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Her Story
By Dwight Harshaw, BBA, Personal Finance Counselor

Dwight Harshaw, BBA

Dwight Harshaw, BBA

Recently, a story came to light in my hometown about a 27 year old woman who was cited for a misdemeanor sex charge. She was caught by an undercover detective in a sting operation targeting escort services. It was her first night on the job. How did she get there? She said she lost a second job, she was going through a bankruptcy, and her wages were being garnished. Her financial problems overwhelmed her and drove her to making an unfortunate decision, which destroyed her young career. I don’t know her and this is not a condemnation. I have great empathy for her. I am captivated by her story because-before she resigned-she was a high school algebra teacher, with a master’s degree, in her fifth year of service. What happened?

I don’t know any more than what has been publicized but in looking and speculating about her situation through a personal finance lens, I think she may have found herself in the circumstance that a lot of young people and people in general are in; they are besieged with debt. The average college graduate is nearly $20,000 in debt. (Source: Demos.org, “The Economic State of Young America,” May 2008) Many have fallen prey to the constant stream of messages (advertising) that are designed to persuade people to value things (depreciating assets, junk) more than money (financial security). Once young graduates get their credentials and jobs, they want the material accoutrements that they believe they should have. On top of school loans and credit card debt, they pile on more debt. And then, there are the ordinary living expenses of life to contend with. Before they know it, they find themselves in unsustainable financial predicaments. More attention needs to be given to the importance of wealth building, especially at the start of a career.

 

Stylish Woman Dancing with Martini in Hand

 

Wealth Building

Wealth building is simply being knowledgeable about money and making it work for you more than it works for others. To become a wealth builder, there are 4 things you should do. You should steer clear of new debt, establish an emergency fund, pay off your student loan debt early-if you have any, and save for your long term future.

 

Avoid Debt

The young lady is bankrupt and suffering wage garnishment. When credit is so easy to obtain, it is hard to be responsible. We use it to buy non-financial things that give us temporary pleasure. We buy expensive wardrobes of which the styles come and go; we buy new cars which lose value as soon as the deal is done; and we purchase things that we simply don’t need, but the debt on those things goes on, long after the usefulness and excitement is over. Credit should be used responsibly-never! Okay rarely. Debt avoidance is a virtue.

 

Emergency Fund

If she had an emergency fund, she might not have been faced with a decision that put her career in jeopardy. An emergency fund is a fund dedicated specifically for extraordinary immediate crisis needs; it smoothes out a rough financial time. Car repairs, job lost, medical bills, household maintenance problems or things that cannot be paid for with out-of-pocket cash qualify as emergencies. It should be a priority to fund it with at least 1 to 2 thousand dollars initially and with 3 to 6 months of your take home pay ultimately.

 

Pay off student loan debt

Some are fortunate to not have student loan debt when college life is over. If that is not your fate, I have this advice; pay your loans off as soon as possible. Double your payments or add an extra amount to reduce the total interest and time that you will pay on your loan(s). Be sure to follow the protocol of the lender for early payoff. The sooner you pay off your student loan debt, the sooner you can get on with building wealth.

 

Retirement

The money you save early on in your career will be the most valuable when you retire. The elements of time, dollar cost averaging, and compounding are a wealth builder’s best friend. Save to the maximum level in tax advantaged retirement plans offered by your employer. If nothing is offered or you can afford to save more, establish a traditional or Roth IRA and fund it to the max or with as much as you can. Ultimately you want to save at least 15% of your annual income for the future because the burden of providing for your retirement is on your shoulders. The money you save early will be worth more and be more useful in the years to come than the value of any consumer item you may buy today.

Her story is all of our stories. All of us have made unwise financial decisions. On a positive note she is young, smart, and hopefully ambitious. She will recover over time and this will all be a distant memory. Time heals. When you find yourself off track financially, get back on. To be a wealth builder, remember this; it is wise to pay with cash rather than with credit, have money set aside for a crisis, pay your debt off early, and save for your long term future.

 

About Dwight Harshaw: Dwight Harshaw is a personal finance counselor, realtor and writer. He has a BBA from the University of Arkansas at Little Rock in Finance with an emphasis on financial planning.

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Financial Literacy Month 2015: A Call To Action

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

To book Mr. Edwards to speak at your next event, contact:
Donell Edwards Enterprises
13111 W. Markham St.
Suite 116
Little Rock, AR 72211
DLEdwards@DonellEdwardsEnterprises.com

 

We’re Celebrating Financial Literacy Month

 

Know Your Money
Friday – April 24, 2015

Financial Literacy Month 2015
A Call To Action
By Donell Edwards

As we approach the end of Financial Literacy Month 2015, it is time to take action if you are really serious about getting your finances in better condition, regardless of your station in life.

We have covered much over the past three and one-half weeks, and there is more to come next week.

I highly recommend the Money Management International Thirty Steps to Financial Wellness program as a means of starting and successfully maintaining your personal money management.  If you already have your finances in good condition, this is still an outstanding program to implement to review what you are doing and to improve on your efforts.

If you have been following our blog on a daily basis you know that some of the program may be easily implemented, while other elements involve time and effort and may take longer, some even being done on a continuous basis.

So, don’t be overwhelmed.  Make the commitment to do whatever it takes.  Stick with this program and make it work for you.

Check back a year from now on your progress and you will be surprised how far you have come.

One of the very important things I want to focus on to day is making sure that you are already saving, or that you are working toward saving on a regular basis, and that you know what your best options are for saving.

 

 

Businesswomen Balancing Over Money

 

We have provided some great information in past posts on this blog about saving.  One method that I particularly like is the 52 Week Savings Plan.  This plan helps develop the habit of saving by starting out with only a dollar a week and increasing the amount in increments of one dollar each week.  You may learn more about this method if you are not already familiar with it clicking on the link in this paragraph.

We also provided options on where to save in our blog post of May 16, 2014, Making The Most Of Your Savings.  You may read that post here.

I am aware that some reading this blog may have challenges that make it very difficult or even prohibitive for them to save at this time.  I encourage you not to give up and make it a goal to do all of the things necessary to get into a position where you can save.  How do you do that?  In the credit.com blog post, “10 Ways to Save Money When You Make the Minimum Wage,” there are many suggestions to help you.  Just click on the link above to read the article.

My challenge to you is to make the most of this Financial Literacy Month and start making money smart decisions, use the Money Management International Thirty Steps to Financial Wellness plan, and make sure that start or continue saving.

 

Here is today’s step to financial wellness from Thirty Steps to Financial Wellness developed by Money Management International:

Step 20 – Identify and Plan for Periodics

EVENTS AND RESOURCE LINKS:

Hosting A Financial Literacy Month Event

2015 National Savings Forum

Financial Literacy Month Articles from Huffington Post 

The FoolProof Foundation

FoolProof Teacher

FoolProof Solo

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We welcome your comments and encourage you to share your knowledge about personal money management and financial literacy.  We hope to be a conduit for others to disseminate information on this subject to promote financial literacy and to enhance knowledge and understanding of the subject.  If you have comments you would like to share please send them to: 

Comments@knowyourmoneyglobal.com.

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2015 CWR Media – All Rights Reserved

 

Financial Literacy Month 2015: The Case For Reducing Your Tax Refund

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

To book Mr. Edwards to speak at your next event, contact:
Donell Edwards Enterprises
13111 W. Markham St.
Suite 116
Little Rock, AR 72211
DLEdwards@DonellEdwardsEnterprises.com

 

We’re Celebrating Financial Literacy Month

 

Know Your Money
Wednesday – April 22, 2015

Financial Literacy Month 2015
The Case For Reducing Your Tax Refund
By Donell Edwards

In her article for MarketWatch, Tax Columnist Eva Rosenberg makes a very strong case for individuals to reduce their tax refund.  We have taken this position in this blog from our inception over a year ago.  However, it is great to have our position validated by a professional tax expert like Ms. Rosenberg.

Ms. Rosenberg cites the following 10 advantages to reducing your tax refund:

 

1.     You don’t have to wait for the IRS to release your money …

2.     You don’t have to file your tax return in order to get your refund

3.     You don’t have to get suckered by some unscrupulous tax preparer …

4.     You improve your credit and your credit score by …

5.     In a real emergency you can …

6.     You can use the money to pay monthly bills that you …

7.     When you do get ready to file your tax return, you can reduce your total tax liability by …

8.     You might even choose to fund a …

9.     If your refund or your spouse’s refund is routinely grabbed by the IRS for back taxes, child support, student loans, etc., you won’t have to …

10.   Not getting a large refund is extremely patriotic. After all …

 

Ms. Rosenburg also discusses the risk of identity theft related to income tax returns and learning the art of saving in her article.  We strongly encourage you to read the full article, just click here.  Also, watch the video below, “Why You Don’t Want A Large Tax Refund.”

 

 

Here is today’s step to financial wellness from Thirty Steps to Financial Wellness developed by Money Management International:

Step 18 – Where Does All The Money Go?

 

EVENTS AND RESOURCE LINKS:

Hosting A Financial Literacy Month Event

2015 National Savings Forum

Financial Literacy Month Articles from Huffington Post 

The FoolProof Foundation

FoolProof Teacher

FoolProof Solo

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We welcome your comments and encourage you to share your knowledge about personal money management and financial literacy.  We hope to be a conduit for others to disseminate information on this subject to promote financial literacy and to enhance knowledge and understanding of the subject.  If you have comments you would like to share please send them to: 

Comments@knowyourmoneyglobal.com.

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2015 CWR Media – All Rights Reserved

Financial Literacy Month 2015: Be Financially Smart About Income Tax Refunds

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

To book Mr. Edwards to speak at your next event, contact:
Donell Edwards Enterprises
13111 W. Markham St.
Suite 116
Little Rock, AR 72211
DLEdwards@DonellEdwardsEnterprises.com

 

We’re Celebrating Financial Literacy Month

Know Your Money
Friday – April 17, 2015

Financial Literacy Month 2015
Be Financially Smart About Income Tax Refunds
By Donell Edwards

The purpose of the Know Your Money Blog is to educate and inform readers so that they become better at managing money and making money-wise decisions, and to help eradicate generational poverty for those who find themselves trapped in this vicious cycle.  This includes helping readers with the step-by-step process of identifying destructive spending habits, carefully and regularly monitoring spending, developing and rigidly living by a realistic budget, learning to make wise spending choices, working to transform long standing negative behavioral patterns, acknowledging the need for assistance with personal money management, accepting accountability for acquiring knowledge and information to improve money management skills, and providing readers with encouragement and support to make the commitment to change and to find the willpower to resist the temptation to allow spending to spiral out of control.  Ultimately our goal is to help each individual who reads Know Your Money to become more financially literate and to achieve personal wealth free from debt.

So, today’s post about adjusting tax withholdings is very relevant to our mission to help readers improve their personal money management by adding money to the personal or family budget by correcting the W-4.  It is important to understand that this is a personal decision, and some may at this point in life be in a position where they really feel that they need the large tax refund more than the increase in monthly income, that is a personal choice.  However, the purpose of today’s post on tax refunds is to educate and inform readers so that an informed decision can be made in regard to whether to correct the W-4 or not, and if now is not a good time, to make it a goal that at some point in the near future the income tax refund you receive for that year will be the last tax refund you will ever receive.

We also want to caution readers not to make changes to your W-4 yourself, regardless of how qualified you may feel, especially in completing the Adjustments and Deductions Worksheet on page 2 of the W-4 form.  If you work with an experienced and reputable tax professional you should avoid any mistakes that result in having to pay taxes when you file, or at the very least, owing only a small amount.

 

Stressed Over Money

 

In today’s post we examine two articles listed in yesterday’s blog from two writers who think it is a good thing to get an income tax refund, and we will explain why we disagree with them.  The writers and their articles are representative of the thinking of many others who support getting a tax refund.

One of the articles is “5 Reasons Why A Big Tax Refund Can Be A Good Idea” from USA Today, written by Dave Carpenter.   The other article is “Everything You Know About Getting A Tax Refund Is Wrong” from Daily Finance, written by Rich Smith.  Both articles support the idea of getting a tax refund and cite their reasons.  Listed below are the reasons cited by each writer:

 

Dave Carpenter – Associated Press

  • Avoids debt trap of owing the government taxes
  • Provides a welcome windfall
  • Protects against tax surprises from unexpected events in life that affect tax liability
  • Forces Savings and prevents squandering money
  • Costs little in lost opportunities because of the low interest rates for CDs and money-market savings accounts

Rich Smith – Motley Fool

  • Low interest on savings accounts
  • Miscalculating withholdings resulting in owing taxes with penalties
  • MoneyRates.com study shows 69% of people (who were polled) use their refund wisely and save at least half

 

In my response to both articles it must be acknowledged that not everyone is in the same financial situation and so obviously the options are going to be different depending on an individual’s circumstances.  For this post we will consider that everyone is in one of three categories:

Living from paycheck-to-paycheck and financially distressed with no money left over at the end of the month, and probably not enough money to pay bills and expenses. We will call this Group 1.

In fair to good financial condition with money left over after paying bills and monthly expenses.  We will call this Group 2.

Finally, those in excellent financial condition with money to invest.  We will call this Group 3.

The position taken by both Mr. Carpenter and Mr. Smith are very similar.  They both cite low interest rates on savings and miscalculating withholdings resulting in owing taxes at tax times as major reasons that having too much withheld is a good idea.  First of all, both of these gentlemen and everyone who agrees with them assume that everyone who gets a tax refund only has the option of putting the money into a savings account if they don’t spend it, or at least that is the inference.  If that was the case I would agree with them.

But as previously mentioned, the options for those in Group 1, 2 and 3 are not the same.  Those in Group 1 most likely need all of their return to pay bills, make purchases that have been delayed, and do other things that are important to them that they would otherwise not be able to afford.  They most likely are not going to save.  This is the group that we hope will make enough progress by next year that they will have some of the same options as those in Group 2 and Group 3.

Although those in Group 2 and Group 3 could put their money into a savings account, most likely they are more money savvy than that, or at least they should be.  The purpose of this blog is to ensure that everyone that follows over time will have the knowledge to make wiser decisions.  Obviously putting money into a savings account with almost no interest, that may have a monthly service charge, and that penalizes depositors if their monthly average balance falls below a certain amount is not wise money management.

According to the IRS the average tax refund is approximately $3,000.  For those in Group 2 and Group 3 who do not already invest or have a financial planner, they have the option of purchasing stocks and earning a much greater return on their money than with a savings account.  There are fees involved, but in the long run investing is a far better option for those with enough money to invest.  This is another component of our blog that will be discussed after the proper groundwork is laid.  If you do go this route and you have never invested before, be sure to do your homework and carefully select a financial planner to work with.

In my opinion, saving should not be an option for anyone in either group because of the small return in today’s market.

The other reason Mr. Carpenter and Mr. Smith cited for supporting tax refunds was the risk of owing money at tax time.  Although working with an experienced tax professional does not guarantee that no taxes will be due if the W-4 is adjusted, the risk is very, very low if accurate and complete information is provided.  There are risks with anything in life, the smart people anticipate risks and take action to ensure any affect on them is minimum.  Working with an experienced and reputable tax professional in adjusting your W-4 is the smart thing to do and should provide you with sufficient protection from any risks.

Going back to Group 1, even if there is not any money to work with to invest, paying down debt is a money wise option.  Another option is to begin building your emergency fund, which we will also discuss in much greater detail in coming months.

Two other reasons Mr. Carpenter provides for supporting a tax refund are (1.) Providing a windfall and (2.) Forces saving that prevents squandering money.  Although Mr. Smith cites a MoneyRates.com survey in which 69% of those participating reported they used their returns wisely and saved at least half of the money.  Obviously this was a random sample and did not include all taxpayers receiving tax returns.

The average taxpayer does not use this so called “windfall” wisely, but instead spends wildly and without restraint, and in a few days or weeks it is all gone.  Mr. Carpenter’s opinion that by having too much money withheld for taxes forces a person to save and receive a large sum at tax time, rather than squander the extra money that would be received in the paycheck each payday.  The problem with this theory is that if the person is the type to squander the money away each payday, getting a large tax refund only gives them more money to squander away.

This blog, as we have repeatedly mentioned, is designed to help people overcome thinking and habits that result in squandering money away. Certainly that is a problem for anyone not really serious about improving their money management skills.  But for those who want and accept the information provided by the contributors to this blog, and who take the extra step of reading articles from our “Suggested Reading” at the end of most of our posts and who do additional research on their own to educate themselves, they are developing the willpower and transformed money management philosophy to resist the temptation to squander away money.

In conclusion, adjusting the W-4 so that only what a person owes is withheld from their payroll check is a personal decision.  But there is overwhelming evidence that having only what is owed withheld is the money wise thing to do.  If you need more convincing watch the video below, “Don’t Get A Tax Refund”, featuring nationally acclaimed financial expert Suze Orman, who agrees that getting a tax refund is not the financially smart thing to do.

 

 

Here is today’s step to financial wellness from Thirty Steps to Financial Wellness developed by Money Management International:

Step 15 – Secure Your Financial Future

 

EVENTS AND RESOURCE LINKS:

Hosting A Financial Literacy Month Event

2015 National Savings Forum

Financial Literacy Month Articles from Huffington Post 

The FoolProof Foundation

FoolProof Teacher

FoolProof Solo

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share?
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to info@knowyourmoneyglobal.com.

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2015 CWR Media – All Rights Reserved

Financial Literacy Month 2015: Is This Your Financial Wake-up Call?

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

 

We’re Celebrating Financial Literacy Month

 

Know Your Money
Thursday – April 2, 2015

Financial Literacy Month 2015
Is This Your Financial Wake-up Call?
By Donell Edwards

 

We begin this Financial Literacy Month with a very sobering article from one of our favorite sites, MarketWatch online, entitled Most Americans are one paycheck away from the street, written by Personal Finance Writer Quentin Fottrell.  Even if you are doing well financially, could you improve your skills and increase your knowledge?  Remember, as revealed in yesterday’s post, much of the problem with financial literacy in America is not about a lack of knowledge, it a failure to exercise strict financial discipline and the willingness to make sacrifices.  So, if you are doing well financially, congratulations!  But don’t think that financial literacy should not be important to you.

However, the cold, hard fact is that millions of Americans fall into the category described in Mr. Fottrell’s article.  Why?  As previously alluded to, some know better, but just choose to make bad financial decisions.  Then there are those who are seriously challenged because no one ever taught them basic money management principles like, how to make and use a budget, how to effectively use credit, the advantage of having a cash budget as opposed to a credit based budget, the benefits of saving, and the importance of eliminating debt and learning how to invest.

It’s all about acquiring knowledge and making the best choices.  In Mr. Fottrell’s article he cites data from a recent survey conducted by Bankrate.com that revealed that 62% of Americans do not have an emergency savings fund.  If you are reading this and you are asking, “What is an emergency savings fund?”  Or if you do not have an emergency savings fund, you need help with financial literacy.  Not only does Mr. Fottrell list the lack of an emergency fund as a problem, he also explains some of the sad consequences for those who do not have an emergency fund.

Mr. Fottrell also cites a U.S. Federal Reserve survey of more than 4,000 adults released in 2014 that revealed that “Among those who had savings prior to 2008, 57% said they’d used up some or all of their savings in the Great Recession….”  Mr. Fottrell also discusses the impact of debt, the use of a budget, healthcare and much more.

 

Homeless People

 

 

Reading this article is a great way to kick off Financial Literacy Month, and should be a wake up call for many of us.  Here is the link to the article:

www.marketwatch.com/story/most-americans-are-one-paycheck-away-from-the-street-2015-01-07

 

Here is today’s step to financial wellness from Thirty Steps to Financial Wellness developed by Money Management International:

Assess Your Financial Situation

 

 

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share?
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to info@knowyourmoneyglobal.com.

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2015 CWR Media – All Rights Reserved

 

Special Savings Series: Making the Most Of Your Savings

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

 

Know Your Money
Friday – May 16, 2014

Knowing Your Personal Finances
Special Savings Series:  Making the Most of Your Savings
By Donell Edwards

 

During this special series we have discussed what it takes to get a savings plan started, the importance of debt management, the benefits of creating additional income streams, and savings strategies to motivate you to save and to help you start and continue to save regardless of how much or how little you may have to save.  Our intent has been to provide you with information to help you change your thought process about saving and to help you have the confidence that you can become a saver.

 

In his classic, War and Peace, Leo Tolstoy writes, “The strongest of all warriors are these two — Time and Patience.”  No words could better describe what it takes to become successful at personal money management.  Because it takes time and patience to learn to change one’s thought process, to be willing to change, to understand the importance of self-sacrifice, and to overcome bad habits.  It takes time and patience to monitor and evaluate spending and to take action on what the results of those activities reveal.  It takes time and patience to establish a realistic budget and to learn to live rigidly within that budget.  It takes time and patience once spending is monitored and a realistic budget is implemented in order to learn to resist the temptation to splurge and waste money.  It takes time and patience to develop the willpower to make sacrifices in order to pay down debt instead of continuing to incur additional debt.  It takes time and patience to get to a point where one can replace credit spending with cash spending, or to learn to do without.  It takes time, patience, and courage to get to a point where one can save.

 

If you are somewhere in the process working toward positioning yourself to save, you are to be commended.  You are making progress on the long road to success.  If you have already arrived at the point where you can save, congratulations, you are ready to make the next step.  Whether you are working toward being able to save and the rest of this post is motivation for you to continue your efforts, or you are ready to take the next step and can use this information now, take note of how you can make the most of your saving.

 

 

Woman In Red Roses - MP900440313

 

 

 

One of my great concerns when I decided to write this series about saving, and in other posts that I have written about saving, was where to recommend readers to save. Since the interest rates at most banks is so very low it is almost not worth even putting money into them, the question was where is the best place for savers to save their money?  

 

In doing research I discovered that credit unions generally pay more interest than banks.  In one of our Must Reads for today, Highest Savings Account Rate Is 40X the National Average, there is a comparison chart that shows the average savings account rates over the past year for banks and credit unions and the national average, and the change from last year.  The article also lists the 10 best savings accounts based on data from the GoBankingRates database.  So, credit unions are a good choice.

 

For those in the military, United Services Automobile Association (USAA) is a good option.  This company provides banking, investing, and insurance services to people who serve or have served in the military and their families.  

 

Another option is to purchase Certificates of Deposit (CDs) if you are prepared to leave the money in the account for at least 6 to 12 months.  Since you should be saving for the purpose of creating an emergency fund or to accumulate enough money to invest, leaving the money in the account for up to a year should not be a problem.  In some cases the interest on CDs may be higher than the interest in banks.

 

So, do your own research, and look for the best deal.  Also, make sure to read the fine print because there may be penalties for making more withdrawals than allowed, there may be penalties for failing to meet the minimum balance requirement, and there could be other hidden penalties or fees.

 

Be sure to read all of our Must Reads for today in addition to the highest savings rates article.  The other two articles, 10 Best Ways To Earn More Interest On Your Savings and How Lottery Savings Accounts Fool You Into Saving More will provide you with additional information on how to earn more on  your savings as well as how to stay motivated to save.

 

Have a great and money wise weekend. 

 

Must Reads:

10 Best Ways To Earn More Interest On Your Savings

How Lottery Savings Accounts Fool You Into Saving More

Highest Savings Account Rate Is 40X the National Average

 

 

 

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We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share?
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.

 

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Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2014 CWR Media – All Rights Reserved

 

 

Special Savings Series: Getting Started – Do You Have What It Takes?

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

 

Know Your Money
Monday – May 12, 2014

Knowing Your Personal Finances
Special Savings Series:  Getting Started – Do You Have What It Takes?
By Donell Edwards

 

Good morning everyone!  This week we zero in on saving, following up on our special series last week on managing debt.  Hopefully, you are at a point in the process where you have begun to carefully monitor your spending on a regular basis, you are evaluating your spending and eliminating wasteful spending and overcoming bad habits, you have prepared and are rigidly following a realistic budget, and you have gotten your debt under control, or you are in the process of doing so.  These are all steps that must be in place and should be accomplished before seriously working to have a successful savings plan.  One other important step in the process is implementing an emergency fund, which we have discussed briefly in previous posts.

 

Our special series this week will discuss saving directly, as well as other aspects related to your success in establishing and maintaining a successful savings plan.

 

So, are you really ready to start saving?  Over the past two months we have talked about the importance of controlling spending, and the fact that in addition to having a realistic budget and doing the proper planning, it takes sacrifice, willpower, determination, and a willingness to change in order to successfully control spending.  Obviously, in order to save there must be funds to save.  Those funds should come from effectively managing the income that you have, implementing and closely following your budget, and paying down your debt.  As you pay down your debt or receive income occasionally from other sources, use that money for your savings.

 

The first savings project you should have is your emergency fund.  One of today’s Must Reads, Before You Start to Pay Off Debt…Do This,  discusses the importance of an emergency fund.  It is important that you have planned so that once you start saving there will not be anything to interrupt your regular contributions to your savings.  That is where your emergency fund comes in.  There will be unscheduled expenses like vehicle repairs, appliance repairs, home repairs, paying for insurance co-pays or deductibles, and a variety of other things.  An emergency fund allows you to continue to follow your budget and continue to save and care for those expenses.

 

 

Smiling African American businessman

 

 

Most experts recommend having an amount equal to six months living expenses in your emergency fund.  It is a good idea to do this in stages.  First set a goal to accumulate at least $1,000 in your emergency fund.  Do not spend this money for vacations or anything other than real emergencies.  Then as your next goal build that amount to 3 months living expenses.  Once you achieve that goal, then continue until you have 6 months living expenses.  After you reach 6 months living expenses continue to add to the fund until you feel comfortable that you have enough breathing room in case of a severe emergency.  And again, do not spend this money for anything other than emergencies.

 

As mentioned earlier, it will take sacrifice, willpower, and determination to stay with your savings plan.  But, if you are not a person who understands the importance of making sacrifices, if you do not already have willpower, and if you are not determined, how do you acquire these qualities.   In our other Must Read for today, 9 Ways to Harness Your Willpower to Save Money, writer Marilyn Lewis cites a comment from a book review in Mother Nature News from The Power of Habit by Charles Duhigg showing how habits begin with conscious choices, “Then we stopped making a choice, and the behavior became automatic. It’s a natural consequence of our neurology. And by understanding how it happens, you can rebuild those patterns in whichever way you choose.”  So, by repeatedly exercising self-restraint, resisting temptation, and making sacrifice, these choices become habits.  These qualities can be learned with time and effort.

 

So, do you have what it takes to become a saver?  If you don’t, now you know how to get it. 

 

Must Reads:

Before You Start to Pay Off Debt… Do This
http://www.enemyofdebt.com/2014/01/before-you-start-to-pay-off-debt-do-this/

 

9 Ways to Harness Your Willpower to Save Money
http://blog.credit.com/2014/02/9-ways-to-harness-your-willpower-to-save-money-75365/

 

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share?
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2014 CWR Media – All Rights Reserved