I have always gotten along well with math.  I guess being an engineer by trade and writing a financial blog lends itself to at least tolerating math.  Math is one of those things that I profess to know little about, but actually am quite good at.  Philosophy on the other hand I profess to be an expert on, but know very little.  So just for fun, lets mix the two together.  As my son likes to say “Ready, set, gooooo…”

A decade or so ago I had a class in college on philosophy.  I attended half of the classes.  Of those I attended I slept through half.  Of the half of those that I was awake for, I thought that half was boring.  Of the half I did not think was boring, I thought half was BS.  Of the little bit that was left I learned two things:

1) Philosophy professors have no grasp of real life

2) There were actually some pretty smart guys in history that came up with some pretty smart things.

Revolutionary, right?  Well one of those things that I thought was smart was a little logical exercise called Occam’s Razor.  To put it in simple terms it is the principle that everything usually boils down to the most basic fundamental things.  One other way to state it that will be relevant to my eventual point is: do not complicate things unnecessarily.

You might now be asking yourself: “what on earth does this have to do with personal finance, my career, or any of those other things Jesse likes to ramble on about?”

The answer is: everything.  Using a completely unscientific poll of my contemporaries, I’ve found that the vast majority of people reading personal finance sites, listening to personal finance podcasts, watching personal finance TV shows, and making people rich by buying personal finance books are most concerned with getting out of debt and saving money.  Does this sound familiar to you?  I know it does to me; its how I discovered I enjoy staying up late working on blog posts while listening to my eclectic music collection and drinking diet pop.  We are now going to apply this concept to getting out of debt:

1) Am I spending less than I earn?
If yes, continue until debt is gone.  If no, go to question 2.

2) Do I have a budget?
If yes, go to question 3.  If no, create a budget and come back after a month.  Ok ok, come back tomorrow, but come back to this article in a month.

3) Am I following my budget?
If yes, go to question 4.  If no, follow your budget and then come back.

4) Are there things I can cut out of my spending?
If yes, go back and remake your budget, removing that which can be removed.  If no, go to question 5.

5) Can I increase my income?
If yes, do so and then come back to these steps.  If no, go to 6.

6) Something big needs to change.

If you got to question six, then there is nothing further to boil down, you need to make some sort of life altering sweeping change.  It really is that simple.  If you need help with any of those steps along the way, search my site and there will be answers.

You do not need to buy 10 personal finance books, listen to David Ramsey 24/7, or meditate for clarity.  I just saved you doing all of that.  Now, instead, you can go get out of debt, make more money, and send me an email about how you are killing it and you’d love to treat me to a scotch tasting on your new yacht.

Now is a great time to refinance, there is no question about that.  Of course, with refinancing comes the fun of dealing with getting approved and getting approved for certain rates comes with the fun of dealing with credit scores.  One of the top questions I get regularly is “what should I do to fix my credit score? (or the variation what should I do to improve my credit score)“  which is usually accompanied by one of the following opinions:

1) Credit cards are Satan; evil creatures stalking their prey deep into the night..

2) The credit card companies are evil, taking advantage of the public

The truth is that credit card companies are machines.  They are giant revenue generating machines.  Unfortunately, that revenue comes at the expense of us, the consumer.  That being said, the responsibility lies with us.  There are harsh penalties when we get sucked in.  As soon as you sign up for a credit card you are accepting responsibility for your actions with that card.  That includes paying on time, paying at least your minimum payment, and not skipping payments.  Right about now, since you are here wanting to fix you credit score you are screaming at me “Jesse tell me how to fix my credit score”

Lets talk first about fixing mistakes on your credit report

This is why I actually am writing today.  We are thinking of refinancing since we bought our house during the rate spike a few years ago.  I decided to pull my credit report just to make sure since I had my wallet stolen a few months ago.  As I was browsing through the report I noticed that all three credit agencies were reporting me 30 days late on a credit card payment for a credit card that I had never used (I got when I bought a TV from circuit city a while back, then I returned the TV and never had a balance on the card). Here are the steps to take to correct an erroneous entry:

1) Contact the credit card/bank/whoever that incorrectly reported. 
Ask them for details when/why/what etc and ask them to provide documentation.  Sometimes they will have documentation, sometimes they will not, and commonly if it is an old account they may not even have anything on file.  If this is the case, it may be as simple as filing a dispute with their own credit department (which most credit card companies have).  If they are not forthcoming or helpful, you may have to move on to the next steps.

2) Either report online or send a certified letter to the credit agencies to dispute the inaccuracy.

Here is what a template might look like:

(Date)

(Your name)
(Street address)
(City, state, and zip code)
(Phone number)

Dispute Investigation Department
(Business name)
(Street address)
(City, state, and zip code)

Dispute Investigation Department,

I am writing to inform you that there is inaccurate information on my credit report. The following data is not correct and should be updated:

(List each inaccuracy on your credit report. Include exactly why it is in inaccurate and what it should be replaced with)

I have attached a marked copy of my credit report to assist your investigation. In addition, I have included (list the copies of account records, statements, and communication records).
Thank you for your assistance with this matter,

(Your full name)
(Signature)
(Social Security number)

3) Submit your credit dispute

Submitting your dispute by mail is best, but only Equifax and TransUnion allow this kind of dispute. Experian requires all disputes to be submitted online. For phone or online disputes, you may need to provide the identification number located at the bottom of your recent credit report. Using the information you put together in Step 2, submit your dispute to each of the credit bureaus:

4) Track what is going on with your credit report and credit score
The credit bureaus have 30 days to investigate your dispute and make changes to your credit report and thus help fix your credit score. Once this investigation is complete, they will send you a letter that includes information about what was and was not updated on your credit reports. If you were unable to get an error corrected, try submitting your dispute again with new documentation. You can also try working directly with the company that reported the error to have the matter corrected. Once you receive notification that an error has been updated or removed from your credit report it is a good idea to do a final credit check to confirm that the changes have actually been made to your satisfaction.

Next lets talk about fixing and improving your credit score
This is where the real legwork is because this is where you take matters into your own hands to fix your credit.

Dos:

1) Pay down your credit cards.
Paying off your installment loans can help your credit scores, but it won’t hold a candle to the effect of paying down or paying off those little evil revolving accounts such as credit cards. One of the factors that go into your credit score is the gap between the amount of credit you’re using and your available credit limits. Getting your balances below 40% of the credit limit on each card can really help.  Now I know that goes against what I normally say about highest APR first but in this case you have a different goal; maximize credit.  The main place this could be helpful is if you are raising your credit score to get, say, a 0% balance transfer card.

2) Slow or stop using your credit cards
It is going to be impossible to do #2 if you don’t do this. Another problem is that if you are doing large passthroughs, your balance may be reported at its highest point so while you are trying to boost score its best to avoid the cards all together.

3) Use an old card
Conversely, make sure that you keep old accounts active.  If it is inactive for too long a lender might request the account be closed which would hurt your credit history (longer is better!).  I suggest making a few small purchases and paying them off.

4) Check your credit limits
Make sure that your credit limits are being reported correctly on your credit report.  This goes back to the ratio thing; if it is showing a lower credit limit than you actually have, get it corrected so that your ratio goes down.

5) Pay everything on time
Everything.  Period.

Do nots:

1) DO NOT Pay loans late
As if the above do wasn’t enough, it also gets a top spot on my don’t list.  Whatever you do, do not make late payments, especially on things like your mortgage.  These will absolutely devastate your credit score.  I dont want to get any email from any of my readers saying “Hey I did what you said above, and I only missed one mortgage payment, but my score is shot and you lied about fixing my credit score! Im never reading again. WAaaaa” or anything else along those lines.

2) DO NOT Apply for new credit cards
New credit hurts your score temporarily.  How long it hurts for is hard to say and not worth risking. I had a case where I applied for a 0%, got it, transferred balances, and my credit score dropped 30 points for quite a while.  Its just not a good idea.

3) DO NOT Close old accounts
This goes back to the do’s; older credit is better.

4) DO NOT Wait for there to be a problem before contact a debtor you can’t pay
If you are in dire straights, chances are you can call the company and tell them there is no way you can pay and that you would like to make a plan.  Chances are good they will work with you because they don’t want you to go to collections any more than you do.  They have much less a chance of collecting from you if it goes to collections and they know it.

5) DO NOT Fall for credit counseling or consolidation scams
If in doubt, send me an email.  Seriously, I will write you back.  I care about the readers and I do not want you to put yourself in a worse situation than you are already in.

Remember, you can save yourself thousands of dollars in just a few years by taking steps to fix your credit.  So get out there and fix your credit score! After all, if you are paying 29% APR, you as well just be…

(In the Carnival of personal finance)

 All terrible puns aside, since the dawn of time (cue melodramatic music), people have been enamored with the beauty of a certain tannish looking metal.  In fact, this particular metal gives its color its name.  Thats right, we’re talking about gold (although if you had guessed silver, you get points for trying and lose points since I said tannish).  All throughout human history there have been mad rushes everytime gold is disovered somewhere.  The new world, California, hell even Alaska.  The point being it has been a valuable commodity for a long, long time.

Even right now, whenever there is a hint of financial instability, people flock to gold because it has always been a hedge on inflation and currency crashes.  As most of you know in the past I have liked gold, but been skeptical of how fast it has increased in value.  Well, I am just going to say it now; I give up, I don’t think its going to fall.

That being said, there are pros and cons to investing in Gold.  Lets start with some of the pros.

Pros of Investing In Gold
-US government spending is out of control and the dollar is likely to be weaker and weaker as we get further and further into debt.
-Inflation has slowed down but is likely to increase going forward.
-Gold will always be worth something, unlike many of the “intangible” things we invest in.
-It has industrial uses

Now a few of the cons:
-It does not ‘grow’ in value and it cannot create wealth, like investing in companies can.
-It maintains purchasing power, but does not grow it.
-Its hard to predict prices so it is not good for “playing the market”

The bottom line:
Gold is just like anything else, it is good in moderation.  It should be part of a balanced portfolio and if you do not own any at all, you should. There are local places you can buy gold in your town but there are also online places where you can invest in gold.

Most people are not comfortable negotiating for things.   Negotiating is one of those awkward things that makes most people want to just throw in the towel and try to be ‘fair.’  Well, life is not fair and that is great new for you.  If you have the cahones to tip the balance in your favor.

As a culture we are taught that negotiating is uncomfortable and awkward, and it can definitely feel that way but just like anything else, practice makes perfect.  There is a graphic I like:

Now, the goal is the push the negotiation so that you are to or near the “other’s” minimum.  I am not going to go into specific tactics, there are entire websites dedicated to negotiating but I have a few points for you.

-The average person who negotiates their salary upon higher ends up with at least 10% more than the person who does not

-Contrary to popular belief, negotiating will not cost you the job

-You can negotiate more things than you probably think you can.  For example, we actually negotiated with Best Buy when we bought our TV and got them to knock $100 off the price.  Thats right, best buy.

-Don’t be afraid.

Step one I want everyone to try.  Call your credit card company, and ask them to lower your rate.  If they refuse or make up and excuse, tell them you would like a 10% lower rate.  If you are already at 15% or under, tell them you want 5% lower rate.  You hold the chips here, you can mention you will balance transfer elsewhere, you can mention you are going to consolidate with a loan at another bank.  The credit card company has everything to lose (your monthly fees) and nothing to gain.  Some may not budge at all, but I think you will surprised if you try…

What is worth buying?  Its something I get asked fairly frequently and something I seem to think about frequently.  The funny thing about it is, it seems to vary from one day to the next what I think is worth it.  Some days I think my collection of tequilas was worth buying and other days (particularly mornings after) where I think they were the worst investment I’ve ever made.

All joking aside, there are things that I never regret buying and have told myself over and over again what a great investment they were.  For today I am still on quite a health kick that my wife and I got on before we went on vacation to Mexico (another thing worth spending on, that I will talk about sometime soon!).  So today here are five things worth investing in for your health that I do not regret spending money on.

1)  Ipod
I have had a second generation ipod nano for what feels like forever.  Its the little black square one that holds I think 2 or 4 gigs.  It is by far the most long lived $100 I have ever spent.  I listen to music everytime I work out and I have a psychological dependence on music for some sort of rythm while running or lifting.  If you do not need that, more power to you.  If you find music motivating, get yourself one.  You don’t need a brand new shiny one, get a refurbed old model.  In fact, I have gone through more ipod armbands than I have ipods (3 to 1).

2) Comfortable Clothing
When I was a kid I used to run with my dad.  We would routinely run two miles.  Since then I have never done any serious running outside of a sports environment.  I started to try to get in my cardio when I realized that I was much fatter than I had been in years and I did not have time to joing 4 sports leagues to get my cardio in.  I quickly realized that it was not as simple as when I was younger; aside from being winded quickly, I was uncomfortable.  To be blunt, I was chafing badly and it made it miserable to run.  I went to a local running place and bought a pair of running boxers for $30.  Immediate difference.  I could focus on running instead of focusing on being uncomfortable.  I soon was up from half a mile to nearly 4 miles.  As a side note; if you have not run in a long time and are out of shape, be careful of shin splints, that was my main limiting factor.  I went from 223 lbs to a very lean 197 lbs.  See picture.

3) Gym membership
I know many people think this is a waste of money but I disagree.  If you use it, it is an excellent investment.  I simply cannot exercise at home.  I dont have a weight set but even if I did I would probably use it as much as the treadmill we do have; not at all.  The gym is close to my work and I try to go at lunch.  Even if you are intimidated by the people there, give it two weeks and suddenly the huge musclehead is not intimidating but rather a familiar face.  There was a very very overweight older gentleman that was going at roughly the same time as me and when I saw him in there I admired his sticking to it and actually found it motivating that he was trying so hard.

4) Healthy Food
My wife and I grill fish.  A lot.  Fish is more expensive than hamburgers.  We do not care.  The healthier food is worth it.  This does not mean you need to go to an organic food shop and spend 10x as much as you usually would.  It just means means choosing healthier foods from your regular supermarket even if it does cost a little more.  For example; try getting lean turkey burgers instead of 70/30 hamburgers.  Buy spinach and steam it.  Buy cucumbers and cut them up and make a salad.  Hell, right now, corn is selling for 3 for a dollar.  Another big winner here; protein powder and skim milk.

5)  A regular checkup
I am terrible about this.  I hate going to the doctor and I had paying to go to the doctor.  I hate waiting in the waiting room.  I hate waiting in the office once you get called back.  Pretty much I just dont like any of it.  But lets face it, as you get older you need to get examined once a year.  You owe it to yourself and your family.  Most people have some sort of insurance particularly around preventative care.  Use it!

Everyone feeling motivated?  Alright, lets spend (a little) money!

It is extremely important for anyone with a large amount of debt to seek professional help and advice. If they do not, then the whole situation can (and often will) get far worse. However, for many people, looking for help has recently become a bit of a worry in itself… The Office of Fair Trading has just ordered 129 debt management companies to clean up their act after accusing them of giving out poor advice to their clients and of using misleading advertising campaigns.

But the worst part of this news does not concern those 129 shady firms offering a substandard debt advisory service; it is the negative image that is being given to the entire sector. There are far more than 129 other companies out there who are totally genuine and these help thousands of people every week to manage their debts!

For those people running a proper debt management service, this news will all be extremely frustrating. There are good and bad products or services in every area of life and they will all be hoping that their customers are aware of this. The whole situation has been made far worse by the fact that the names of these 129 firms cannot be made public. If they could be, then it would help to clear the names of a great many more!

The help and advice offered by debt management companies is invaluable to an enormous amount of the population and anyone who has found themselves in a poor financial situation should not be put off from using these excellent services. Ninety percent of companies on the World Wide Web are completely above board and it is just a terrible shame that such a small amount of firms can cast such a long shadow of doubt across everyone else in the industry.
Article supplied by Abacus Finance who are part of the Cleardebt Group.

Investing is one of those things that people think is sexy.  Nice suit, nice shoes, clean cut, tall athletic people living the huge lifestyle in New York.  Hey that sounds like a damn good time!  The truth is, its not easy, and those poster models down on wall street aren’t a hell of a lot smarter than you or me.   They think they are, but I promise you can do as well as any of them can with the exception of a rare few.  Now stop right there, I know what you are thinking.  That doesn’t mean jump in and throw your life savings into an investment account.  Read this first and lets cut off any of those newbie tendencies before they have a chance to take hold.  Mistakes to avoid:

1) Not paying off debt before investing.
This one is easy.  If you are paying somewhere in the realm of 20 percent on credit card debt, and averaging a great 15 percent return on your investments, you’re paying out more money in interest than you’re earning on your investments. Not to mention taxes, broker fees and all that other stuff that comes out of that 15%.   Get rid of credit card debt first unless you can get a crazy low interest rate (like 0-5%).

2) Following tips
I’m not just talking about penny stock emails.  I’m also talking about friends, family, and anyone else who promises you they have a tip to make you rich.  If you can make me rich why the hell aren’t you already rich uncle Ricky!?

3) Impatience
Im as impatient as the next guy, but investments take time to grow.  Too many investors make the mistake of getting easily frustrated and selling quickly. Don’t be a slave to minor fluctuations in the market.  A great example is my 401k.  I look at it, get ready, once a year.  Thats right, once per year.  I know I have things setup correctly, I know I am diversified, so I do not worry from day to day how it is doing.

 4) Being to risky or too cautious
Didn’t your momma ever tell you moderation is key?  Or was it don’t drink on weekdays?  Well both are good bits of advice, though as you get older the latter is self apparent while the former becomes cloudier.  Don’t dump all your money into one stock.  In fact, don’t dump all your money into stocks (bonds, gold, money market).  On the other hand don’t get a portfolio full of bonds and wonder why you aren’t rich when you retire.  If you are young, the majority of your investments should be in stock, hands down, but spread it out, or grab an index fund.  If the market hasn’t grown by the time you retire Mr. 30 something, why then, the country has probably collapsed and there is likely bigger trouble you are worrying about.

5) Pulling out
If, by chance, you manage to make a lot of money, or some money, or any money, you might be tempted to pull out completely and reap your rewards.  Well, don’t.  Reinvest, keep gaining, it will be worth it in the long run.

Oh and when you all get rich, don’t forget to tip your blogger…

Its that wonderful time of year again; tax time.  I know all of you out there are jumping for joy but try and calm down, sit back down in your chair and lets talk a bit about organization tax paperwork.  As many of you know by now, organization is not exactly my strong suit.  With that in mind, my wife and I are both making a concentrated effort to keep all tax documents in one place.  Even with that, I have an idea for what I am going to do for next year because there are some things that get missed keeping everything in one place.

I will setup a folder with some categories and accumulate things there over the course of the year:

- House related

- Rental house related

– Business expenses/home office expenses

– Medical expenses

– Charitable contributions

- Income Related

This should help a lot because despite the fact that I have all the ‘important’ paperwork for the year such as W2s, I don’t have any good way of tracking the small, extra expenses.  For example, there were expenses related to our rental house that I did not track that I now have to go back and try and dig up.  There were expenses related to home office and keeping TPS going that I now need to go back and dig up.  We also gave away bags (and I mean bags) of clothing to charity, that I now have to try and estimate.

Good luck to rest of you with your taxes; remember, if you dont claim it, the goverment will!

Money management is a difficult issue, and a lot of people don’t ever really get it.  A lot think they get it only to be disappointed later when they realize their carefully laid plans have failed. will assure you of a money management plan to fit YOUR special needs. If you follow each step, It will also save you a complicated job of bookkeeping. This guide won’t be able to work miracles for you but will help show you the way to get the most out of your money.

To make a sustainable plan:

1. Add up your total income, including any funds you receive in addition to your earnings.
2. Figure out your total fixed expenses such as rent or mortgage, insurance premiums or car payments.
3. Provide for a savings fund adequate to meet emergencies and achieve special goals.
4. Estimate how much you need for day to day living expenses.

While these steps are listed in sequence, it’s likely you will arrive at your final estimates by considering them as a group. You may need to do some adjusting of the amount in each step until you have what you feel is a satisfactory plan. After going through each step and filling out the worksheet, you will have a better idea of where your money is going and how much you have left over to work with.

Before you begin to work out your plan, it is important to remember good money management starts long before you begin keeping track of dollars and cents. As we have discussed in previous lessons, your plan is a personal or family matter. You need to take a long hard look at your values. Your goals will reflect your values. No one can tell you what your lifestyle ought to be. Only you can decide how your income is spent. Effective money management will depend on the way you choose to live and the goals you plan to achieve.

So where do you cut expenses to keep the budget balanced? Travel? Clothes? Entertainment? Education? That’s up to you. Think about where you are now and where you want to be in five or ten years. Your long-term plan should reflect those goals you and your family have decided are most important.

Plan For Savings
When making out your budget, plan for savings first. You can grow richer each month if you pay yourself first. Here’s an idea you might want to try. Before paying any bills, decide on an amount, to pay yourself first–say five or ten percent–or whatever you decide– of your paycheck. Then, deposit the amount into a savings account before paying any bills. When you do this at the beginning of the month, your entire paycheck will not slip through your fingers. If you wait until the end of the month, there may be nothing left to save.

Paying yourself first gives you a systematic way to make your money grow. Regardless of the kind of job you have or your income, this system works!

Another technique you might try for saving money is to empty your change into a coffee can or jar each day. At the end of the month, roll the coins and put them into your savings account. You may be able to save up to $30 a month this way.

Remember, good money management is more than a mathematical formula. It’s too closely tied with the ups and downs of living for that. Your money management plan is always subject to change if your life situation changes. The object of a good budget is to make your money help you reach your goals, not to force you to conform to rigid rules. Don’t be discouraged if this budget plan doesn’t work out right away. You may have to revise it several times until it fits your wants and needs. Then, review it from time to time; to be sure it continues to help you use your income in the best way.  Good luck and happy managing!

Have you ever been to one of those really fancy restaurants where they sit you at a table next to each other and the entire room seems like one big awkwardly staged scene?  I had a dream last night about one such place, called picasso in Vegas that Lauren and I went to once.  I think it was about $300 for the meal when it was all said and done.  I should mention that it was so little food that when we were done eating there, we had to go re-eat at a burger joint that I think cost a total of about $10.   Not only that, but we were miserable the entire time we ate at picasso because we felt out of place, and they seated us in an awkward place next to each other where the entire restaurant could stare at us.  On top of that, the wait staff was pretentious and rude (at least those that served us were).  When I emailed the Bellagio about my experience, the ‘helpful’ person sent me back not a response, but instead a MENU OF PICASSO.  Nice customer service Bellagio.  I guess they don’t care about the average Joe.  In any case, it seemed like a good idea at the time but it ended up in my top 10 of dumbest money mistakes.  It certainly wasnt the largest in amount, but in value it was right toward the top.

Instead, here are some ways to actually get your money’s worth.

1) Know what you want and actively look for it ahead of time
I did this with Christmas presents this year on some sites such as Slickdeals.com and it worked out wonderfully.  Yes it gets rid of the instant gratification but it will save you a ton of money in the long run.

2) Dont buy things you dont need
I know this seems simple but I know we all do it.  Or at least most of us do it.  Or at least I do it.  This equates directly to the topic.  Its hard to get your money’s worth if it is something you dont even need (or want that badly).

3) Use discounts
When you do have to make big purchases there is always a way to get a discount.  We had to buy new car seats since our son grew out of his rear facing one so we waited until we had 15% off coupons and then used them.  When you are buying 2x $150, suddenly 15% off is a decent chunk of change.

4,5,6,7,8) Price compare.  I dont know how many times I have bought something only to see it cheaper somewhere else.  And hey, if you see something advertised for a certain price, Walmart will always price match.  I know, I know some of you hate Walmart.  I get “Dont talk about Walmart” emails all the time.  Since Im not a hippy and I dont like unions, Ill keep talking about big-box-mart with the caviat of: there are other places that price match, find em.