Goodbye 20, Hello 30

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Hello readers! I am turning the big 3-0 today, and I am super excited about it! I chose this image, because it’s a great metaphor for my 20’s.  It was crazy and exciting with lots of unexpected twists and turns.  Somehow, I still managed to hang on and enjoy the ride, just like I did on that waterside.  Anyway, lots of my friends are somewhat bummed about leaving their twenties behind, but I’m optimistic for the next decade and all the excitement I am certain it will bring. Here are 30 reasons why I’m looking forward to kissing my twenties goodbye:

  1. Independence. I support myself and do what I want, when I want. Booyah!
  2. Confidence. I know so much more about myself than I did at 20. I have a better sense of my personal and professional goals, higher self esteem, and feel far less shy about expressing myself to others.
  3. Career. I have a solid foundation in my field, and while there are lots of open doors, I am developing a sense of my niche and how to pursue my interest in it. Also, if I change my mind, there is plenty of time to go back to school.
  4. Family. I am no longer at odds with my family because I neither live with or depend on them financially. It has helped my relationships with family members tremendously.
  5. Money. I know so much more than I did at 20, and expect that my knowledge base will just keep growing and growing.
  6. Compassion. I have learned how to relate to others in meaningful ways, and understand where people are coming from. Turns out, there are a lot less assholes in the world than I originally thought.
  7. Community. I am learning how to participate in different communities – personal, professional, local, etc – and to make a difference in them.
  8. Love. I spent a lot of my twenties learning how to love myself. Once I learned to love myself, it opened up the opportunity to love someone else too. Yay!
  9. Forgiveness. I’ve been letting go of things that are bothering me. Instead of avoiding these issues, I confront them so I can forgive, forget and move on.
  10. Discretion. I am way better at knowing when to share different pieces of myself with different people. This has opened up lots more opportunities for networking.
  11. Friendship. I am incredibly rich in friends, and have lots of people who love and support me even when I fly off the handle. But I’ve been learning to give back to my friends, listen to, support, and love them unconditionally the way they do for me.
  12. Listening. I learned how to shut up and listen. It’s not all about me, and listening to others has had a profound effect on my social interactions.
  13. Relaxation. I no longer feel the urge to go out every night of the week. I value the time I spend at home relaxing with a good book or watching a favorite show.
  14. Food. I am eating way less junk food, and more real food. I’ve cut out soda and most processed foods and sweets. I’m eating way more fruits and veggies, and as a result, feel a lot better.
  15. Exercise. I hit the gym, play volleyball, go cycling, go swimming… the possibilities are endless. It’s hard to get started sometimes, but I never regret it.
  16. Vanity. I’m less obsessed with looking perfect, but somehow feel that I look better than ever. Maybe it’s the confidence.
  17. Dreams. I still have a bunch, but it’s pretty damn cool that I’ve achieved some already.
  18. Humility. I’ve had my butt kicked by the real world quite a bit, and I’m ok with that.
  19. Depth. There are many parts of my being, and I have had some time to work on the different dimensions that make up my core. In the process, I’ve discovered whole new pieces of myself that I never even knew existed.
  20. Work. I’ve worked hard, and am continuing to do so each and every day. I’m not afraid of it and I’m not lazy.
  21. Balance. On the subject of work, I have learned when enough is enough, and when to nurture myself. I’ve learned that if I don’t take care of me, I can’t be as productive as possible.
  22. Travel. I’ve been to some cool places. I’ve also lived in a couple of cities in the good old USA. I have lots more travel to do, and every trip I take makes me want to add 3 more to my bucket list.
  23. Budgeting. This is a super important skill that I learned through trial and error. Managing my money makes me feel in control of my life.
  24. Debt. I paid it off. Adios student loans and credit card debt!
  25. Indulgence. I do indulge sometimes, but I know that it’s got to be a treat and not a regular occurrence. Besides, a treat can’t be a treat if it’s a part of you every day routine.
  26. Experience. I buy a lot less stuff and a lot more experiences these days. For example, instead of buying a new pair of boots that I don’t really need, I buy tickets to the ballet instead. I’ve learned that it’s more fun and makes me happier than buying stuff.
  27. Acceptance. I’ve stopped trying to fix everyone and everything around me. Sometimes, you’ve just got to accept that people won’t change because they choose not to.
  28. Risk taking. Lately I’ve been way more open to taking measured risks. It’s opened lots of new doors and opportunities to me. I’ve let go of the rules that I thought existed, and am learning that it’s ok to not play it safe sometimes.
  29. Health. When I get sick, I take care of myself instead of pretending nothing is wrong until I’m really feeling crappy.
  30. Authenticity. I’ve comfortable being me when I am around others. I’m learning to interact with the world in my own skin, with my own thoughts and beliefs, and to be real in my exchanges with others.

I’ve transformed so much over the last decade, and can’t wait to continue to learn and grow. So, twenties, I’ve got nothing against you, but it’s time to move on. Goodbye 20’s and hello 30’s!!!

How To Borrow Money from Random Strangers

Image(Photo Credit: http://www.slate.com)

Need a loan? Thanks to the interwebs, there are more options than a traditional bank loan or heading to the bank of mom and dad. Peer lending, a new(ish) form of digital lending has evolved over the past few years into a loan delivering juggernaut. The premise is pretty straightforward. If you need cash, you fill out some forms, make a plea for your loan, and hopefully get funded by an investor. You should expect to pay interest on the loan, and to pay the loan back at regular intervals over a span of 1-5 years. Interest rates are generally determined by your credit worthiness, and borrowers with good credit will be rewarded with lower interest rates than those with poor credit.

On the flip side, investors now have the ability to deliver funds to people in a pinch, essentially becoming someone else’s bank. The enticement here is that you have the opportunity to collect a decent return on interest. But the rewards do come with risks. As with any bank, there is always the risk that the recipient of your loan will not pay it back promptly, or even at all. Lenders therefore assume the risk that the loans will default, and payments from borrowers arenot guaranteed by peer lending websites.

In order to diminish the risk of default, investors in this platform are generally encouraged to diversify the loans they make. This means spreading out your money by making lots of small loans to lots of different borrowers. The idea here is to diminish the risk that one person won’t pay by buffering your loan portfolio with lots of people who will pay. For example, assume you have $1000 to invest. If you make 100 loans for 10 dollars, and one person doesn’t pay back, it won’t hurt your bottom line that much in the long run. In fact, the interest you make on the other 99 loans should more than make up for the loss. However, if you make 1 loan for $1000 to 1 person, and that person doesn’t pay you back, it’s going to hit you right in the wallet. You will lose your initial investment of $1000 plus the interest you were hoping to make on it.

So next time you need a loan or have a few bucks that you aren’t sure what to do with, perhaps you’ll consider peer lending. Remember that even though these services aren’t guaranteed, they still can provide a useful alternative for the average Joe’s and Jane’s of the world looking to borrow some money or make an investment. Plus, it’s a heck of a lot better than asking your parents!   

Well, Hello There 2014

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The holidays always tend to set people back a pretty penny. Whether it’s gifts, travel, fancy meals, or just general socialization, the holidays can be an expensive time of year. While the time between Thanksgiving and New Year tends to fly by in the blink of an eye, it can leave lots of us with unexpected debt that we will be dealing with for months into the New Year.

Happily, with a new year come New Year’s Resolutions. Try committing yourself to one or two financial resolutions this year to pump up your financial health and recover from the holiday crunch. Here are a few that might tickle your financial fancy:

1) Save at least 10% of your income each month. You need savings, and you need a plan to develop your saving skills. Start out with as little as 1% if you have to, but make a point to get into the habit of saving.

2) Live within your means. This means actively avoiding getting into situations where you will incur unneccesary consumer debt. You may need to forgo some nights out, adjust your plans to socialize, or forget about shopping for the next 6 months, but it could free up the wad of cash that you need to pay the bills on time, or prevent you from using your credit card unneccesarily.

3) Pay down debt agressively. I suggest focusing on the debt with the highest interest rate first, the second highest interest rate second, and so on. If you are feeling overwhelmed, try consolidating debt into a single monthly payment with a fixed interest rate. This could cut down the number of bills you are dealing with significantly, and give you the structure you need to manage your money more effectively.

4) Clean out the closet. Organize a clothing swap with your friends or head to a local consignment shop and see if you can sell any of your old duds. If thos aren’t options, virtual consignment and eBay can be great ways to digitally clean out the closet and make a few extra dollars. You can even donate your old stuff to charity, and might be able to use the donation as a tax write off for the new year (check with an accountant on this one).

5) Get in shape. Studies show that people who take control over their physical health take control of their financial health too. I don’t know if it’s because of the endorphins, or the time spent at the gym, but it is just an extra reason to get fit, so get off the couch and get motivated. You’ll feel good when you look in the mirror and when you look at your bank statement too.

 

Life Insurance 101

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I’m back after a fantastic spring break vacation with my guy. We did plenty of awesome and relaxing activities, but one of the many financial activities we did over our break was buy some extra life insurance. You’re probably thinking, “But Christine, you’re in your 20’s. Do you really need life insurance?” To which I would respond with a resounding, unflinching, “ YES!!”

There are two types of life insurance; term life insurance and permanent life insurance. Both types of life insurance pay out their death benefit if the policy holder passes away.  However, there are some major differences between term and permanent life insurance, three of which I plan to talk about below.  

The first major difference between the two is that term life insurance has an expiration date and permanent life insurance doesn’t. So at 30 years old you could buy a term life insurance plan that lasts ten years. It would expire when you turn 40. However, if you purchase a permanent life insurance plan at 30, it never expires.

Another major difference between term and permanent life insurance is that term life insurance doesn’t build cash value, while permanent life insurance does. With term life insurance, you pay for it, and it covers you for a specific amount of time, somewhat like care insurance or home insurance. With permanent life insurance, you pay for a specific number of years, lets say ten years again, but at the end of the ten years, when you stop paying, the policy doesn’t expire. As the years pass the policy builds cash value and you can withdraw from the policy for things like retirement income or for unexpected expenses. When you take money out from the policy, the amount you borrow gets deducted from what your death benefit would be.

A third major difference is that term life insurance tends to be significantly cheaper than permanent life insurance, especially for young people. Because of the fact that you build value over time with permanent life insurance, it is more expensive.

Depending on your situation, you may want to consider term, life, or both types of insurance. For example, if you are in your 20’s with no dependents (kids), no mortgage, and no health problems, you probably want to get permanent life insurance. It will be cheap because you are young, and the risk of you dying in the near future is pretty small. It will take you a few years to pay off, and then you will be insured for the rest of your life. Plus, it will give you an option for supplemental retirement income in the future.

If you have kids, you probably want to get some term life insurance. It’s cheaper than permanent insurance, so it will be better for your diaper and baby food filled budget. Regardless of whether you are a working parent or a stay at home parent, I recommend getting a term policy. If you’re the breadwinner, you want enough money that if you aren’t around to provide for the family, you know the family will still be able to live.  If you’re a stay at home parent, you should consider getting a policy that is enough to cover the cost of a caretaker for the remainder of your dependents’ childhood years. Remember, if you aren’t around while your significant other is out bringing home the bacon all day, your child(ren) will need care, and care is expensive.

Personally, I’ve chosen to take a balanced approach to life insurance, meaning some term and some permanent insurance. I have enough term life insurance to cover my major financial obligation, my mortgage. This way, if anything were to ever happen to me, I know that D, my fiancé, could stay in our home comfortably. Luckily, I don’t have any other debt, but if I did, I’d want enough to cover any other major debt I had. I also have some permanent life insurance. It’s more costly, but I’m using it as a financial vehicle for my retirement planning. Specifically, I plan to use it to supplement my income upon retirement. Or, in the event of my untimely passing, it would cover my funeral costs and give my family a couple thousand extra dollars for any unexpected expenses associated with my death.

The bottom line here is that you may not realize it, but you need life insurance. Whether you are single or taken, have kids or not, it’s a smart move to ensure your future financial stability and the financial stability of the people you love just in case you aren’t around anymore.  

Spring Cleaning

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The weather finally is getting warmer, the clocks have sprung forward, and it’s time for some spring cleaning! I enjoy cleaning out my closet as much as the next gal, but let’s get serious. Spring is a time for cleaning up everything, including those pesky personal finance tasks that you’ve been putting off.

Here are a couple of things you might want to consider getting done to complete your spring cleaning:

  1. Finish your taxes. If you didn’t do it yet, do it soon because the deadline is April 15. Be sure to use a tax professional to help you get the most deductions possible.
  2. Get a handle on your debt. Start organizing bills and stop putting them aside. Figure out how much you owe everyone, figure out what debt has the highest interest rate, and focus on paying down that debt first.
  3. Clean out your closet and donate the clothes you haven’t worn in 24 months. Did I mention that charitable donations are tax-deductible?
  4. Shop around for insurance. Have you been using the same company for 5 years without comparing rates? You might be able to reduce insurance rates by comparison shopping.
  5. Cancel subscriptions that you don’t use. Have you been receiving a magazine you don’t care for anymore? Are you still subscribing to xBox live even though you don’t use it? Cancel the subscriptions and stop paying for service you don’t use.
  6. Compare shop for cable/internet. Some companies offer a deal if you “bundle” cable/internet and commit to a year or two long contract. If you are feeling really adventurous, cancel cable completely and try using Hulu/Netflix.
  7. Check on your cell phone usage. Is there a new plan available that can better suit your needs? If you cell phone plan expires soon, ask yourself if you really need that fancy new smartphone. Odds are, you don’t.

Minimum Wage Rage

Minimum_Wage_IncreaseRemember your first job? I do. I was 17, and I was working in a local park. It was around the corner from my house, and it was my job to be a “Recreational Seasonal Employee.” The job included tasks such as painting the lines on baseball diamonds, driving pickup trucks rather recklessly, cleaning public bathrooms (major yuck), keeping score for basketball leagues in the park, picking up trash, painting curbs, and playing games of Uno and Rummy 500 with my fellow seasonal employees. It was a fun, easy job for the most part, and I made a whopping $7.00 an hour, which is just below the current minimum wage for New York State.

Was $7.00 an hour good for a high school student with no skills or experience? Absolutely! I had enough money to gas up the car, head to the movies, or hang out with friends. I saved some cash on the side for college related expenses, and stayed with the job until I got my bachelor’s degree.

However, now that I’m older, more experienced, and more educated, I know that I command a significantly higher wage. I have a master’s degree, I’ve learned fantastic skills, garnered great recommendations, and accumulated 7 years of experience in the full-time workforce.

The idea of a minimum wage job is simply not an option anymore, considering my skills, experience, education, and the fact that I want to be financially sound adult. As a kid with no bills, no car, and no cares, $7.00 an hour was a perfectly acceptable wage. However, as an adult with bills, a mortgage, and ambition, $7.00 an hour simply isn’t an option. It represents life at or below the poverty line, and it’s a wage that is simply not enough to live on in the New York City area.

Granted, the current minimum wage in New York is $7.25 an hour. It’s better than $7.00, but I still don’t consider that a living wage for an adult.

With that said, there’s been a bit of political debate going on lately about the minimum wage. Politicians are toying with the idea of raising the minimum wage, with the idea that it will help the economy if wages increase. In New York, there is a proposal to raise the minimum wage from $7.25 to $9.00 over the next 3 years or so, giving minimum wage earners an automatic 24% raise over the next few years! I want to be clear here – $9.00 an hour is not what I would consider a living wage in today’s economy.  But, I also think that it’s not too shabby compared to the 2-4% the average worker gets annually.  

While I love the idea of increased wages for those of us earning the minimum, I’m a bit concerned about the lack of focus on the rest of us. There are lots of “middle class” people out there who have been working away over the past decade or so without receiving significant wage increases. Will they benefit from the increase in wages too? Or will their wages remain stagnant, as they have for nearly a decade?

Hence, I raise the question of the day: What would you do if you had a 24% raise guaranteed over the next 3 years? Ponder and feel free to comment with any ideas for how you would choose to use your newfound dough.

Sunday Shout Outs

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Photo Courtesy of thepoliticalcarnival.net 

This week I had tons of time to browse the interwebs because I was sick at home.  I’m finally feeling better, and although being sick was pretty awful, the silver lining was that I had plenty of time to check out and enjoy other bloggers’ writing.  Here are some of my favorites: 

How To Coupon – An Exercise in Frugality

Fear of Not Having Enough Money – Budget and the Beach

How I Became the Budgetnista (The Bike Story) – The Budgetnista

Went in the Grocery Store for One Item But… – Debt Round Up

You Vs. Debt: A Financial Guide for Controlling Your Expenses - Girls Just Wanna Have Funds

#Tag Getting to Know the “Person” Behind the PF Blog - Living Debt Free Rocks

30 Days & No Drinking – I’ll Cheer to That - Mo’ Money Mo’ Houses

Renting Out a Room in Your House – Moneyglare

10 Positive Financial Habits – No Debt Brunette

Rules for a One Night Stand – Thought Catalog (Not personal finance related, but hilarious)

Mean Spirited Friends – House Haters  – Student Debt Survivor

Thanks to everyone for the well wishes and for reading this week!  See you on the other side of Monday.

xo – Christine

 

 

 

The Cost of Getting Sick

Courtesy of www.spaweekblog.com

How I Feel This Week – Image Courtesy of http://www.spaweekblog.com

Hello readers! I know I’ve been out of touch for the past couple of days. I’ve been home sick in bed, which has resulted in numerous naps, excessive consumption of chicken soup, a trip to the doctor, three antibiotics, and a bottle of Advil. I’m thrilled that I’ve finally mustered up the energy to compose a post, and the events of the last few days have gotten me to start thinking about the cost of getting sick.

This week, as a result of my respiratory infection I’ve incurred the following expenses:

  • Visit to the Doctor, including Strep Throat Test: $15 co-pay
  • Copious amounts of fresh chicken soup: $15
  • 3 Types of antibiotics – $5 each for a total of $15
  • 1 bottle of Advil to reduce fever, shakes and sweats: $10

That comes to a grand total of $55. Certainly not too bad when you add up the amount of services and products I’ve received. I’m lucky to get sick time through my job and have a good medical plan, which really reduced my costs significantly. However, what about those of us who are uninsured, unsalaried or both? In the interest of fairness, I want to show you how much the same exact experience would have cost me if I didn’t have sick time and insurance:

  • Visit to the Doctor, including Strep Throat Test: $220
  • Copious amounts of fresh chicken soup: $15
  • 3 Types of antibiotics: $210 (estimated $70 per antibiotic, which is on the cheap side)
  • 1 bottle of Advil to reduce fever, shakes and sweats: $10
  • 3 days of lost wages @ about $300 per day of work (pre-tax): $900

Grand total of…(digital drum roll)… $1355! That is nearly 25 times the cost of getting sick while having benefits. In my opinion, the discrepancy is ridiculous! However, it reminds me of how incredibly lucky I am to have sick time and health insurance. If you aren’t as fortunate, it’s especially important for you to think about putting some money aside in an emergency fund to cover these types of expenses in the event of an unexpected illness or other emergency.

Well, it’s time for another nap, so back to bed I go. Stay healthy my friends!

 

 

You Need an Emergency Fund. Really, You Do!

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I was recently talking to a friend who told me that she never learned how to save money. Her family never saved, so she never saved. I learned that her family’s financial mantra is “you can’t take your money to the grave, so you might as well spend it today.” Although I’ve heard this philosophy, I was surprised to know that someone so close to me believed it!

Knowing this wasn’t sound financial wisdom, I decided to introduce my friend to the phrase “saving for a rainy day.” It refers to the idea of a savings account where you stash enough money for a “rainy” (crappy) day. Things that could cause said “rainy” day include unexpected emergencies such as getting laid off, illness, large unforeseen expenses (car accident, leaky roof, etc.), and so on. The purpose of the emergency fund is to provide you with the resources to deal with the unexpected challenges that life can something put in your path.

There is a general rule of thumb for saving up enough money to deal with the unexpected. Most financial planners will tell you that you need to save up enough money to cover three to six months of expenses (rent/mortgage, transportation, food, bills, etc.) for your emergency fund. The money in this fund should be liquid, meaning you can quickly, easy access it. This way, if you are laid off/get sick/incur a large expense, you can easily withdraw the money you need to support yourself while you get back on your feet.

If the idea of saving up six months worth of bills seems overwhelming, start out by setting a series of more immediately attainable goals. Try to start by saving up one week’s worth of expenses. Once you’ve got one week, work towards saving up one month’s worth of expenses. From there, work towards two months, and so on. Setting up attainable, incremental goals will help you feel feel good about the milestones you reach on your way to setting up your emergency fund.

It’s true you can’t take your money with you after this life, but setting up your emergency fund can help you deal with the financial challenges that life brings. You never know when your “rainy day” will come, so get prepared and start saving.

Stop Putting it Off… Get Financially and Physically Fit

Cartoon courtesy of davewalkercartoons.com

Cartoon courtesy of davewalkercartoons.com

Readers, I’ve got an ugly admission to make to you today. It’s finally time for me to come clean about a little vice of mine. I love to procrastinate. I really do. There’s nothing like not doing what you should be. I relish my lazy moments of nothingness, and although I’m not exactly proud of this character flaw, it’s been a part of me for years.

It started years ago, with me putting off writing papers in high school. My skill at procrastinating only improved in college, and at this point, I’d consider myself a master of the art. However, there’s one thing that I’m making a concerted effort not to procrastinate these days: working out.

Hitting the gym is easily my favorite adult activity to procrastinate. It’s so easy to sit on the couch, especially with the excuse of blogging, instead of walking down the street to the gym for a workout.

Strangely, through the years I’ve learned that the more I work out, the more I’m in control of my personal budget, finances, and life in general. It’s an unusual relationship, but there is balance in my life between my bank accounts and my commitment to the gym. Going to the gym gives me the motivation and confidence to deal with my life, especially financially.  When I take responsibility for my health, I do so in every aspect of my life, from the physical to the financial and beyond.  As a result, the more in shape I am, the more in shape my money situation is. The less in shape I am… well, you get the idea.

Knowing this, I’ve committed to my personal and financial fitness. I’ve been hitting the gym at least 3 times per week consistently and dealing with financial challenges immediately, instead of putting them off. Hopefully I’ll reap two excellent results of this habit: it will this increase my bikini-readiness for the spring/summer, and will also help keep me motivated to stay on my personal path to financial freedom.

What do you think readers? Do you find that working out helps motivate you to take charge of your money? Do you think there is a connection between the two or is a bunch of malarky?