This article is presented by Kelly Whalen, Consumerism Commentary staff writer.

The temptation to spend money is everywhere, especially during the holidays. There is something magical about lights glowing, soft Christmas music playing everywhere, and the hustle and bustle of the holiday season that seems to make money fly right out of everyone’s wallet.

Whether you enjoy the busyness of the holiday as much as I do, or not, it’s likely you have a few gifts to purchase during the week leading up to Christmas. You may, like me, still have some items still unchecked on your list, or you might be one of the 19% of holiday shoppers who haven’t started their holiday shopping. Either way, you can get your holiday shopping faster than Santa can fill stockings by trying these suggestions to curb your holiday spending. (note: the same principles apply year round)

• Make a list, and check it twice: I’ve said this before, but it bears repeating. A holiday shopping list is the ideal way to keep your spending in check. Just like a grocery list it will keep you from forgetting you already bought a gift for Great Aunt Sylvia or worse leaving someone off your list.
• Take advantage of FREE Shipping Day: Today only, December 17, is “Free Shipping Day” at many etailers. For a complete list go to FreeShipping.com If a retailer isn’t on that list, try calling their stores or customer service line. Some companies, such as Land’s End at Sears, offer free shipping if you order from the store. What could be a better way to finish your gift list from the comfort of your own home.
• Look, but don’t touch: When you touch an item you are more likely to buy it, according to Time magazine. Keep your hands in your pockets, or if you can’t keep from touching look at the sticker price first, so you can shock yourself into not buying.
• Concentrate on the recipient: While it should go without saying, putting yourself in your recipient’s shoes will allow you to walk away from overspending. I found myself dreaming of a particular toy that I have not been able to find for one of the kids. After considering a web-wide hunt for said gift, I realized it was my own nostalgia that colored my perception of the “perfect” gift. I could give a gift that was similar for half the cost, and the kiddo would still be thrilled.
• Shop after the holiday: If you don’t have small children, or will be visiting far-flung relatives after 12/26, consider going shopping on 12/26 when the products in many stores are reduced significantly.
• Don’t try to do it all! Most of us have precious little free time. Use your free time to be with your family, or friends instead of focusing on hunting down the perfect gift, or squeezing in 5 holiday parties in 2 days.
• Opt out. Many families are scaling back, but you might consider opting out of gift exchanges altogether. This only works well for adults, or families with older children, so proceed with caution. Some families choose a vacation over exchanging gifts.

Do you have any tips for curbing your spending?

The original version of this article, Curb Your Consumerism, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Haggling for Beginners, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Telemarketers Can’t Talk to the Dead, is copyrighted by Consumerism Commentary.

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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)

The original version of this article, The $155 That Almost Wasn’t, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Ben Stein’s Tips for New College Students, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Ten Questions to Ask Before Getting Hitched, is copyrighted by Consumerism Commentary.

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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]

The original version of this article, 12 Steps for the Paycheck Type to Become a Millionaire, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Tips for Purchasing a Musical Instrument for the Non-Professional, is copyrighted by Consumerism Commentary.

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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?

The original version of this article, Bad Job-Hunting Tips You Must Avoid, Part 2, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Question for Readers: Static Cling, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Suze Orman’s 5 Tips for 2007, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Rule for Building Wealth: Go Heavy on Stocks, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Rule for Building Wealth: Make Saving Automatic, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Letter From Reader: 2007 Financial Literacy Calendar, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Rule for Building Wealth: Start Early, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Money Magazine: 8 Smart Year-End Moves, Part 2, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Money Magazine: 8 Smart Year-End Moves, Part 1, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, 7 Ways to Save Money While Maintaining Your Extravagant Lifestyle, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Money Magazine: 25 Rules to Grow Rich By, Part 5, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Money Magazine: 25 Rules to Grow Rich By, Part 4, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Money Magazine: 25 Rules to Grow Rich By, Part 2, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Money Magazine: 25 Rules to Grow Rich By, Part 1, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Money Magazine: 7 Shortcuts for Major Money Hassles, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Automate Your Emergency Savings, is copyrighted by Consumerism Commentary.

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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.

The original version of this article, Five Tips for Starting a Career or New Position, is copyrighted by Consumerism Commentary.

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Money Magazine is profiling Michael and Brittany Abbate. Here is their situation.

The couple used to have a total annual income of $135,000 to support them as well as their daughter, but thanks to a move from Chicago to Phoenix and a pregnancy, they now make less than half that amount. Due to the pay cut, they’ve used $11,000 of their $15,000 emergency savings just for regular expenses.

Without giving too many of the details within the article, he’s a spender and she’s a saver. The article gives five tips for communicating with your partner when money issues arise.

I’m not an expert when it comes to relationships; in fact, every relationship I’ve had until now has ultimately failed, usually because of issues having nothing to do with money. I don’t think that the only way to have a successful relationship is to have the same spending philosophy as your partner. Although sharing the attitude does help to get both individuals are quickly on the same page when it comes to spending and saving, openness, communication, and willingness to compromise are much more important in my opinion.

* Think big picture. Decide on important goals and make decisions that are in line with those goals.

* Give each other financial space. Combine most of the income into joint accounts, but keep a small portion separate. The individuals should have the freedom to use an agreed-upon amount however they see fit without consulting the other. This is great for suprise gifts.

* Swap roles. Usually only one within the relationship will be the one maintaining the books. Let the pilot hand over the controls to the co-pilot for a while to increase understanding of the financial situation.

* Schedule money dates. The article’s author says it’s better to plan ahead and choose a time to speak about money-related issues than to bring them up at an inconvenient time. You can use the meeting time to review progress, to plan ahead, and to address any issues.

* Get help if you need it. Sometimes disagreements about money aren’t really about money, they’re about control. Consider seeking a financial planner, a marriage counselor, or a combination, if compromise continues to fail.

The original version of this article, Spending Philosophies: Five Tips for a Better Relationship, is copyrighted by Consumerism Commentary.

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I know speed is not my strength. I’m concluding this series over a week after it was started, but that’s the way things are. Last week, I found an informative series by Money Magazine providing tips for managing your 401(k). The articles reminded readers to save early and often, spread your money around, limit company stock, and check in once a year. Here is the final tip for making the most out your retirement account.

Keep Your Hands Off

One of my coworkers started her job at my company earlier this year. She came from another financial services company. While one would think that with this particular background, people would know how best to manage their own money. Not everyone in my industry is so savvy.

She withdrew her entire 401(k) account, about $50,000, instead of choosing another option. After withdrawal penalties and taxes, she only had about half of that left.

I don’t give financial advice to people I work with (or anyone unless they ask, but I’m no expert anyway), and certainly not after the fact. But the fact is she had other better options. Our company has a great 401(k) (but the fund management fees are higher than what you would find in index funds) and very easily accepts rollover from other companies’ 401(k)s.

If she didn’t want to go in that direction, her old company probably would have allowed her to keep her account where it was. According to the Money Magazine article, if she were to have less than $5,000 they might have kicked her out of the plan. In this case, she would have been safe.

A third option would be to roll the account into an IRA. By working with a brokerage that includes IRA accounts, like ShareBuilder, more investment choices would be available. This route may be more expensive as some brokerage have annual or inactivity fees for IRA holders.

Either one of these three choices would have been better than cashing out. I can’t speak to whether she really needed the cash immediately. Perhaps there was an emergency and it was her only choice, but I don’t believe so.

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Money Magazine has a feature this month about finding extra money or “hidden assets” as they call it. I’m not going to do a whole series on these suggestions, but I will simply summarize and add a few thoughts.

1. Cash in old savings bonds. If they’ve matured, you have money that’s not earning any interest. Cash them in and put the money in a high-yield internet savings account or something more risky if you’re so inclined. Search treasurydirect.com because you may not know that you have bonds in your name… yes, it is possible.

2. Boost your savings rate. I often talk, like I did one paragraph earlier, about getting out of low-paying brick-and-mortar bank accounts and into the world of online banks where you can earn significantly more on your cash. Money talks more about making the most out of your brokerage’s sweep accounts, where uninvested cash sits. Most brokerage have higher-performing, low-risk money market funds that provide a much better alternative for a sweep account.

3. Stop paying for unneeded life insurance. Money Magazine suggests arranging for your premium to come out of your dividends. This may be practical for some whose insurance needs are lower than they once were. Also, avoid sales pitches when you go to talk to your insurer.

4. Consolidate your retirement accounts. Too many accounts can be confusing and expensive. Simplify!

5. Prune your credit cards. Simplify! Get rid of unused cards. Consolidate cards. Close accounts (but leave your oldest credit card open for evidence of credit history).

6. Unload unused gift cards. Money suggests using CardAvenue for swapping an unneeded gift card for one more useful. Beware, many gift cards lose value over time or even expire.

7. Finally sell that lousy investment. It’s easy to get emotionally attached. “Take a look at every dud investment you own and ask yourself why you still own it. You are not allowed to factor the purchase price and the long-ago value into your answer.” If you take a loss when you sell, you can deduct it from your tax return to a point.

That’s what Money Magazine had to offer, but there are many other places to “find” money. Here are two I can think of off the top of my head.

8. You can “find” money just by creating an automatic withdrawal from your checking account to an obscure checking account immediately after your paycheck is deposited. You’ll never know the money’s not available like normal, and down the road, you’ll find you have a sizable chunk of extra cash.

9. Check your state’s unclaimed funds website. Here is New Jersey’s. I searched for my last name and determined the state has some money due to my father, which was likely sent to an old address. I keep forgetting to let him know…

Feel free to add any suggestions!

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I’m still enjoying Money Magazine’s “Last 401(k) Guide You’ll Ever Need.” So far, I’ve addressed the first three tips offered by the magainze, save early and often, spread your money around, and limit company stock. Here’s the fourth tip for maintaining a strong retirement investinment portfolio.

Check in Once a Year

Take a date you’ll remember every year, perhaps your birthday as the magazine suggests, and evaluate your portfolio. Look at your contribution instructions to make sure you are allocating your money in a way that makes sense for your situation, looking at risk profiles. If you’re invested in a target retirement fund, this risk adjustment is done for you, but you should make sure this is still what you want.

If certain investments have performed well, consider rebalancing — selling (tax-free) part of the investments that have done well and buying investments that have performed poorly. It sounds strange to buy poor-performing funds, but you’re selling “high” and buying “low,” and that’s good for long term investing.

Benefits consultant Hewitt Associates found that in 2005 many 401(k) investors loaded up on emerging markets funds, which had been delivering double-digit returns. But in May of this year, foreign markets tanked, and panicked investors found themselves selling with 20% losses.

I’ve experienced this. In 2005, people everywhere were talking about emerging market funds because they had performed so well up to that point. My international equity fund is balanced more towards established markets, but it hasn’t performed well lately. I’m fine with that; in the buying stage, as the fund goes down a little, I’m getting a better price that will hopefully pay off for me well into the future.

The article suggests looking at asset allocation and risk profile once a year to make adjustments. This is what I do now, but I used to do this once every quarter. In fact, my 401(k) was configured to automatically rebalance once a quarter so it was no effort on my part. Since there are no tax consequences to moving funds around within a 401(k), and I would think transaction fees would be very rare, I think it’s safe to do this every quarter if you desire. I’m more comfortable with a yearly rebalancing.

Here’s a question for those who have managed to read this far into the article. Do you rebalance your portfolio? If so, how often, and is it an automatic process? Leave a comment if you like.

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Money Magazine has done a good job of assembling five simple tips for starting and maintaining a great 401(k) retirement account. The first tip was to save early and often and the second was to spread your money around with a smart diversification strategy. Here’s the third tip.

Limit Company Stock

When you work for a company, it’s easy to feel you know your organization really well. You may get daily communications from your executives extolling the indestructability of the corporation. Or maybe you really do work for a company that has a bright future.

But it’s risky. And by working at the company, you’re accepting risk associated with your salary. You don’t need the extra risk of being overly exposed to your company in your portfolio.

Chances are you know someone who worked for a start-up in the late 1990s. The future looked bright, but companies were using the buzz to their advantage, compensating employees with stock when there was no cash. And of course, everyone knows the story of Enron’s stock and the employees who lost (paper) millions.

The chart to the left contains some statistical details outlining why you should not take on the extra risk by overly investing in your company — or any one company’s — stock.

How about my company? If I take my employer’s full 401(k) match, which is up to 4% of my salary, half of that match is invested in a company stock fund while the other half is invested according to my asset allocation instructions. I cannot change the company stock portion of the investment without cashing out the 401(k) or rolling it over if and when I leave my current employer.

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Money Magazine is presenting five tips for building a great 401(k) account. Their first suggestion was to save early and save often by diverting as much as possible directly from your salary to your retirement account. Here’s the next tip.

Spread Your Money Around

What you must do, though, is choose a suitable combination of stock funds, bond funds and other investments. The idea is to create a blend of assets that’s aggressive enough to improve your odds of earning the returns you need, but not so risky that you’ll panic during market downturns and bail out.

The Money article talks about allocation between investment types: stock funds, bond funds, and other investments, without much discussion of various types of each. The authors suggest funds that target a retirement date. That’s not always the best solution, as the fees for “funds of funds” multiply behind the scenes.

First, determine how much risk you’re willing to accept. You could accept the level of risk provided for you by “target” funds, but that’s removing a level of responsibility from the investor. If you want your money to last even in cool markets, take on as much risk as you can handle without making rash decisions if your portfolio decreases.

CNN has an asset allocator tool that can help you determine your ideal portfolio. I’m not happy with the results, however. With my options, a 10+ year horizon, a high tolerance to risk, and a positive attitude about bear markets, it was suggested I invest 20% in bonds, 20% in foreign stocks, 20% in small-cap stocks, and 40% in large-cap stocks. I’d like to consider myself “still young” and investing almost all of my portfolio in stock funds seems more likely to provide me a return higher than inflation.

(Don’t believe the tame 3% inflation numbers people toss around. It’s not widely known that the formula to calculate inflation has changed.)

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Money Magazine is presenting a series of articles focusing on 401(k) accounts. The magazine’s five basic tips can easily be exapnded to cover all long-term investing. Here’s the first tip:

Save Early and Often

Suppose you started work in 1990 with a $40,000 salary. You saved just 2% of your pay but were such a brilliant investor that you put your 401(k) into top-returning funds every year. You would have finished 2005 with nearly $50,000 in your 401(k). Now suppose you… picked mediocre funds year after year, but you were frugal enough to save a full 6% of your salary. You’d hit 2005 with nearly $120,000. That’s right: more than twice as much as the brilliant saver.

There’s some number play in the magazine’s example, in which the authors neglect to mention the remaining 4 percentage point difference between the 2% and 6% saved. That 4% can also be invested outside of a 401(k), in which case, the “brilliant investor” scenario will undoubtedly beat the “mediocre funds” scenario.

But this isn’t what most people would, do, right? Once that extra 4% is in their paycheck rather than in their 401(k), it will get spent, or so the traditional thinking goes. In this case, the money is lost and the “mediocre” investor who defers 6% wins.

The article suggests increasing your 401(k) investment by 1 percentage point each year. I’ve erratically increased and decreased my 401(k) investment since I began working at my current company. When my rent was less than $350 and I was splitting my utilities expenses four ways, I was investing 12% of my salary. I probably could have done much more than that.

At the moment, 8% of my salary is invested directly in my 401(k).

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I’m finally delivering the last installment of MoneySense’s top 25 money tips of all time. This follows parts 1, 2, 3 and 4. Now, without further ado, are the final five money tips, as decided by Canadian financial experts.

Understand how your advisor is paid. In Part 4, some tips were related to finding the right financial advisor. This is an important aspect of completing that task. Some advisors are paid by commission when selling certain products. You can be sure he or she will be looking out for his or her own interests (making money through commission) rather than offering what is truly best for the customer. “[A]sk your adviser to put on paper a complete list of all the ways he or she will derive compensation from your account, as well as estimated amounts… [O]nly by understanding your adviser’s incentives can you judge whether the advice you are receiving is unbiased.”

Consider risk. The article says you should have your advisor put any statements including the phrase “no risk” in writing. Anyone promising high returns with no risk is trying to take advantage. If markets are efficient, any no risk, high return opportunities will be gone long before we regular folk will have access to them.

Ask questions. Ask for credentials. Ask for the fee structure, as we mentioned above. Ask for discounts.

Beware of 10% solutions. I’ve heard many estimates of a 10% annual return in the stock market, but a 5% to 7% return is more likely. The 10% figure that is common excludes fees and was calculated at the height of the stock market book in the 1990s, according to MoneySense.

Write it down. Any investment conditions you would like to set should be written down in a formal agreement. You could call this an “investment policy statement,” and it may outline types of funds (like those containing investments in tobacco, defense contractors, or Japanese auto makers) that you wish to exclude from your portfolio. It should also outline your risk tolerance and your expected returns. “How do you know if your statement is complete? Ask yourself if a new manager who has never met you could, with only that information, handle your portfolio the way you would like. Only if the answer is yes should you be satisfied.”

It took me a while to finish posting the series, but these top 25 tips are excellent suggestions for maintaining personal finances and working with an advisor. Remember that these tips came from advisors, so they may be biased. Some people prefer not to work with advisors. Everyone needs to make a living and it’s often difficult to determine who in the services industry is really there to help the customer rather than their own.

The more educated the customer is, the more of a chance he or she will succeed.

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Last week, I started looking at the top 25 money tips of all time, according to MoneySense, a Canadian finance magazine. I looked at tips 1 through 5, 5 through 10, and 11 through 15 so far, and there have been some interesting thoughts. Some are aligned with mainstream views while others might surprise you. Here are tips 16 through 20.

Be cheap. The financial advisors intereviewed are concerned that paying 2% for investing advice every year cuts into your profits. According to their calculations, you lose a third of your investment to fees after paying this percentage for 20 years. This stresses the importance of choosing mutual funds with low expense ratios. Vanguard offers mutual funds with very low management fees. My mutual funds come from TIAA-CREF, which also offers low fees at the current moment.

Forget last year. While you’re shopping around for mutual funds, don’t be swayed by a fund’s recent performance. “Top performers in one period often lag behind in the next,” according to MoneySense. When salesman try to sell you a fund, they’ll try to sell you something that has performed well recently, but that isn’t always the best choice. The magazine suggests looking for consistency in performance year after year, but that’s not a surefire way to make millions of dollars, either.

Ignore your portfolio — selectively. “Smart investors avoid looking at their portfolios too frequently.” Most of the time, you’re investing for the long term. Daily fluctuations don’t matter much when your time horizon is several decades. If you watch your accounts every day, you may let your emotions take hold and react poorly. The magazine doesn’t say precisely what it means with the “selectively” qualifier, but in my interpretation, you should be watching your accounts for larger-scale patterns. That will allow you to get out of really bad investments or into exceptional opportunities.

Keep it simple. Investing doesn’t have to be complicated. You can instantly create a well-diversified portfolio by looking into one of Vanguard’s Life Cycle Funds, some of which target a particular date for retirement, and adjust the asset allocation automatically. With one fund, you have instant diversification. There’s really no point in delaying investing because you believe it’s too difficult; the longer you wait, the more you’re missing out on compounding returns. Start out with one fund like a Target Retirement fund and as you educate yourself, add what you need in order to diversify further.

Look for the right fit. When searching for a financial advisor, the magazine suggests asking the potential expert what type of clients they prefer to work with. If their description doesn’t match you, then move on. I would go with someone who charges a flat fee rather than a percentage of assets (more about this next time), but I agree with the magazine. For example, if the advisor has only experience with high net worth clients, he or she may attempt to provide products or services not within my price range.

Only five tips remain from the “top 25 money tips of all time.” I’ll take a look at the remaining ones in a following blog entry today or tomorrow.

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Everyone has their favorite money tips, and we’ve been looking at the favorites of some Canadian financial advisors. Here are the first 5 and here are the next. Keep reading this post for tips 11 through 15.

Emphasize rewards. “Think of a budget as pre-spending and emphasize the objects or experiences that you want to spend money on.” This sounds psychological, but putting yourself in a positive mindset can be helpful. If budgeting is somehow designed to be “fun” rather than a chore, you have a better shot of sticking to the plan.

Use debt intelligently. A number of people have been burned by debt and they believe that all debt is evil and must be avoided at all costs. You can compare that to alcoholics that are finally on the wagon (or is that off the wagon?) and who will not drink alcohol again. Anything is find in moderation, including debt. Debt can be used to your advantage in a number of cases. You can leverage your expenses by using a credit card and paying the balance off each month. You can even borrow money to purchase investments (for example, a house) when the risk-adjusted return is higher than the interest you’ll have to pay to borrow.

Take the long view. Ah, compound interest does show up among these tips. The financial advisors recommend automatic investing in a low-cost, well-diversified portfolio. We all know what Robert Kiyosaki thinks of diversification, but others seem to think it’s a good idea, which brings us to…

Diversify, diversify, diversify. “This is the most important rule of investing… Your portfolio should span both stocks and bonds and ideally should include foreign as well as domestic investments.” When you diversify across mutual funds, you should look at what the funds consist of rather than the general description of the fund. If I hold several mutual funds, but the top investment in each is Microsoft, then I’m not getting the diversification I think I am.

Plan your portfolio, then stick to your plan. The plan they are referring to is your asset allocation. Decide on how you want your portfolio divided between items offering varying degrees of risk, and then rebalance your portfolio occasionally (quarterly or yearly for example), so you are not overwighted in one type of investment that had a good run recently.

That should be enough to keep yourself busy for a while. There are ten tips left from our Canadian neighbors, and we’ll take a look at those shortly.

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Those Canadians are at it again. They recently assembled, from experts in personal finance, the top 25 money tips. I wrote about the first 5 earlier, so now I’ll continue.

Invest in your kids. The article talks about RESP accounts, which are savings accounts designed for parents to invest for their children, with a bonus matching contribution from the government. No account in the United States offers this kind of guaranteed return through matching contributions, but the Ford Foundation suggests how these might work.

Give now. This suggestion stems from the gift tax versus the estate tax. It might be beneficial to give funds to your descendants while you are alive rather than leave funds for them through a will.

Talk it over. There are many things in the world in which communication is key. Money issues are no exceptions. “The best and simplest way to avoid problems after your death is to talk things over with all of your kids and other heirs well ahead of time.” The advice seems to be for those ready to pass on their wealth, but communication is important in any instance that involves another person, which includes just about every situtation.

Look at all-in costs. It may cost a certain amount to aquire something, but before making a decision, you will need to consider all costs. The classic example is a house. I’ve heard many people tell me that for “just a little bit more” per month, I could be making mortgage payments on a house rather than renting. That doesn’t take into account the down payment, expenses to maintain the house, taxes, and so on. What about the true cost of a car? Edmunds.com offers a true cost to own calculator that determines the real price of owning and maintaining a specific vehicle. You should always be looking at the true cost to own anything you plan on purchasing.

Set goals. This is another hot topic on personal finance blogs. The article suggests setting short-, medium- and long-term goals for yourself in order to track your progress. If you combine this tip with the first tip, “money is a tool,” you might determine that the goals you set shouldn’t be hard net worth numbers, but they should be goals on a more personal level.

Stay tuned for more of MoneySense’s top 25 money tips.

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Perhaps Canada is just backwards, but I don’t think so. MoneySense asked some of the northern country’s top personal finance experts for their top money tips, and they gave some surprising answers.

Do you think it’s all emergency funds and the “power of compound interest?” If so, you’re wrong. Here is what they had to offer.

Money is a tool, not a solution. Do you accumulate money just for the sake of doing so? Do you save what you earn so that your net worth climbs higher. Are you aching for the positive comments you’ll receive when you post your net worth online? Money’s function is to acquire things. More specifically, money is a tool to acquire “goods and services you find useful.” What good is $50,000 if it never gets used?

How you spend it is more important than how you invest it. “The only way — we repeat, the only way — to amass money is to live on less than you generate.” That’s sensible; live below your means, spend less than you earn. Either axiom is a popluar mantra whether you’re reading The Motley Fool or talking to a financial advisor. Consistently spending more than you have is a voyage to disaster.

Love your job — or leave it. This is interesting. If you look around personal finance blogs, you’ll find people analyzing the latest salary report from CNN or another source. Which college degrees are the hottest? What professions are earning the most money after graduation? If you love what you do rather than choose your profession according to what makes the most money, you’ll work at it harder and consequently earn more money doing so. While you’re enjoying your job so much, you may just forget to retire, having no desire to stop “working.”

Put first things first. I’m not a big Suze Orman fan, but even I agree with her bite-sized nugget of wisdom: “People first, then money, then things.” Spend as much time taking care of your health as you do taking care of your finances. For every hour you spend in front of Quicken trying to make sense of your mess, spend an hour jogging or playing tennis.

Know your spouse. By this, the authors mean understand how your spouse approaches finances. “Schedule a time at least once a month to sit down and discuss money matters with your spouse before minor irritations turn into a major crisis. Better yet, if you’re not already married, take money attitudes into account when choosing your partner.”

These five tips present a good start to the top 25 money tips of all time (as determined by some Canadians). There will be more to follow.

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