So I find that there are a lot of great articles in the PF world and a lot of terrible, boring ones about topics that are more overplayed than “Crank that” in the clubs.  So here are articles I actually like or found entertaining for the week.  And no its not just link love, because you can bet your ass some of these dudes haven’t/probably won’t ever link back to me (though admittedly there are a lot of my closer associates on the list):

Obtain a copy of your credit report for free at Blogging Away Debt

Mrs MiniDucky is cleaning out her Wallet (just like I did, except probably more thoroughly than me)

This is right up my ally: Stick figures explaining the subprime mortgage crisis at My Money Blog

Mrs Micah and her Cash Register problems 

Patrick has some sweet Salary Negotiation Tactics at Cash Money Life…also check out my Guaranteed way to get a raise

The Honest Dollar has an interesting article on Date-targeted retirement funds (these are offered at my company: I do not use them)

PTM has the first money hack carnival (no, yours truly didn’t submit anything this time around)

Mighty Bargain Hunter has I know whats wrong with my trumpet which I feel obligated to mention since I play a good amount of musical instruments (including trumpet) and I had a similar experience with my trombone.

Lazy Man and Money has a pretty funny article on the worst finance book of all time

JD tackles money social situations (and who HASN’T run into this)

Saving on TV from Free Money Finance

Words of Wisdom from Warren Buffett at five cent nickel and trust me, when Warren Buffet talks, you should listen.

Breaking the cycle from NCN

My Two Dollars has a great article that I like to paraphrase as Take care of your crap 

Lynnae has a good point with Budget Evolution (so true)

Debt free Revolution is finally debt free (in fact she will be doing a guest post coming up sometime here)

Probably one of my favorites of my favorites for the week is Digerati life’s Getting to a mill with small change too bad a million isnt enough 

At blueprint, bad breeds more bad Wow Im a jerk, I don’t even bother to give details, guess you have to read the article

And finally not even personal finance related but I saw this:

Are meme’s helping peoples blogs?  at My investing blog.  Apparently it works.  I have some real reservations about this and my current stance is “@#$% that, I am not artificially inflating my rank, if people like stuff here, they will link here” I do this for the people and to break up the monotony in a topic that is as traditionally dry as a bad white wine, and for emails like:

“Dear Jesse,
This is a wonderful thing that you are doing!  You are really changing lives, mine included…”

Except wait you have to wait for the Monday contest update to see the rest, but that being said I’m occasionally tempted.  My technorati link average compared to my reader count is almost comical.  Over 10-1 visitor count per day compared to link count (last I checked) and my advertising revenue suffers because of it.  For now, I’m sticking to my guns.

Helping a reader out:

“Hello and my name is Jacob. I just graduated with a degree in mechanical engineering. I have 5k in high interest credit card debt, 21k in student loans, and 8k in a car loan. I just received a job working for a company that designs cranes and I am starting out at 55k a year. I don’t know what I should do next. Should I be trying to buy a house or stay in my (very inexpensive) apartment? I have six months before my student loans are due so should I ignore them for now? The biggest one is very high interest (18%) due to my parents at the last minute not being able to pay for a bunch of expenses. What order should I be looking at things? Should I be putting money into the company retirement plan? Im still pretty young so I have a few years to start that. Basically I am just completely lost, help me please :)”

This is a great email because I think it reflects a lot of people coming out of college. It’s a whole different world with different priorities.

My advice to him was fairly short and sweet.

1) Stay in the apartment
If it is inexpensive, wait until you have saved up enough for a sizable downpayment to go the house route. There is no reason to rush this and it would even hurt you in the long run. Plus housing prices will continue to fall as foreclosures increase.

2) Get to work on the credit card debt. Start getting rid of that sucker ASAP. Even better, ff you can, transfer it to a zero percent interest card.

3) Consolidate those student loans. Since the majority is high (ridiculously high, I thought my 11 percent I had for one while unemployed was crazy high) consolidate those SOBs. Federal consolidation rocks because it is capped at 8.25% This means you get an automatic lowering of your interest rate. Nice.

4) Make sure you immediate start investing in the retirement plan ASAP. The company match is FREE MONEY. Its like the company saying, oh you’re going to give yourself 100 bucks when you are 60? Ah what the hell, heres 100 more just cause. Not to mention the younger you start, the more years for compound interest and the more moola you will have.

I also gave him a few other points, but I am curious what you, the readers have to say to him, what are your ideas?

If you are in the generation y age group (as I am) you have grown up thinking about how awesome it would be to be a millionaire. And if I was already a millionaire I would probably be driving around in my money truck with a funnel out the back making it rain ones on you all like we are in the middle of a rap song. Eehh except I am not so I have to resort to helping out giving financial advice.

Back to the original point, as we look toward retirement the once-far-off idea of millionaire is not too hard to reach. Infact lets say you are making $40,000.00 a year at age 25 and putting 5% toward your 401k with a company match of 4%. If you get your index return of 10% on investments you’ll be over a million by 59 1/2, hurray! Except uh oh…

Starting total: $1,000,000.00 

Well first there is inflation so lets adjust for yearly inflation of 3.5% (the rough average over the last 100 years).

New total: $450,000.00

Oh and then there are taxes. Lets say you get taxed at 15%

New total: $330,000.00

Hey, where the hell did my million go?

Don’t worry its not all doom and gloom. Chances are very great that you will be making more than $40,000.00 throughout your life.  If you are married, that doubles the retirement income.  The lesson is this: don’t become relaxed about the rest of your financial life because you can “pay it all off in retirement.”  Pay it all off before then, get other investments going before then, get your roth IRA going before then.  Do all that, and Ill see ya on the golf course.

Ah yes, its tax time again. Time to look back on your W2s and become depressed at the 4-6 digit income you have provided the federal government to build bridges to nowhere. Ok ok all cynicism aside, we all have to go through the tax season, which ranges anywhere from refund party to, to use my friend as an example “Oh God, Oh God, I owe double social security because I am contractor….I DIDN’T BUDGET FOR THAT” sort of panic. (Actually hes not panicking at all, but its great for dramatic effect)

Ok so the most ominous of all things tax is the little word we call “audit.”

What IS an audit exactly?
It is where the government comes to investigate to determine if the information you gave to the IRS on your tax return is correct - which results in them telling you whether the proper amount of tax was paid. Oh except that there are a few details, such as, if they decide that you were purposely avoiding paying some taxes, you can go to jail. Thats right buddy, jail. And (un)fortunately (for the taxpayer), the IRS works the opposite of our legal system. You are guilty until proven innocent. Thats right my friend, the burden of proof is on you, the taxpayer if the government comes a knockin. Some audits are fairly routine where they ask you to just clarify a few things via mail. Then there are other audits where you go to a government office, and still others where the government COMES TO YOUR HOME. Awesome.

Ok now the bad news is that there is no way to completely avoid an audit…some returns are chosen at random. However most are chosen because of certain triggers and red flags that the IRS uses to determine if you are stealing your money from their pockets.

1) Be neat or better yet use something like turbotax
Appearance really does matter. One of the worst things you can do is turn in a handwritten return and you want it to at least look like someone who has a clue what they are doing. I really really really encourage the use of tax prep software, it completely eliminates math mistakes….which happens to be the #1 thing the IRS looks at.

2) Report all income
No Im not referring to the garage sale you had last Saturday where you sold that old sofa for $5 and some old 80s abba records for 10 cents. Any income that you have done as a contractor for a business, as an employee, from capital gains (stocks etc) has to be reported. I am not just speaking ethically because businesses report to the IRS as well and so when they send you that tax form in the mail, its not for nothin….the IRS has it too. This is ESPECIALLY important if you are in a career that is paid primarily in cash. Fair or not, the IRS loves auditing cash earners because they assume we all cheat.

3) Make sure your income matches your lifestyle
If are reporting that you earn $30,000.00 but you live in beverly hills and drive a ferrari, you are probably going to have trouble. The IRS can and WILL reference your income against your zip code. Kind of scary, huh? Also if you drop income substantially from year one to year two it could also get flagged.

4) Be VERY careful about claiming business expenses
Business expenses and home office deductions WILL raise the IRS interest. Huge deductions and loss write offs will have Joe Auditor showin up at your door in no time. Oh and those emails going around saying “you would never know it but you can deduct…” are not true. Not only are they not true but the IRS looks for them. So no you can’t deduct that BA suit or dress you bought just because you wore it to work. My favorite is probably that if you work from home you can deduct your HOUSE. Yeah, no.

5) Make less money
The more you make, the more likely you are to be audited. But hey, triple my income, Ill take my chances.

Some of you reading right now are going to win some great stuff. I am giving away the following things:

• Two iPod nanos

• One (large) surprise prize
• One copy of Organizing Your Life

• Five copies of Ramit Sethi’s personal finance ebook (a special thanks to Ramit for donating these)

• Two copies of Trent’s 31 Days to fix your Finances ebook

Ok so whats the deal?

Recently my girlfriend, a self professed shop-o-holic took a big step. She cut up all of her credit cards. I am having her explain in her own words:

My dad told me, “Lauren, don’t get yourself caught up in credit card debt”. At the time, I didn’t really even know what he was talking about. It started in college my sophomore year. I opened up a buckle charge card to buy a pair of $75 jeans. I thought, I will get a monthly bill of $10 and in about 8 months it will be done. Well, six years later that $75 turned in to $8500! I soon graduated college and received a full time job (more money, more debt) and bought my first house and had opened another 8 credit cards since my first! I have to say, the catch for me is not just “buy now, pay later”, but the up front discount they give you to open the card. “15% off if you open a Kohls charge card”. I promise you that if you do not pay it off right away, they will get that
that discount back from you and more in interest. So, this really started to consume and I thought back to my dad when I was younger “Lauren, don’t get yourself caught up in credit card debt”. I didn’t know where I was going to get extra money to pay off the debt, but I have managed to bring that $8500 down to about $6500. At this point every little bit helps and it actually feels really good. The trick for me is not paying little sums of money on every card, but when I get a large sum of cash ($100 or more), I pay it towards one card. It’s like I never knew I had the money. For example, my recent tax returns, I was due to receive $1800. I put $1600 of that towards paying off debt and cut up all of my cards in the process. I’m telling you, it was really hard for me to do this, but knowing that you are closer to being rid of debt is a much better feeling. I actually paid myself by doing this. By paying off my 3 credit cards, I now have an extra $100 per month! So, my take away is listen to your dad, and start getting rid of debt ASAP.

Here they are, its quite the pile:

This got me thinking. How many of us having extra temptation in our wallets? How many of us are carrying around credit cards we don’t need that can do nothing but put us into debt?

The contest:
All you have to do to enter is CUT UP one or more of your current cards and take that step in the direction away from relying on them, and take a picture. Mail me that picture at contest@thepennysaved.com along with a message about your experience with credit cards. Those that have no credit cards or cannot cut theirs up can still send me their experience to be eligible for any prizes EXCEPT the iPods. Here is the breakdown:

Grand Prize Man: Black Ipod Nano, Ramit’s Guide to kicking ass, 31 days to fix your finances
Grand Prize Woman: Pink Ipod Nano, Ramit’s Guide to kicking ass, 31 days to fix your finances

First runner up: Secret Prize, Ramit’s Guide to kicking ass, Organizing your Life, Investing online ebook

Two random drawings from the entry pool: Ramit’s Guide to kicking Ass, Investing online ebook volume 6

Added Bonus: As a commitment to all of you and the cause, I will cut up MY credit cards. All of them. I now have the ability to put rewards on my debit card so I will cut up all of my credit cards as well and post the VIDEO of it online.

The deadline is TWO WEEKS FROM TODAY. Thats Monday March 10.

A couple rules:
It must be a real credit card and not a fake one that comes in the mail. If there are not at least 30 entrants I will give away everything except the ipods.

There are all sorts of articles everywhere that will tell you how to avoid blowing your budget…but what do you do if you DO blow your budget? Well that exact thing happened to me this weekend so now is a decent time to tackle it because lets be honest if you are part of the 99% of people that aren’t always perfect, it will happen to you at one point or another. Now Im not referring to “I got super sauced and bought a corvette from a used car dealer” kind of blown budget. More along the lines of “unplanned dinner and taxi trip” kind of thing. Anywhere from a few bucks to a few hundred.

So this weekend, I went over budget. We went down to Denver to visit some friends this weekend and I budgeted a certain amount of money for going out. One slight problem: we went out friday night with friends from work as well. This took out roughly 1/2 of the money I had planned for the weekend (I was expecting to spend only a few bucks friday night). Long story short I kept to budget until about 10 PM when we decided to take the light rail to a karaoke bar. If you haven’t ever been to a good karaoke bar with a huge group of fun people, I highly recommend it. So anyway four hours, one rendition of The Bad Touch (complete with dance), one rendition of Beat it (complete with attempt at dance) , taxi ride, and taco bell meal later I was roughly $125.00 over budget.

So what to do?
Well, the trick is that you should always put aside money each month for “unexpected expenses.” Aha, but I ALREADY used my set aside money.

So what now?
Its painfully obvious but should be pointed out anyway; cut back for this week, eat a few more meals at home, don’t go out next weekend.

For the sake of argument lets say you are already living perfectly frugally, what else can you do? Well there is a little trick called payment shifting. I don’t recommend it except as a last resort. Its this: you postpone when you pay a certain bill so that it coincides with the next paycheck. An example is, I get paid on the 1st and the 15th of every month. My mortgage is due on the 16th of the month. I pay my mortgage with money from my first paycheck of the month, if I had a situation where I was behind I could use my second paycheck of the money, effectively buying myself an extra 15 days worth of money if I needed until I had a chance to make back up the original money that was overspent.

By no means am I advocating blowing your budget but we are all human (even Michael Jackson, despite outward appearance) and mistakes happen. The real takeaway is that if you make one mistake do NOT get discouraged and just start putting things on credit card that you cannot pay off or give up on budgeting.

Well, they are exactly evil, I mean they are actually a modern marvel. Can you imagine telling someone a couple hundred years ago that you could someday go to one store and it would have every food from everywhere in the world? Unfortunately, this is also what makes them a trap. Heres a question to ask yourself: how do I shop?

Until recently I shopped by the “instinctive food gathering principle” which as it turns out, really means “spend tons of money on crap I probably dont need just because it sounds good.” It doesn’t help that they arrange things specifically to mess with you… in any case I would go to the store for toilet paper and come back with some drinks, chips, mens health, some fruit, a ribeye, cottage cheese (because I somehow always convince myself that I am out, even though I never am), ice cream or pizza, and who knows what else. Except toilet paper. I’d almost swear there are voices whispering in my ear to buy crap I don’t need. Anyway Ive come up with a list of things that has drastically reduced spending and the amount of time I spend in the store.

1) Make a dang grocery list. It takes two minutes, do it! I know you are saying “uh Jesse I can remember what I need” and you are probably right, but not only will it help you get what you do need but because it gives you direction you will be less inclined to pick up other random things.

2) Don’t wait until you are out of things to go to the store. A lot of times this creates a huge rush situations. A great example is needing milk in the morning to eat your cereal. When you start to get low on things, make your list and go…you’ll know exactly what you need and there won’t be any guessing involved.

3) Stick to one store if you can so that you can go directly to the aisles you need to go to. Wandering up and down the aisles is frustrating and leads to picking up more than you need.

4) Use coupons. I know, I get pictures in my head of my grandma cutting out coupons medituculously for 2 hours too…but really you can save a lot of money. And some places like King Soopers will give you coupons based on stuff you just bought with your receipt. nice-a!

5) Plan out some meals in advance. If you don’t feel like eating your planned meal you can always change it.

6) Eat healthy. As it turns out if you eat healthy stuff you can eat as cheaply as just getting junk. I eat kashi for breakfast with milk, then a mid morning protein shake, then a lean pocket for lunch, then some fruit and a pb&j sandwhich, some chicken for dinner and a post workout protein shake. All of that together can cost less than $5/day. Of course I dont always eat like that but its a good example.

Alright, site is fixed! Thanks for the support everyone!  And heres some of my favorite articles for the week

When Buying on sale isn’t frugal at BeingFrugal.net

Managing Debt in college years at TheSimpleDollar

Handling Credit Card Receipts at IWillTeachYouToBeRich

What could you have sued over? at MrsMicah

Should you keep cash under the mattress? at Pinching Copper

P2P Lending at Cash Money Life

Changing Payment Due Dates at Prime Time Money

Easily Confused Money Terms at Mighty Bargain Hunter

Tax the Unhealthy? at Lazy Man and Money (some controversy for the day)

Wednesday Challenges at Money Managed

Start a website, Make Half Mill at Free Money Finance

I have my wordpress (and theme) files replaced with ones that said “STFU already” and my backup failed, so things are still going back together, thanks for everyone’s patience! Note: several pages will be unavailable for a small amount of time due to changes that need to be made.

Update: ok, most pages are working…however the “about” “best posts” and “glossary” are all down until later tonight.

I am giving away the following two ipods (and some other great stuff). Check back MONDAY for details.