here:
https://finance.yahoo.com/news/9-financial-legends-habits-made-190000898.html