Coming clean right off the bat: I can’t personally teach you how to haggle or negotiate anything. It terrifies me almost as much as falling in love or doing improv theater. But at least I’m not alone.

Amy Reiter over at Salon.com posted a great article yesterday called “How I learned to haggle”, and while I recommend the whole story, I’ll distill the bullet points for you here:

• Practice
• Act as if it’s a game
• Just say, ‘Is that the best you can do?’ And then be quiet [...] Silence is a great tactic.
• Negotiate for yourself as if you are negotiating for others

I can also vouch for the silence technique as being particularly effective in getting your co-workers to understand your point of view. I don’t mean offering anyone the “silent treatment,” just including some longer pauses during the course of a conversation that starts with people disagreeing. Now that I think about it, I guess it is a kind of negotiation.

Any other tips? Please leave them in the comments below.

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Haggling for Beginners

I was speaking with a co-worker who used to be a telemarketer, and she told me that if I’m ever again harassed by any strangers on the phone trying to sell me things I don’t need, I should just say, “Mark me down as deceased.” You don’t even have to pretend to be a different person.

Apparently, they have a check box on their form for “Deceased” that will prevent them from calling you ever again. What’s more, this misinformation gets passed downstream to the other telemarketers that they sell their lists of “customers” to, so those people won’t be calling you, either.

This is just a quick and dirty alternative to the more official process that Flexo has previously talked about.

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Telemarketers Can’t Talk to the Dead

College graduation like when you beat Ganon, the resilient bad guy at the end of the classic video game, The Legend of Zelda, for the first time. You’ve been through many levels of challenges, perhaps even used a few “cheats” along the way, and did anything necessary to grow your knowledge and skills, many of which were necessary for the final test of strength.

You’ve saved Princess Zelda and were rewarded by watching one final scene and reading the names of computer programmers as they parade up the screen. You were relieved that your journey was finally complete, but before long, you realized there was more to the game.

Suddenly, you were presented with the option to begin your next journey. Your character, Link, displayed a new sword to indicate the completion of the first journey. This newly brandished sword is like your degree. With your degree in hand, it’s time to face a new world, one that is uncharted. (The map to this “second” Zelda adventure did not come with the video game.)

After graduation, it may take a moment for some to realize that you are now in control of your life and the decisions you make can have a profound effect on your future. Here are some ideas to help you, the graduate, make solid financial decisions.

1. Actively manage your expectations. You may have friends who have already graduated. They’ve provided you with endless entertainment as they talk about the “real world.” By now, you will have heard about new cars, new houses, new weddings, new kids, new relocations, new implants, and new gardeners, and you’re looking forward to sharing similar experiences.

With jobs, they have been receiving a steady income, probably sizable, and have been spending their money almost as quickly as they have been earning it.

Actually, they have probably been spending their money faster than they have been earning it, but that piece of information will be curiously missing from their stories. What your friends didn’t tell you about is debt. Ask them about their retirement plan and IRA. Ask them about their budget. You’ll likely receive blank stares, and not just because you’re being a stick in the mud.

It’s best to ignore these types of stories because the danger comes when you expect that this is how one must live life as an adult. This is actually quite expensive and detrimental to your future. By managing your expectations, you won’t be disappointed when you can’t find a management position earning $100,000 with no experience right out of college, even if your friends tell you that’s what you should look for. You won’t be disappointed when you have to settle for sharing an apartment with several strangers or moving back in with your parents until you are able to afford your own bills and establish an emergency fund.

Simply, don’t try to keep up with the “Joneses.” This hypothetical family’s perceived wealth is mostly an illusion and it’s best to focus on yourself rather than others.

2. Choose your first job carefully. Your first job sets the tone for your future earning power, particularly if you expect to stay in the same career until retirement. Earning more in your first job out of college not only allows you to save more and be flexible with your budget, but it also makes it easier to negotiate better salaries when future opportunities arise.

That being said, don’t select your first job with money as the solitary driver. It’s quite possible that the path you’ve chosen starts out without much opportunity. If the job that interests you is not in high demand, then you will have to settle for what is available. Like a professor told me as I was pursuing music education in college, “If there’s any other career that could possibly make you happy, consider changing majors.” If you are pursuing your calling, be prepared for a bumpy ride as you progress, mentally, physically, emotionally, and financially.

3. Pay off debt. Many college graduates leave school with credit card debt. While in school, education is your first priority, so depending on your course load’s aggressiveness, you may not have had a job. However, you still had expenses, and your parents may not have provided for you. This is perfectly normal, but it must be attended to immediately.

Unless you are starting in an industry where image is important, it’s time to pay down your debt. With newfound income due to your first job, put any available funds into paying off your credit card balances, and do not add new credit card debt under any circumstances. The debt avalanche is the most mathematically pleasing solution to paying off credit card debt.

Chances are you have student loans to pay off as well. Consolidate these when possible to take advantage of lower rates, but don’t slow down your repayment. You may decide to get your master’s degree, and it’s best to do so without compounding more student loan debt.

4. Automate your savings. Automation is the key to creating habits without having to change your behavior much. If you have a new job and your employer is somewhat familiar with twenty-first century technology, they will have direct deposit available. This will allow you to deposit your paycheck directly into a checking or savings account (and a high-yield savings account is preferable).

From the savings account, you can decide how much you need for spending money each week and how much you need to pay your bills each month. Transfer only what you need and leave the rest in the account earning interest. Work with your bank to create instructions for these transfers so they take place automatically.

This is probably the biggest component of building an emergency fund.

5. Investing basics: Open an IRA and 401(k). Once you’ve automated your savings and are in control of your bills, you may have noticed you have money left over. Rather than buying a new car for $4,000 down and monthly payments of $300, you started with a used car for $8,000. With your saved payments, you can open a Roth IRA to take advantage of what will probably the lowest interest bracket you’ll ever be in.

If your employer offers a 401(k) or its cousin the 403(b), take advantage of this option as soon as possible. In many cases, companies offer “employer matching” contributions; for example, for every $1.00 you contribute, your company may thrown in an extra $0.50, you to one-eighth of your salary. This is free money, and you should accept it without question. Invest in your 401(k) at least to the limit of your employer match.

Your 401(k) may have some confusing options. If an index fund is available, that should be your first choice. Otherwise, your company may offer an automatic rebalancing plan based on your age or years until retirement, or a mutual fund that does the same. That may be a good choice for the novice investor.

6. Develop a plan, but be flexible. Your friends’ stories were missing something. While they spoke of all the exciting things they are buying and doing, they didn’t mention to you where they’d like to be in 5, 10, 25, or 40 years. Perhaps they have some vision of what their future might hold, but they don’t have a plan, something that will explain how they will get to that point.

If you haven’t already, decide where you want to be with your life in the short-term and the long-term. Think about not just the size of your bank account, but about all aspects of your life. For each goal, determine what you will need for its achievement. This doesn’t have to be exact, and without much experience in the workplace, you shouldn’t expect it to be.

Now that you have your plan, expect obstacles preventing you from reaching your goals, but also expect things that will require you to change your expectations, much like the first point above. It is said that people fall in love when they least expect it. Suddenly your own plans must incorporate someone else’s. It’s important to be flexible, because life has a habit of finding its own course.

7. You only live once. It’s important to think about the future and make the wisest financial decisions. But this is your life, and it’s the only one you get. Balance your future plans with making the most out of today’s experiences. Remember that money isn’t the most important thing in the world, but it does let you do some amazing things.

This article is part of the Money Blog Network group writing project for June, focusing on graduation. Here are some participating articles: Welcome to the Real World, Pay Yourself First, My Money Advice, A Fully-Funded Roth IRA, Graduates Might Be Shocked and Four Tips for Recent Graduates.

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Financial Tips for College Graduates

It was only back in April that Flexo wrote about MissingMoney.com. I had heard about it once before through a friend on Twitter who said he’d had some success and so I figured, “What have I got to lose?” They don’t charge anything, it’s just a convenient way to get at some abandoned money that should be yours in the first place.

I searched for myself in the three different states in which I’ve lived and found an entry tied to an old street address of mine for “More than $100″. I had to continue the process on a different site for that State, but since all they really needed was my name, it wasn’t that much of a hassle, and I never felt I was being scammed.

In my case the funds I was missing out on were submitted by Daimler Chrysler, which means it had something to do with the aftermath of totaling my car back in 2001. Ultimately, in order to claim the missing money, I needed to mail (or submit via a form on a Web page) some proof that I used to live at that address. Something like a utility bill or a bank statement. I don’t keep those sorts of things any longer than I have to, which to me means, “throw away as soon as you’re not using them anymore.”

However, crashing your car isn’t just an event, it’s a process that can go on, at a minimum, for weeks. A lot of paperwork is generated. I started keeping everything in a folder so I could prove the facts of the case at a moment’s notice. I figured seven years is a good amount of time to hang on to something that important, so in 2008, while pruning the filing cabinet, I very nearly got rid of the folder. Luckily, something stopped me, and a few months later, I was able to scan and e-mail the actual police report that described the accident, and included my address.

A couple of weeks later I got a check for $155. Naturally, I deposited it and made a $155 payment to one of my two remaining credit cards. If I’d received that money when I was supposed to in 2001… well, I can’t say exactly what I would’ve done with it, but some of it probably would’ve gone toward beer.

(Photo by C.P. Storm)

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The $155 That Almost Wasn’t

College classes have already begun around the country, and it’s not too late to start listening to Ben Stein. He has some great advice for those matriculating. His son is just starting college, so I would imagine Ben has been giving this topic a lot of thought lately.

Make friends with your teachers. While seeing your teachers socially was unacceptable in high school, as adults, the teacher-student relationship takes another form. I had no problem with attending barbecues hosted by my professors, going out for meals, or just relating on a more personal level. We discussed sports and books, music and logic.

Ben goes on to address ways to become friends, but they all pertain to situations in class. While I was in college, a lot of the real relating took place outside of the classroom, but that may be more a result of the type of degree I was pursuing.

Do your assignments neatly, correctly, and timely. Ben Stein mentions that college is about learning to budget your time. Looking back, I wish I had done this better. My time commitments pushed me in a number of different directions and I was always finding it difficult to fir everything I wanted to do inside of the day. I still have this problem now.

I find it hard to believe that people have to be reminded to spell correctly. I’ve encountered horrible spelling from my classmates as a graduate student, and I just don’t understand what the excuse is. Grammar is one thing; there are times when the correct grammatical rules to apply are confusing. Poor spelling is inexcusable. I am sure I’ve made spelling errors in the past, but I would be embarrassed if I spelled as poorly as some of my classmates.

Be well-rounded. I applaud Ben for writing this. Many times, people are encouraged to pick one topic and become an expert without much thought to the larger world around them. Ben Stein wants people to study history, geography, Shakespeare, poetry, literature, biology, physics, and mathematics. Of course, I would add visual and performing arts to his list. All of this teaches more about human understanding than would any business psychology or human resources class.

You probably won’t call upon these subjects in your daily life when you enter the workforce, but they’re vitally important in teaching you how to think. And learning how to think is, above all, the main challenge you face in school. It’s true that you have to know certain basic facts, but you should also know how to approach a problem, break it down, solve it, and write about it. That’s why it’s important to take English composition, and take it seriously.

Join a fraternity or a sorority. Social groups can be positive or negative, so be choosy about which groups you hang out with. My fraternity, which was new on campus when I joined as a freshman, was more of an honor society or service group during the first few years. We didn’t have a house so there are no movies that quite exemplify our dynamic, but we became decent friends as we did as much as we could to follow the fraternity’s national “purpose.”

As Ben notes, the good thing about a group of friends is the support they can provide when it is most needed. Chances are there will be some time during your time in college when you need that support.

Neatness counts. Image is always important.

If you wear sloppy clothes, be clean inside them and have your thoughts especially well-ordered to offset your appearance. You’ll need to work twice as hard so your teachers know you’re smarter on the inside than on the outside.

Don’t smoke or drink to excess. Anything in excess is bad. Aim for moderation and limit any unhealthful habits.

Play a sport. Is marching band a sport? I guess it depends on the marching band.

Have a roommate you like. Personally, I preferred having no roommate and spending most of my time in the dorms with my girlfriend. I never had to worry about disturbing anyone. I did live in a special interest dorm, where everyone on the floor was interested in the same thing. For my floor, that was music. In return for living in the nicest dorms on campus, for which we had to apply separately from the standard housing application, we had service responsibilities to the community. I enjoyed this type of environment.

Try to have a significant other. I am a strong supporter of this idea, but I would suggest not staying with the same significant other for your entire college experience unless you are sure you are going to get married. College is a great time to learn about yourself and determine you compatibilities.

Develop good work habits.

College is where you learn to allocate your time, get your assignments done, and develop a good rapport with your fellow workers (students) and your bosses (teachers), and make them all your friends.

Ben notes that in all likelihood, you’ll spend the rest of your life working. This is the reality, so it is best to make the most of it. I didn’t work as hard as I should have while I was running around leading various organizations. I put my priorities elsewhere when I should have worked for more balance between classwork, practicing (I majored in music education), activities, and socialization.

As a leader among my peers in high school in college, this hasn’t translated as well to the working world as I would like. While I’m happy with my experiences, and changing anything about my personal history would change my identity, there was possibly a little room for improvement when it came to getting the right things done at the right time.

Chances are you won’t get everything exactly right. Ben Stein’s tips will get you started in the right direction.

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Ben Stein’s Tips for New College Students

Perhaps she calls you “her sweeitie” and you call her “lover.” Maybe you don’t have cutesy names for each other, but if you’re planning to get married, hopefully you know each other very well.

This encompasses a little more than favorite restaurants, medical allergies, and middle names. There should be some serious discussions about life goals, passions, and philosophies. And then there’s money. Here are ten questions, thanks to Erin Burt of Kiplinger’s Personal Finance, to initiate more than a five-minute conversation. She provided the questions and I’m providing my interpretation.

Each one of these questions deserves a blog post for itself.

1. Where would you like to be in five or ten years? This is more than just physical location, but where you want to live is important, too. As far as location goes, there should probably be some agreement if there are specific places to live — or flexibility. Aside from this, what are your goals? If one wants to go back to school or to take a risk and open a business, is the other willing to support that?

2. What are our assets and liabilities? You may not know about your friends’ financial positions unless they happen to post their details online. In most cases, you’ll probably need to sit down and talk about what you owe. The article suggests prenuptial agreements, but that’s a personal decision. It could be a good idea in cases where there is a wide disparity between incomes, net worth, or future earning possibilities.

3. Should we keep our finances separate or combine them? I think there is more power when two financial forces join as one — the whole is greater than the sum of its parts — but that’s just my opinion. There are valid reasons for keeping finances separate.

If you’re struggling to come up with a solution in this area, you may consider what I would do: combine almost everything, in proportion to each person’s means to contribute, for all living expenses but keep some “mad money” so you can surprise the other with gifts.

You can do this without hiding money from your partner.

4. What about our investments? Once again, the power of combined accounts works in the favor of the couple as a whole in terms of growth. Fewer separate accounts and higher balances mean fewer fees. It also forces you to discuss risk tolerance and investment goals.

5. How will we handle daily spending decisions? To budget or not to budget, that is the question. The author is strongly pro-budget. Budgets can be helpful, especially for those for whom spending may be an issue. Personally, I don’t keep a line-by-line budget for myself. This type of organization is stifling to me, but I’d be willing to give it a try in a relationship as long as it is flexible and not strict.

6. Who will be responsible for paying the bills and preparing the taxes? I think it’s best to have just one person in charge, just to keep things simple. This will help to avoid paying a bill twice. But who should do it? Perhaps the person who is more efficient with keeping track of statements and records. You could also “outsource” bill organization to a company like Paytrust and avoid all the paperwork.

7. What is your tolerance for financial risk? The article provides a link to a risk tolerance questionnaire and suggests that if the two in the couple fall on the opposite end of the spectrum, compromising may be the only option.

8. What are our insurance options? For a marriage in which both spouses work, chances are one has health benefits costing less or offering better options than the other. So it is worth it to compare plans and decide whether one should be added to the other’s plan or to continue on separate plans. This is also a good time to change beneficiary options.

9. How does your credit report look? It’s time for each part of the couple to familiarize with the other’s credit history. Use this as a chance to make sure there are no errors on the reports, retrievable from annualcreditreport.com. If you plan on buying a house as a couple, this step will make sure there are no surprises.

10. How will we tackle existing debt? This probably should have been included in question number 2 above. I believe debts incurred before joining together in marriage should almost always be handled by the individuals and should not be included in the merging of finances above, but there are bound to be exceptions.

Proper communication is one of the most important ways to keep a relationship healthy, and it doesn’t stop with talking about money-related issues. Monsy is simply another topic about which people in love should not be afraid to be open and honest.

Discussing these issues also doesn’t guarantee a smooth — or successful — marriage, but it couldn’t hurt.

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Ten Questions to Ask Before Getting Hitched

Here is Kiplinger’s predictable 12-step program for becoming a millionaire, which inevitable contains “… and wait” somewhere. This guide is geared towards corporate workers who live and die by the paycheck.

1. Keep your eyes peeled for better ways to do your job. While Milton Wadams was slowly finding himself out of a job, thinking of something creative will help you stand out and make executives want to keep you around.

2. Don’t be afraid to negotiate. Here are 8 tips for negotiating a salary. I’m not quite up to expert negotiator status, and I’ve had this book on my wish list for a while.

3. Get your ducks in a row and your numbers on paper. There’s another vote for checking your market range on Salary.com, but I still believe their surveys are inaccurate.

4. Plot your strategy when it’s time to move on. The article suggests creating a professional-looking MySpace page. Do recruiters and hiring managers look at MySpace when making their decisions? I find that very hard to believe, even when we’re living in the future like we are. I do think it’s important to have a professional internet presence, but I think most corporate workers are better off ignoring MySpace.

5. Contribute as much as you can to your 401(k) and other tax-deferred retirement plans… and wait.

6. Flex your tax-saving muscle. Use a flexible spending account to pay for medical expenses to reduce your tax liability.

7. Review your tax withholding. The article points to this tax withholding calculator so W2 workers can ensure they’re not giving the government an interest-free loan. That money can go to work throughout the year, if you’re disciplined.

8. Stash savings in a Roth IRA if you’re eligible. The law says you’ll be able to withdraw your earnings after retirement without any taxes due. Let’s hope they don’t decide to change that law in the next thirty years or so.

9. Don’t delay. The best time to start thinking about increasing your net worth all ready passed. Since no one has yet perfected time travel, the next best time to start is now, and you’ll regret it if you don’t.

10. Invest automatically. When your money automatically disappears before you can touch it, maybe you won’t even notice it’s not there. When I first started my corporate job, I signed up for Direct Deposit because it was a pain to get to the bank. Then I set up automatic transfers from that checking account to a savings account slightly out of reach for everyday expenses.

11. Watch for fund fees. Even index funds can have high fees, so don’t make any assumptions. Check your prospectus before you make any investment decisions, and learn how to understand it so you know what you’re reading.

12. Keep it simple. The article says it: “Be wary of get-rich-quick schemes or sales pitches for complex investments, such as oil-and-gas partnerships, that trade on the millionaire cachet to lure investors into buying high-fee products they don’t understand. Most millionaire households accumulate their wealth over the long term by sticking to a regular investing plan in a balanced portfolio.”

Each of these 12 steps makes a small difference in the immediate term, but if you hang on and build these thoughts into your personal philosophy, eventually the rewards will be in your bank account. [Kiplinger's Personal Finance/MSN Money: 12 steps to become a millionaire]

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12 Steps for the Paycheck Type to Become a Millionaire

As I mentioned earlier, I finally picked up the Martin D-15 acoustic guitar I’ve been planning to buy since August last year. Here are some tips if you’re thinking about buying a musical instrument.

First, if you are buying an instrument for your son or daughter just starting out, you may find out later that they want to switch to another instrument or the teacher recommends one that might fit the student better. You may also find out before long that they have no interest whatsoever.

The music stores will try to push a “rent to buy” program in which you pay a small amount every month until you’ve paid off the entire cost of purchasing the instrument. In most cases, this is not a good deal. The stores will make sure you pay more than what the instrument is worth. If you’re buying an instrument for a young beginner, see if the school can loan an instrument or try to find a family or friend who would be willing to part with a used instrument. Don’t buy a used instrument, especially if it is a wind instrument.

If you’re buying an instrument for yourself, and you’re a beginner, take a more experienced musician with you. The most important point is to try a number of brands and models to find an instrument you feel comfortable with, but if you’re not quite the most talented yet, but a helper will be able to provide unbiased opinions.

While you are trying out instruments, a process known as “auditioning,” ask for instruments fresh from the factory. In many cases, instruments that are displayed on the floor have been out for a while and may have passed through hundreds of hands.

If you want to buy online, you have no way of auditioning the instrument. I highly discourage buying an instrument online. Even if the online retailer offers the Best Return Policy Ever, it will still be a hassle.

Here’s a little about price.

There is only one “price” you’ll need to know about once you decide on the brand and model. Ignore the “manufacturer’s suggested retail price.” This number is usually highly inflated to provide the false sense of a bargain. When I was in college, the professional model clarinet made by the manufacturer called Buffet had a MSRP above $4,000.

Ignore this price. The manufacturer sets another price: the lowest advertised retail price. Retailers are not allowed to advertise the instrument for less than this price. Again, when I was in college, the Buffet R-13 model was advertised for no less than $1,600. This sounded like a great deal.

In fact, most musical instrument stores have a “price match guarantee,” where they will offer to match a lower price advertised by any other retailer. Of course, this is a joke as the manufacturers control the advertised price. This may work out in a few cases in which a manufacturer lowers the advertised price, but don’t count on this happening.

Most people will simply pay this lowest advertised price, think they got a great deal thanks to the bogus MSRP, and move on with their lives. You cannot hand over cash or a credit card without negotiating. The music stores have a third price for their inventory, the market price or “street price.” This is the only price that matters. Depending on market conditions, this price will move up and down, and may differ between retailers.

You will have to negotiate with your salesperson. It helps to subtly let the salesperson know that you understand that the lowest price guarantee is a joke and you were hoping they could come down on the price. I’ve also found that it doesn’t pay to press your luck. The first offer is usually the lowest they will go when you’re dealing with major stores like Sam Ash and Guitar Center. Salespersons are trained to recognize the savvy shoppers are don’t want to screw around and miss the sale.

What about the extras they push?

Sometimes your instrument comes with additional accessories or replaceable parts. Some of the originally included accessories should not be used if you’re looking obtain the best sound and comfortability. You should seek the best sound and comfortability because doing so will raise the enjoyment you gain from playing an instrument. Here are some examples.

* Guitars: buy a set of good strings. If you’re new to playing, get recommendations.
* Wind instruments (brass and woodwinds): buy a good mouthpiece. The mouthpieces included by the manufacturer will usually be a poor choice. A good store will have a wide selection and allow you to audition mouthpieces.
* Woodwinds: buy a box of good reeds.
* Drums: get a set of batter heads from a brand that specializes like Remo and sticks from Vic Firth.

Follow these tips and your enjoyment of music will last longer. You’ll find the right instrument for you and you’ll know you got a good deal.

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Tips for Purchasing a Musical Instrument for the Non-Professional

Penelope Trunk from Yahoo Finance published an article busting job-hunting myths. I looked at several of her un-tips yesterday and in Part 2, I’ll finish off my thoughts.

Bad Rule No. 5: Don’t have typos in your résumé

I’m not recommending that you misspell words on purpose, but I am recommending that you chill out about the typos. How can you possibly send out perfect résumés every time? Especially if you’re customizing each résumé for each job, which is what you should be doing… While 10 typos is a sign of incompetence, one typo might be a sign that you have a moderate and healthy standard of perfectionism.

I disagree. It is not difficult to proofread a one-page document. Having a perfectly spelled and error-free one-sheet is not a sign of unhealthy perfectionism, it’s a sign of having pride in everything you produce, particularly items relating to your personal brand. I’m not saying my documents are always perfect, but there is no good reason that any professional image-related document should have errors.

Bad Rule No. 6: Honesty is most important

My own résumé says, “Boston University, graduate program in English, wrote master’s thesis about hypertext.” I never graduated from my program (because I got an amazing job offer based on that thesis). But I did write my master’s thesis. It’s not a lie. Anyway, it would be insane to say, “English graduate program, cut out early.”

I don’t completely agree with this, either. In the author’s example, she is clearly implying she completed her master’s degree. She could deny it later if someone confronted her about the ambiguity, but it’s not worth the risk. The right thing to do would have been to find a way to finish the program. If she finished the thesis, there couldn’t have been much left to do. While I was completing my master’s degree and shopping around for jobs, my résumé clearly stated my master’s degree was still in progress.

Lying or creating false implications on a résumé probably won’t get you into major trouble unless you are hired for a high-profile position, but it’s much better to be clear… and safe. I’m sure there are some positions where your résumé will be passed over if it does not include a master’s degree, but the right solution is to finish the degree.

Bad Rule No. 7: Clean up your online identity

Build a more current online identity that will pop up highest when an employer or recruiter does an online background check (which about 70 percent do). One way to get your new identity to the top of the search engines is to use Naymz… Another way to control what people see about you is to blog.

I have mixed feelings about online identities. Obviously, a blog like this one could be detrimental to my hiring prospects due to all the personal content. On the other hand, if I wanted to find a position as a financial writer, it has the slight possibility of being an asset. A person in a creative field should definitely have an identity that is easily discoverable and controlled. Professionals should use services like Naymz if they don’t have time to create their own websites and optimize search engine results.

Bad Rule No. 8: Treat a job hunt like a project and be a project manager

That’s great advice if you look for a job four times in your whole life. But today, job hunting is so frequent that often there’s no downtime — not even while you start a new job… It’s mostly about networking, and you can’t build your network if you’re taking breaks, because being good at networking means being a good friend.

These days, the job hunt is a constant event. There are a few people I work with who have “settled” into positions and aren’t looking to move up or move out. That’s fine, but most people my age (I’m 30) have a very different set of priorities. They won’t stay too long if they’re not getting everything they want from a position, so their ears and eyes are always open for other opportunities. Rather than starting and stopping the job search, it’s a continuous event.

Searching for jobs is one of my least favorite activities. I agree with Penelope Trunk’s premise that the old, standard job hunting tips should be revisited and revised. I agree with most of the eight points she listed in her article, except for my comments above. I’m interested to hear more opinions, especially about online identities. Penelope thinks you shouldn’t worry too much about a squeaky-clean online persona and suggests just a few ways to control what people see. How would you prefer potential employees see your online identity?

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Bad Job-Hunting Tips You Must Avoid, Part 2

Here’s a question I haven’t been able to find a satisfying answer for, so I’m hoping some readers can provide some insight, perhaps from personal experience. I have one pair of khaki pants that seems to hold static electricity constantly. Using fabric softener sheets in the dryer has done nothing to help, and it’s very annoying. Obviously it’s not a life-or-death issue, but I’d like to find a solution other than wearing a different pair of pants.

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Question for Readers: Static Cling

We’re rolling into the new year, a perfect time for gurus to repeat their favorite nuggets of advice. Suze Orman, who writes a column for Yahoo Finance, has published the five best financial moves for 2007. Here are her tips, which don’t have much relationship to 2007 specifically, but are good ideas in general.

1. Lose Your Balance. Pay your credit cards off every month to avoid interest fees and late fees. I’ve been writing about credit cards lately, and I identified two types of credit card users. Type A users pay fees and do not pay down their balance while Type B users have mastered their credit cards by beating them at their own game. Suze says Type As should become Type Bs.

2. Make sure you rate high. ING Direct is falling out of favor, even with the major voices now. Suze says get your cash in HSBC Direct or Emigrant Direct where as of now it can earn more than 5% APY.

3. Win the match game. Invest enough in your company’s 401(k) to be eligible for the full company match. This is recycled from last year’s list.

4. Face your mortality. Suze suggests a term life insurance policy for protecting those who rely on you. This is not part of my 2007 plan, and won’t be until I’m no longer a single guy whose only dependent uses a litter box.

5. Stop kidding around. Here’s something I don’t hear often in the mainstream press. Suze says parents have a responsibility to teach their young children about personal finance and the value of living within one’s means.

I’m not Suze Orman’s biggest fan. I’ve seen her call-in television show and she can be nasty to the callers. I would assume the callers are familiar with the show and know what they’re getting into when they dial, but sometimes they seem to be taken by surprise. I was also not impressed when she started appearing in GM commercials touting the value of buying or leasing cars. This seemed to go against the values she reflected on her shows. For most people, living within their means would mean not buying or leasing a new car.

Nevertheless, when I can’t detect her attitude in her writing, I don’t mind her advice. It’s solid, but not particularly special.

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Suze Orman’s 5 Tips for 2007

The latest “rule of thumb” is to subtract your age from 120. The resulting number is the percentage of your allocation that should be invested in stocks, optimally through index fund investing. This was rule #6 in Money Magazine’s 25 Rules to Grow Rich By.

In The Bogleheads’ Guide to Investing (asset allocation chapter reviewed here), the authors say an allocation of 100% offers no more long-term performance, but significantly more risk than a mix of 90% stocks and 10% bonds.

Fortune Magazine’s Rules for Building Wealth take the long-term view:

If you’re just starting out, 80 percent to 100 percent of your assets ought to be in stocks. “If you have, say, 30 or 40 years, what happens over the next three months or even three years doesn’t matter. If you need the money in two years and it drops 40 percent in one year, that’s a problem,” says Stuart Ritter, a certified financial planner with T. Rowe Price.

I’m in the process of helping my mother re-balance her investments. She plans on retiring soon, but I will suggest staying mostly in stock funds so the money continues to last, even when she starts taking distributions.

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Rule for Building Wealth: Go Heavy on Stocks

In July 2002, I opened an account at ING Direct and created a scheduled transaction. Every two weeks, when my day job paycheck was deposited, a portion of this money was automatically passed through directly into my new Emergency Fund.

A few months earlier, I became eligible for investing in my company’s 401(k). This is an automatic investment. I started off with the minimum investment necessary to take full advantage of the employer matching benefit. Now many companies enroll employees in the 401(k) automatically.

Since then, the details including amounts and accounts have changed, but I never see a good chunk of my paycheck.

The idea of making saving automatic is Fortune Magazine’s sixth rule for building wealth. Here’s what the magazine has to say:

No one wants to think about saving — so don’t. Already more companies are making 401(k) enrollment automatic… If you’re already maxing out your 401(k), see whether your company can transfer money directly from your paycheck into your Roth IRA or a taxable account. Or ask if your bank can transfer a set amount (even $100 a month) from your checking account into a high-interest-bearing online savings account…

David Bach is an author who highly encourages making saving automatic; in fact, he’s written a book that describes how doing so can make anyone a millionaire over time, The Automatic Millionaire.

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Rule for Building Wealth: Make Saving Automatic

Hi Flexo,

Just a quick note to say thanks for all the blogging. I’m addicted to your site and the information you provide on personal finance. Keep it up! I recommend you to all my friends.

Also, I am a CPA in Texas and get emails from the Texas Society of CPAs (go figure). In the most recent email the TSCPA shared a link to a 2007 Personal Finance Planning Calendar [pdf] that I think you, and your readers would enjoy.

Thanks for the link! The calendar has financial reminders on several dates throughout the year. For example, on April 5, the suggestion is “Check on IRA deductions.” May 8 we are told to “Start holiday savings.” On the pages opposite those printed with the months there are tons of personal finance tips. I haven’t had a chance to look through all the tips yet.

The calendar comes from the ValueYourMoney campaign from the Texas Society of Public Certified Public Accountants.

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Letter From Reader: 2007 Financial Literacy Calendar

Fortune Magazine is featuring 10 Rules for Building Wealth. Rule number one is something I wish I had known years before I did: Start early.

By starting early and saving a negligible amount per month, thanks to compounded interest and earnings on earnings, you can end up with more money than someone who starts later. The example provided by the magazine tells the story:

Employee A starts putting away $100 a month when she’s 22. Her money grows at 8 percent a year, and after ten years she stops contributing – and lets her stake grow. Employee B waits until he’s 32 to set aside $100 a month, also growing at 8 percent a year, and he keeps it up until he hits 64. When they both retire at 64, she will have $234,600, and he’ll have only $177,400.

This is the Butterfly Effect. Small changes can have drastic consequences when time is allowed to pass, and the difference is more pronounced with more time. But inflation is as powerful a force as compounding, and when you look at the numbers after taking inflation into account, the differences are less drastic. This is why you have to think beyond the standard personal finance advice. You hear often that all it takes is a little contribution each month to make you a millionaire… some time in the future.

By the time that happens, one million dollars will have the same buying power of “only” $400,000. Yes, it’s more than you would have if you hadn’t been saving, but don’t be fooled by the catchy “millionaire” title. By the time you’re a millionaire, everyone else will be, too. It’s not quite as special when you look at it that way.

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Rule for Building Wealth: Start Early

Here are four more smart year-end money moves, according to Money Magazine. I only conditionally agreed with the first four, so let’s see how the magazine did with the remaining tips.

5. Set your sights clearly. They suggest deciding well in advance the destiny of any year-end bonuses. This will prevent splurging to some extent. In my company, we don’t receive our bonuses until February or March. The delay prevents me from using the money for holiday gifts. In the past, my bonus has gone to pay for regular expenses at my regular income’s shortcoming, but that probably won’t be the case this year.

6. Make some adjustments. Consult an accountant who can help you speed up or slow down tax payments or self employment income, or adjust your withholding for next year so you won’t have to later. Speaking of adjustments, it might also be a good time to take a look at your investment asset allocation. If one part of your investments performed very well or poorly, your allocation may be out of whack with your goals.

7. Play catch-up. The maximum 401(k) contribution for most people in 2007 is $15,500. I won’t hit that mark without a significant raise, but for people like us, Money suggests increasing contributions by a percentage point. I plan to hold my contribution steady at 12% of my income.

8. Have the talk. “In your life, there’s probably a difficult financial conversation that you’ve been meaning to have with a family member but haven’t gotten around to. Maybe it’s talking with your parents about their retirement finances or discussing long-term financial goals with your spouse.” Money believes the holidays are a good time to have this talk. I talked with my mom about her retirement over Thanksgiving, and that’s a topic for another day.

In general, these are good reminders from Money Magazine. A few tweaks here and there would help the set of tips apply to my life.

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Money Magazine: 8 Smart Year-End Moves, Part 2

Money Magazine suggests eight money moves people should consider for the end of the year. Here are some thoughts.

1. Take your losses. Money suggests selling poor-performing stock to offset ordinary income for tax purposes. In my opinion, this depends on the stock. If the future does look bleak, go for it, but if there is some reason to believe there is a comeback around the corner, hold on. (Efficient market theory suggests that any widely-known “comeback” is already represented in the stock’s price, so this may not work for you.)

2. Buy some aspirin. If you have any money left over in your flexible spending plan, particularly if yours is of the use-it-or-lose-it variety, stock up on eligible pharmaceutical items you know you’ll use before they expire, like aspirin. Your deadline for using the funds may extend into next year, so the push may not be as urgent — check your company’s policy.

3. Be generous. Give money to your favorite charity or non-profit organization, and you can reduce your tax liability. I would like to think that isn’t the only reason people support causes, but it does help. Money suggests setting the money aside in a Charitable Gift Fund to get the tax deduction now while postponing the distribution to a later date, when the donor has had time to determine where it should be sent.

4. Get IRA smart. Anyone 70 1/2 or older must start taking the required minimum distribution from IRAs. If the minimum isn’t met, there is a significant penalty. Alternatively, you can donate your distribution to charity and avoid withdrawal taxes.

Part 2 will summarize the second half of Money Magazine’s year-end money moves.

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Money Magazine: 8 Smart Year-End Moves, Part 1

If you haven’t noticed, I’m a fan of long post titles. Anyway, as the title says, here are seven ways you can save money while maintaining your extravagant style. After all, isn’t that what everyone wants? The best of both worlds? If you love living beyond your means, follow these guidelines and both worlds will be yours.

1. Eat out regularly. The trick is going to your favorite restaurants without ordering. Walk around from table to table asking strangers, “Are you going to finish that?” Ask while they have food in their mouths; at the fancier restaurants, you’ll have a chance to grab their plate before they swallow and respond.

2. Vacation in Cabo San Lucas. Rather than staying in the swanky resort, stay just outside of town in the poor area. Smuggle some locals back to the United States; you could end up making money on the trip!

3. Lease a Lexus. Charge $50 per person per ride when you drive your family to the park for your kid’s soccer game or your friends out to the bar for a few drinks. Charge $100 per ride after the bar when you have a few drinks in your system. You deserve more reward for the risk.

4. See one Broadway show each week. During the finale, create a nuisance and get ejected from the theater. Demand a full refund.

5. Buy fancy imported water. Get more use out of the special stuff by using it to clean the dishes before drinking. There are ways you can reuse fancy water after drinking, but some may find this option gross.

6. Build a home theater in your basement. Don’t charge for admission, but sell concessions to your friends who visit to watch DVDs and play XBox 360. Start with $500 for popcorn and $1,000 for a small soda. You’ll recoup the cost in 50 years.

7. Buy lots of real estate. It’s easy when you lie to lenders. Then when the banks foreclose, make a big deal about it on a blog. Lots of people will hate you, but AdSense clicks and media attention will start rolling in. Declare bankruptcy and get out of your mess virtually unscathed.

See, it’s rather simple to maintain your extravagant lifestyle while making just a few changes to save some money. Good luck, and let me know how it goes.

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7 Ways to Save Money While Maintaining Your Extravagant Lifestyle

We’ve finally come to the last installment of Money Magazine’s 25 Rules to Grow Rich By, which has a catchy title, but is more or less just a list of “rules of thumb” that may or may not be applicable to any one individual. And let’s face it, you are all individuals. (Yes, we are all individuals!) ¹ Now without futher ado, here are the final five.

21. Lease a new car or truck only if you plan to replace it within two or three years. Usually, the rule of thumb dictates never leasing, so this is an interesting conditional. There are some situations where you know you won’t need a car a few years into the future. For example, maybe you’re moving to a city with decent public transportation and no need for a vehicle, like New York, or maybe you’re only in the United States for a few years before heading back to Europe. I can understand leasing in these situations. You have no intention to keep the car, and you have low monthly payments.

22. Resist the urge to buy the latest computer or other gadget as soon as it comes out. Wait three months and the price will be lower. Ah, the curse of the “early adopter.” I’m exposed to this first-hand as I attempt to find a new notebook computer. I want something that will last five years as my previous notebook did, and I’m trying to get excellent features like abundant RAM, WUXGA resolution, and a speedy processor, but it’s not quite fitting my “budget.” I’ll probably end up settling for something less powerful, and therefore less likely to last five years.

23. Buy airline tickets early because the cheapest fares are snapped up first. Most seats go on sale 11 months in advance. It’s like Money Magazine is reading my mind. I’m working on airline tickets to California in November. I should have purchased the tickets before Labor Day, but here we are. I’ll end up spending about $450.

24. Don’t redeem frequent flier miles unless you can get more than a dollar’s worth of air fare or other stuff for every 100 miles you spend. If I fly Continental Airlines on my trip to California, I should pass the threshhold of 25,000 miles, which should earn me a free flight. Here’s their chart for flights within the U.S. According to this rule of thumb, if the flight would normally cost $250 or more, than using 25,000 miles would be worth it. When I redeem the miles, I will undoubtedly be limited to a select number of flights.

25. When you shop for electronics, don’t pay for an extended warranty. One exception: It’s a laptop and the warranty is from the manufacturer. I usually don’t go for the extended warranty on anything, including laptops. The standard manufacturer’s warranty should be sufficient. Any problem I’ve had waith a laptop occured early on in its life. Extended warranties are usually nothing but bonuses for salespeople.

When I was in high school, I worked at RadioShack for a short time. We were told to push the “TSPs” — Tandy Service Plans. There was a code on all price tags that allowed the salespeople to know the price of the TSP without having to look up the details. When we sold a TSP, we would get a small bonus in our paychecks.

For smaller items, the TSP would function as a “replacement plan:” for an extra $9.99, that pair of headphones can be returned at any time — forever — and be replaced with a new pair, for any reason. This isn’t a bad deal, as long as customers remember to come in, and keep their receipt.

Nowadays, the only time I go into RadioShack is when I need A/V connectors. I try to avoid the salespeople as much as possible.

1. I hope that there is at least one person familiar with Monty Python’s Life of Brian.

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Money Magazine: 25 Rules to Grow Rich By, Part 5

Money Magazine came up with 25 “rules of thumb” that will help your grow rich, albeit very slowly. Rules of thumb are often appropriate only for a fictional “average person,” but they can be good starting points for determining what is the right choice for any individual. I’ve looked at the first fifteen so far, and here are the next five:

16. When you buy insurance, choose the highest deductible you can afford. It’s the easiest way to lower your premium. You shouldn’t have to go into debt to pay a deductible, so you need to be prepared to pay what is necessary by tapping only your savings.

I do this buy setting aside extra money each paycheck to keep a savings account specifically for car emergencies until it’s funded up to the deductible. This is coming in handy at the moment, thanks to my recent accident.

17. The best credit card is a no-fee rewards card that you pay in full every month. But if you carry a balance, high-interest rates will wipe out the benefits. If you need to carry a balance, get a card with the lowest APR, and keep it low. If you don’t carry a balance, get a card with the best rewards that suit your spending or traveling habits. There’s no one “best card” because everyone’s needs are different.

I still use my Citi Platinum Dividend Select for the cash back. I’ll hit my yearly rebate limit soon, so I’ll be switching to another rebate card for the rest of the year. The only reason reward cards work for me is because I pay the balance off every month.

18. The best way to improve your credit score is to pay bills on time and to borrow no more than 30% of your available credit. It’s hard to determine the exact ratio that credit card companies like to see. The algorithm to generate an official credit score is proprietary, and Fair Isaac Co. doesn’t just give away their secrets.

Due to this, the credit reporting agencies have started building their own calculations, and I predict we’ll see increasingly differing formulas depending on who is looking at your credit. Good habits, like paying bills on time, are hard to argue with. The theory of using not more than 30% of available credit is more of a guess. Some credit cards don’t report the full amount of available credit to the agencies, and there’s very little you can do.

19. Anyone who calls or e-mails you asking for your Social Security number or information about your bank or credit card account is a scam artist. It’s easy to say that this falls under the “common sense” category, but scammers are good at convincing people they are legitimately working for who they say they are. Always ask for a number to call back if a bank or credit card company calls. Verify the number or call the bank’s official number and try to reach someone else in the department who could validate the issue.

20. The best way to save money on a car is to buy a late-model used car and drive it until it’s junk. A car loses 30% of its value in the first year. This depends on your driving needs. If you have a long commute, and your job performance depends on your timeliness, you don’t want to continue to driving a car that is getting closer to “junk” status. Buying a car that is just a few years used is a good option for most, but driving until it breaks down is not safe.

Only five more “rules,” so stay tuned if you’re interested in my thoughts. So far, these are decent rules of thumb, but the headline claiming that they’ll make someone rich is pretty misleading. You’ll save some money, but it’s not going to be significant over a lifetime. The money you save can be put to better use, however.

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Money Magazine: 25 Rules to Grow Rich By, Part 4

Here are more “rules” from Money Magazine. I wrote about the first five guidelines yesterday, and here are five more with some of my thoughts thrown in.

6. All else being equal, the best place to invest is a 401(k). Once you’ve earned the full company match, max out a Roth IRA. Still have money to invest? Put more in your 401(k) or a traditional IRA. “All else being equal” is one of those phrases that describes something that never exists completely. It’s very rare that all else is equal.

However, this describes my strategy. By investing 4% in my 401(k), I get the full company match. I max out my Roth IRA next, and with the leftover income, I invest 8% more of my salary into the 401(k). I may end up cutting back as my cash flow is tight. I could use some more breathing room. I’d like to fund my 401(k) to the maximum some day, but that would require a higher salary.

7. To figure out what percentage of your money should be in stocks, subtract your age from 120. I just mentioned this in another post. The old rule used 100 instead of 120, but someone decided that with people living longer in retirement, that wasn’t enough equity. By this logic, 10-year olds should have 110% of their funds in stocks. I’d like to see a 10-year old who can pull that off.

8. Invest no more than 10% of your portfolio in your company stock – or any single company’s stock, for that matter. This is mainly for company stock. You income is already dependent on your company, so also assigning such a big chunk of your money to your own company stock just increases the risk. There are tons of reasons why you shouldn’t be heavily invested in your own company, and that’s a topic for some other time.

10% is probably too much to let ride on any one investment if you’re looking for diversification.

9. The most you should pay in annual fees for a mutual fund is 1% for a large-company stock fund, 1.3% for any other type of stock fund and 0.6% for a U.S. bond fund. This rule sets specific limits. Annual fees eat away at your returns and they should be avoided as much as possible.

10. Aim to build a retirement nest egg that is 25 times the annual investment income you need. This is based on the research that shows that you can safely withdraw 4% from an equity portfolio every year without your funds depleting over the long-term. If you need an income of (inflation-adjusted, let’s say) $100,000 a year in 2030 when you retire, your funds invested in stocks should be valued $2.5 million if you want your funds not to deplete.

This may not be possible for most people, which means the money will run out at some point.

Each one of these tips deserves discussion, and some are more controversial than others. If you disagree with anything you see, feel free to defend your position in the comments below. I love to hear from readers and it’s usually quite educational for me.

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Money Magazine: 25 Rules to Grow Rich By, Part 2

Money Magazine seems to be publishing some good content lately. First, it was 7 shortcuts for major money hassles, and today it’s a larger feature on 25 rules to help you grow rich.

I’ve never been one to play by the rules, which in my opinion, are made to be broken. In fact, I hate when people talk about rules of thumb as if they apply to everyone in every situation. But the fact is rules of thumb give people a starting point for doing further research; the problem is when there is no follow-up research and the rule is taken as the “be-all, end-all” for financial decision-making.

Here are the first five rules and some thoughts of my own.

1. For return on investment, the best home renovation is to upgrade an old bathroom. Kitchens come in second. If the only reason for renovating a house is to increase the possible sale price, the best way is to go with renovations that research shows return more than the cost to renovate. Adding extensions and pools, for example, cost more than the value added when it comes time to sell.

However, if you get pleasure from renovations and are considering the work as an expense to offset that pleasure, you won’t be expecting to make up the cost of renovation when selling.

2. It’s worth refinancing your mortgage when you can cut your interest rate by at least one point. You have to consider the expenses in refinancing, not just the principal and interest on the mortgages. This rule of thumb assumes that your refinancing expenses won’t exceed one percentage point.

The corollary of what Money Magazine says is that the lower monthly payments will benefit someone not planning to stay in the house for long more than someone planning to stay.

3. Spend no more than 2 1/2 times your income on a home. For a down payment, it’s best to come up with at least 20%. Do you think someone living in New Jersey and getting paid a salary of $40,000 — supposedly “middle class” — can find a suitable home in the area for $100,000? The only option for that amount of money? This is what she would be able to find in downtown Trenton, NJ.

4. Your total housing payments should not exceed 28% of your gross income. Total debt payments should come in under 36%. Using the calculator provided on the Money Magazine page for this rule, that house linked above, with a $20,000 down payment, a 6.25% interest rate, $3,000 in yearly taxes, and $1,000 in homeowners’ insurance add up to a $826 monthly payment.

That’s already 25% of the $40,000 hypothetical salary. On top of that, you’ll need to add maintenance costs, which in downtown Trenton are sure to be high if you want to live in a functioning building.

5. Never hire a roofer, driveway paver or chimney sweep who is going door to door. This is a general rule that could apply to any service, not just the three listed. Find help through referrals only. The only way this is a rule “to get rich by” is because it reduces the chance someone will take your money and not provide the service. It’s good advice, but I’m not sure it belongs in this particular list.

Some good investment rules to grow rich by are coming up next.

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Money Magazine: 25 Rules to Grow Rich By, Part 1

Money Magazine is running an extended feature targeting 7 of the most annoying money problems, and proving some easy solutions. Here is a shortcut to the seven shortcuts:

1. Ace your retirement. Buy a target-retirement fund in your 401(k). If you believe you’ll be retiring in 2030, you can buy a fund that targets that date and has “appropriate” risk for that time frame. The article doesn’t mention that with any fund of funds, you’re also paying fees on top of fees.

2. Invest (almost) like a pro. If you don’t want to buy a target-retirememnt fund, use a stock index fund and a bond index fund to achieve the level of risk you’re willing to undertake. Here’s their rule of thumb. Subtract your age from 120 and put that percentage into the stock fund. I’ve heard this rule using 100 as the baseline rather than 120.

3. Cruise into college. The Utah Educational Savings Plan will configure your 529, a college savings investment plan, using low-cost Vanguard funds. Or view your local options at savingforcollege.com.

4. Disaster-proof your family. Build an emergency fund, buy life insurance, and write a will. The first part applies to anyone, including single men like me. Once I have a family, I’ll take care of the rest.

5. Protect your identity. Opt out of receiving junk mail, which is targeted by identity thieves, by calling 888-567-8688. Shred paperwork and opt to receive statements via email rather than snail mail. Get your credit report for free three times a year from AnnualCreditReport.com.

6. Shop smart for a car. If you don’t want to deal with the hassle, hire a buyer for $400 to $800. Buying online is an option, as well.

7. Simplify your credit life. If you carry a balance, use a low-rate card. Call the company and ask if they can lower your interest rate. If you pay in full like I do, use a rewards card.

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Money Magazine: 7 Shortcuts for Major Money Hassles

David Bach, author of The Automatic Millionaire, offers suggestions for making your emergency savings automatic.

Before we get to the tips, most people agree that building an emergency stash of cash that can last long enough to cover three to six months should be one of the first financial priorities, even for those in debt. This can be difficult to achieve. Bach says the average American has less than one month’s worth of expenses set aside.

Here are some tips for getting to the three to six months point:

* Make it automatic. Every time you get paid, a portion should be automatically transferred to your savings account. This is even easier if you have Direct Deposit. If you don’t have this set up yet, just call your bank to get started. At this point, I automatically deposit 5% of my paycheck into a fund for emergency savings, in addition other amounts for other savings goals.

* No checking accounts. Your emergency fund should not sit in a checking account where it can be easily accessed by checks, debit cards, and ATMs. You shouldn’t be able to dip into the fund whenever you feel like. If you do, it’s not really an emergency fund.

* Put it in the right place. Bach suggests a money market account instead of a savings account. There is really no difference unless you’re looking at a “money market fund.” Money market accounts are insured by the FDIC and have no discernable differences from savings accounts. In fact, many banks that offer money market accounts call them savings accounts. The point is to find a cash account that offers significant interest. Here’s a handy guide to the best savings account interest rates.

* Decide how big a cushion you need. As I mentioned above, the typical emergency fund should be three to six months’ expenses. In order to determine what your number is, you have to know what your expenses are. You might have to track your spending for a few months before you have an idea of how much you are really spending. Get help from Quicken or Microsoft Money

Take a look at some of the other blog entries I’ve written on this topic, listed below.

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Automate Your Emergency Savings

Jeanne Sahadi has a few tips for getting ahead in the first few years of your career. It’s also appropriate for starting a new position anywhere, new career or not. Here are the take-aways.

Ask for help, then take charge. Ask for questions when necessary, but not much more. Show initiative and independence in solving problems without going to the manager.

Know the boss. “Getting to Know You” is a song Mister Rogers used to sing, which was actually from the musical, The King and I, written by another Rodgers (Richard and his partner, Oscar Hammerstein II). Anyway, know what your boss wants and what she considers important. Seek performance feedback often.

Cultivate good relationships. “Act like you’re running for office…” but not too much. Humor, respect, and grooming are three important aspects of getting along well with people.

Don’t watch the clock. 9-to-5 is a myth. The director of my department is very watchful; we are not allowed to be in the office after 5:00 unless we have requested overtime, which is usually not granted. This is a chance from my last department, in which occasional overtime was expected.

But know when to go. If you’re no longer learning anything from your job, then it’s time to move on. Don’t just settle for a promotion if it is in title only.

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Five Tips for Starting a Career or New Position