All Posts Tagged With: "procrastination"
Financial oopsies most new investors make
Jennifer McClelland | RSS | Wed, Jul 08 2009 | 0 Comments
When you first start out investing or even in life, you don’t always make the best choices. After all, you usually have to make mistakes to learn from them. However, not learning before hand when it comes to your financials could prove to be costly and damaging to your long term wealth.
Here are a few mistakes that are often made:
1) Procrastination. College is over, and now it’s time to get out there are really make something of yourself…tomorrow. I know this one well. In college, when you procrastinate you may not lose out on anything at all, I often put papers off until the last minute and still did well because I wrote the best papers under pressure. However, when it comes to your finances, again, you can’t procrastinate or you will damage your long term financial goals. Here are some of the consequences:
Fail to start investing soon and you’ll miss out on years of compound interest.
Don’t keep a budget and you could sacrifice control of your spending.
Buy now with the intent to pay off later and you’ll dig a debt hole that’s tough to climb out of.
Pay your bills late and you could damage your credit score.
Put off saving money in a rainy day fund and you could be caught unprepared in a personal
emergency.
2) Not diversifying your portfolio. When people start out, they don’t always know how to diversify out risk from their portfolio. While you can’t completely hedge yourself against something like the current recession, you can help your portfolio out a little. Investing in a wide array of save investments can lead to steady returns. While you may not get the “super returns” that some stocks give, some mutual funds simply track the market and you may earn a fairly steady rate every year.
3) Over paying taxes. A Roth IRA grows tax-free and a 401 (k) is money taken out of your employment check before taxes. Both are ways to avoid and save money on taxes.
The idea of saving on your taxes may seem a tad obscure, but it really can pay off big. Say a 25-year-old contributes $5,000 each year for 40 years to an investment account, making an average annual return of 8%. If she used a taxable account, she’d have more than one-fourth less money than if she’d gone with the Roth. (Use this calculator to see how far your savings can take you. Enter “0″ in the tax-rate boxes to simulate the tax-exempt status of a Roth IRA.)
4) Going into debt is another big problem and mistake. Eventually, with the right investment moves and job, you will be able to have a fancy car and a big house full of “stuff” but right now, you don’t want to start out your life in debt. Any money you put toward interest is money that you won’t have later and you’re basically just throwing it out the window.
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Financial myths debunked
Tags: saving money, rainy day fund, compound interest
Being lazy is costing you money!
Jennifer McClelland | RSS | Thu, Jun 25 2009 | 0 Comments
Laziness is a curse and the end result of nothing but procrastination. One of the seven deadly sins known as sloth, laziness was even punishable by death in Christian mythology. Those who were guilty were fed to the snake pits in hell.
Worse yet, laziness is digging into your greed and is actually costing you money. Forbes magazine had a special showing ways that being lazy is costing you money.
1) Not doing enough research to choose the best rate on your savings account. When you stay content with your bank without doing comparison shopping, you are setting yourself up to not realize the full returns you could be having if you just did a little comparison shopping. Traditional banks offer less than 1% while some banks can offer up to 2.25% APY. On $100,000, over five years, that’s an additional $8,000! Looking for a new bank won’t take too much time either. Just make sure the bank you put your money in is FDIC insured.
2) Open your retirement fund as soon as you can. If you’re like me, or even close to it, you’re not thinking about retirement, but you and I should both be thinking about it because we all get old, it’s something that happens to everyone. Say you’re 25 and start saving $5,000 annually at 6% interest a year, well by the time you’re 65, which would have come out to $821,000…not too shabby. You can also try to see if your company offers a 401 (k), then you can save for retirement and not have to worry about anything.
3) You have to send in rebates to get the rebates! Oh, how many times have I bought something what was “so many dollars off” after mail in rebate and just not ever sent it in? I think that this is what companies are planning on when they offer this kind of rebate. Recently, I bought a new phone that offers a $100 mail in rebate after the phone has been activated for 30 days. I’m thinking it has something to do with the carrier hoping that people will forget, possibly. Seriously though, filling out a mail in rebate takes minutes and (in the case of the phone) can save you hundreds. You may even be able to get household items for free this way.
4) You have to pay attention to 0% APR deadlines. Oh we’ve all heard the promos for the credit cards about 0% financing for “a set number” of months. Well, if you remember to pay off the balance within that amount of time, then you’re fine, but if you carry a balance past the deadline, then you could be setting yourself up to pay more money in interest than if you had stuck to your “set interest” credit card. In the example given by Forbes, if you purchase a $3,200 TV with 0% interest for 18 months, you have to remember to pay it off in that time frame because one day past the 18 month mark and you will owe interest on the entire $3,200 (at 22% interest that’s $700!) even if you have paid $3,199.
5) Look into renegotiating for a better deal because you may be surprised to find what you can get. Just to bring up the cell phone story again, I called the carrier the next day and was able to “upgrade” my plan to a plan with more minutes for $10 less a month, plus get a corporate discount on top of it. I was able to get that just by asking nicely. You can negotiate on things like cell phone plans, leases (especially in the real estate market we’re in right now landlords may be even more willing to work with you), hotel rooms, electronics, and furniture. Who knows, you may just end up saving yourself even more than what the “mail-in rebate” can get you!
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Tags: retirement fund, end result, laziness
