Are We Really Smarter?

Even though Mrs. Frugal Rules would say I am a pessimist, (I consider myself a realist, but that’s besides the point) I do like to hear the good news first. The good news, if you want to call it that is as follows and has occurred over the past four years:

• 8% increase in people paying off their credit cards each month to 49%
• 5% increase in people having a three month emergency fund to 40%
• 4% increase in people having no problems with monthly bills to 40%
• 9% increase in people satisfied with their financial health to 25%

You might take a look at these numbers and think to yourself that things are on the upswing. Well, let’s take a look at the bad news:

• Only 41% spend less than they earn
• 56% do not have a three month emergency fund
• 34% do not pay even the minimum on their credit cards each month
• The average person from the survey scored a whopping 57% (an F in my books) on a 5 question basic financial literacy test

Now I know there is some debate about the need for an emergency fund within the personal finance community and that is not really the point of this post. That is something I have discussed in the past and really what I am seeing here, ultimately, is a spending issue and emergencies, or the lack thereof, is inconsequential until the spending problem is addressed. To see that only 41% spend less than they earn means that nearly two thirds of the people surveyed are spending more than they bring in each month and that is backed up with the F score on the financial literacy test. As an aside, I took the more expanded 12 question test and got 11 of the 12 correct; given that, I assume the 5 question test probably wasn’t that difficult. I know that we have seen some tough times over the last five years and that might be at play here, but I hesitate to say that tough times are ultimately to blame. So, if there are some people that have been unable to make headway, what does it say for the others who’re not in that position? In my opinion, it shows either a comfort level with having debt and/or living paycheck to paycheck, or it shows a lack of knowledge…not increased levels of being smart.

Do Your Surrounding Circumstances Matter?

What I did find interesting, though not terribly surprising, about the survey results was that they pointed to a number of influencing factors. According to the survey, where you live, how much money you make and your education level have a somewhat significant impact on your level of financial literacy and ability to avoid debt. To be fair, I am sure this plays some role for some, but I highly doubt it as a blanket statement. The study found, surprise surprise, that we emulate those we’re around. Meaning those who spend gather around those who spend and those who save/invest gather around those who do the same. I know this plays a role, but at what level does this become an excuse? We all have our excuses that we like to use in various parts of our life, heck, I know that I use them. The problem comes in when we believe those excuses and use those as reasoning to justify our problematic behavior. This is not to disparage those who do not know better, it is meant as a call to take action and take responsibility for our behaviors. We all do not have the benefit of receiving good financial education that results in us being financially literate, but I do know that there is a wealth of resources available to help teach the basics and fundamentals so we can stop making excuses and start being responsible for ourselves. As one who has benefitted from those resources myself in order to turn around my financial life I can’t encourage you enough to seek them out if you have the need.

Ultimately, it’s Simple Math

So, what are we to do with all these numbers? Are we really smarter in regards to personal finances…I think not. While there are improvements, I am still not a buyer in believing that we’re smarter with personal finances. The question becomes then, how can we change that? Ultimately it comes down to simple math…spend less than you earn. It really is as simple as that, even our five year-old understands that. If you only have a certain amount of money coming in each month then you must spend less than that and save or invest the rest. You can budget or not budget, use an envelope budget or not, you can have an emergency fund or not…what matters is how spend your money. Beyond that it comes down avoiding temptation to spend, being frugal when you do spend and making the remainder of your money work for you as opposed to being a slave to it. Amidst all the theories, preferences and ideas it really does boil all down to that – spending less than you earn and save the rest. If my five year-old can understand it, then I am certain the rest of us can too.

What do you think? Are we really smarter when it comes to personal finances, or are we still coming up short?

Photo courtesy of: Anton FomkinSimilar Posts:

• Find Financial Safety With an Emergency Fund
• How to Spend Money Like the Government
• How do Credit Cards Make Money? I Found Out the Hard Way
• Frugal Friday: Blog Posts That Ruled This Week, I am Tired Edition
• How Should You Spend Your Tax Return?

The post How Do You Define Smart? appeared first on Frugal Rules.

Today, I’d like to discuss a topic that becomes increasingly important as you reach for financial stability – credit scores. As a personal finance journalist, I spend tons of time reading stories from several different personal finance sources. Through my reading and, emails that I receive from readers of my work, I’ve noticed a trend in crucial questions revolving around credit scores. More importantly, these questions tend to yield different responses depending on who you are talking to. Here are my three favorite and most challenging credit score questions and the best answers that I can give to them…

Question #1: How Do I Protect My Credit Score If I Think My Identity Has Been Stolen?

Identity theft is a very real concern, especially for those consumers who are working to build and maintain great credit scores. Knowing that if your identity is stolen, the thief can cause irreparable damage to your credit scores, you might want to know how to protect yourself if you are a victim.

The credit reporting agencies are no strangers to identity theft themselves. They’ve come up with detailed algorithms to help detect it. But, the best and fastest way to detect identity theft is to track it on your own. If you find anything before the credit reporting agencies do, you can request a freeze on your credit report. The rules for these reports and how to file them varies by state so, the best way to find out how to do it is to visit the websites for the credit reporting agencies and research the rules in your state. If you prefer, you can also call them and ask a few questions.

Question #2: How Will Closing A Credit Card Effect My Credit Score?

The answer to this question varies depending on who you ask. However, without specific details on your credit profile and the account you plan to close, no one can tell if how closing an account will affect your credit score or if it will even have an effect at all. This is because there are several variables that come into play when you make any financial decision. In this case, here are a couple of them:

• Debt To Available Credit – One factor that is proven to make a difference is your debt to available credit ratio. If it is high, this means that you’ve used most of the available credit allotted to you and you are most likely a high risk. Therefore, if you are closing the credit card with the most available credit, you might want to think twice.
• Amount Of Revolving Credit Lines – If you have too many credit card accounts, you become more of a risk to the lender as well. Therefore, if you are choosing 1 card of 6 to close, it might be a good thing for you depending on other variables.
• Average Life Of Revolving Credit Lines – A consumer that keeps their accounts open and active in good standing for a long time is a good consumer to loan money to. Therefore, the average age of your credit cards comes into play here. If you are closing your youngest account, it could yield a positive effect.

The bottom line is, the credit reporting agencies have their own detailed algorithms to come up with your credit score. These proprietary algorithms are kept secret for good reason. However, through research and case studies, we are able to predict if one financial decision or another will be a good idea. That being said, generally, if you feel that the financial decision you are making is the best for your financial stability, by all means, make the decision! The credit score system is designed to reward those who make an active attempt to become financially free!

Question #3: How Long Will It Take To Improve My Credit Score?

If you’re asking this question, your credit score is in one of two places, either 0 or poor in most cases. If your credit score is absolute 0, meaning that you have absolutely no credit at all, improving your credit to a loan-worthy score can happen in as little as 12 months if you make great financial decisions. However, the time it takes to improve your credit score can be substantially longer for those who have experienced bankruptcy or recently settled incredibly past due debts. I got this question quite a bit in emails so, I recently wrote the article “How Long Does It Take To Improve Your Credit Score” to address the demand for the answer. For more details on how long it might take you, feel free to read that article.

Do You Have A Question That You’d Like To Ask?

If you are not sure about how a financial decision may affect your credit score or, anything else that has to do with credit scores, I’d love to help. Simply leave a comment below with your questions and I will respond with the answers for you. Please remember that I will be responding in the comments here so please check the box for comment updates after asking your question.

The preceding was a guest post by Joshua Rodriguez, proud owner and founder of CNA Finance and avid personal finance journalist. Join the discussion with Joshua on Google+!

Editor’s note: Improving your credit score is not something I have talked about much , so I do appreciate Joshua’s insight on this. I find that this is an area which is confusing for some, so please do your due diligence before taking serious action.

Photo courtesy of: Casey KonstantinSimilar Posts:

• The Cost of a Bad Credit Score
• A Man’s Credit: Taking Responsibilty of Your Financial Life
• Finding Qualified Help for Eliminating Debt: 5 Steps
• How do Credit Cards Make Money? I Found Out the Hard Way
• 5 Reasons Why I Love Budgeting

The post Answers To Challenging Credit Score Questions appeared first on Frugal Rules.

• Taking the Plunge is not Just for Polar Bears
• The Risks and Rewards of Taking the Plunge
• Why I Love Being Self-Employed
• Why I Hate Being Self-Employed
• What the Hell Have I Done?!
• Freedom Without Boundaries is Enslavement

What My Quitiversary Means to Me

I remember the months leading up to making the decision and we were discussing on a seemingly nightly basis the issue of whether or not we could do it. We looked at our finances inside and out. We came up with our bare minimum budget and looked at what kind of cash reserve we’d need. We also looked at the client base Mrs. Frugal Rules had managed to build up and the prospects she had created. Those were all the easy parts. The difficult part was the three little blessings we have and the fear of what it would look like and the fear that we would be living off of government cheese and in a refrigerator box by month three. I don’t know if it was sheer stupidity, or the desire for something more, but we did take the leap after much introspection. Now that we’re a year in to this I can look back and see how I have grown personally and professionally and what that means going forward. It means that I am no longer going to let fear hold me back. For years I had the desire to be my own boss and start something from the ground up and I did nothing about it. There are many reasons why I did not, but fear was no doubt the leading cause. It also means that I am no longer looking at what’s expected or what is considered “normal” , but am pushing the boundaries to find something that works for us. Ultimately, it has meant being more comfortable with the idea of creating something for ourselves in order to provide a better financial future for our family and enjoying the flexibility that comes with running our own business. I have said it before and it warrants repeating, that freedom of creating something yourself and being paid directly for it is quite intoxicating and once you get that taste you want more of it. I will be the first to admit that running your own business is not for everyone and that is ok, but I find it to be incredibly rewarding. Here are a few of the other rewarding things I have discovered since quitting my job:

• While I wanted to tell my boss to take his job and shove it I am SO glad that I did not.
• There will be times that you doubt yourself. That is ok; it can and does make you stronger.
• Keep your goals in front of you. As a visionary, that is what keeps me going many days.
• There will be both good days and bad days; learn to appreciate them both.
• You may have to work on a Holiday, but you’ll also get to take the next two days off…learn to be flexible. (I am still learning that one).
• People will lie right to your face. Don’t count on that new client until you get the first job. Don’t spend the payment until you see the check.
• Contracts, contracts, contracts…enough said.
• People will look at you quizzically when you tell them what you do…I guess advertising is a confusing term.
• Some will think that you have the easiest job in the world. Newsflash…you won’t be working for yourself long if you sleep in until 1:00 p.m. to watch Jerry Springer reruns and to give in to your Cheetos and Coke habit.
• Don’t work yourself in the ground, you’ll only pay for it in the long run.
• There are few things in the world as gratifying as seeing something you have created benefitting others.
• It still is possible to be a part of something bigger than yourself. It’s simply more rewarding when you’re the one who helped create it.

I am sure there are other things I could list, but these are the ones that come to my mind at first thought. I would also like to add that many of these things can also be applied to money and finances. We have seen it personally ourselves and when it comes down to it you need to do what’s best for you and your family, not to mention the fact of what will put you on more solid ground in the long run. It’s funny how life can be that way sometimes. You learn something in one area and see how it can be translated to another. The key is, do not let fear hold you back! Find what you want and go for it. Enjoy the ride too because that’s half the fun.

What about you? What is something you want but are being held back from for some reason? What do you think the most rewarding thing would be to you in running your own business?

Photo courtesy of: Kalyan ChakravarthySimilar Posts:

• Taking the Plunge: Budgeting and the Entrepreneur
• The Risks and Rewards of Taking The Plunge – Part 2
• Taking The Plunge is Not Just For Polar Bears – Part 1
• Taking the Plunge: Why I Love Being Self-Employed
• Taking the Plunge: Why I Hate Being Self-Employed

The post Taking the Plunge: 1 Year Quitiversary!!! appeared first on Frugal Rules.

It was another great week for Frugal Rules in the blogosphere. Thanks to everyone who gave Frugal Rules a shout out or included us in their blog carnival. Have a great rest of the weekend everyone!

Shout Outs

Carnival of Financial Independence #13 on Reach Financial Independence

Carnival of Money Pros on Master The Art of Saving

Lifestyle Carnival on Faithful With A Few

Finance Carnival for Young Adults on The Happy Homeowner

Work Life Balance and Goal Setting Carnival on Time Trading Guru

Carnival of Retirement on Hurricanes, Panties and Dollars

The Wealth Builder Carnival #129 on My Wealth Builder

Stock Carnival Ecstasy – June 3, 2013 on Fast Swings

Personal Bankruptcy Blog Carnival – June 5, 2013 on Personal Bankruptcy Canada

Carnival of Financial Planning on Money Soldiers

Working at Home Blog Carnival #343 on Working at Home on the Internet

Yakezie Carnival on Growing Money Smart

Photo courtesy of: MasatsuSimilar Posts:

• Frugal Friday: Posts That Ruled This Week, it’s 2013 Edition!
• Frugal Friday: Posts That Ruled This Week, College Football is Over Edition
• Frugal Friday: Posts That Ruled This Week, the BCS Edition #2
• Frugal Friday: Posts That Ruled This Week, the BCS Edition #3
• Frugal Friday: Posts That Ruled This Week, the BCS Edition

The post Shout Out Saturday #22 appeared first on Frugal Rules.

For that can of worms, here it goes…While I understand and applaud the intent of the ban, I have serious misgivings about it. My first problem with the ban on large sodas is does the government really have the right to tell us what we can or can’t consume? Not that I am one to go buy a 64 ounce Big Gulp to have with my dinner, but what right does the government have to tell me that I can’t have it if I want it? I don’t want to live in a country that tells me what I can or can’t consume. That aside, my biggest concern is the precedent allowing a ban like this would have. I know that I do not live in NYC and it would not impact me now, but how soon would it be until something like this is passed in other cities or even goes to a national scale? Allowing a ban like this would only create a slippery slope, in my opinion, and could open up other consumer goods to be banned which makes me very uncomfortable.

Now that half of you are ready to throw some virtual stones at me, let me take a step back. I fully recognize that we have a significant health issue in the States. The numbers in regards to obesity and other diseases are staggering and I completely understand that. I also understand that this is putting yet another stressor on our completely messed up health care system. There is no doubt that there are changes which need to be made in both areas in order to improve the situation for our country. This is also not to mention the financial impact of choosing to regularly consume such a large amount of soda. The short term aspect is an obvious one, soda can be expensive and when you drink a lot of it that means that you’re spending money needlessly on something that brings little to no nutritional value and can be directed to other areas of your grocery spending. The long term aspect is virtually as obvious from a financial standpoint, the more sugary soda you drink, over time, the worse your health may become and thus cost you more as you get older to provide for your health care needs. All that said, I do not want the government dictating what I can or cannot consume as I believe once you give an inch then the government will take a mile.

Now that I have opened the can of words, I want to know your thoughts and please keep them respectful. I am totally fine with disagreement, just keep it clean. I especially want to know your thoughts on this matter if you live in NYC and see it much more closer than we do just seeing it on the news.

It has been another great week in the blogosphere. I came across some well put together blog posts this week. I do want to thank everyone for answering my call for guest posts last week! I have a couple of other openings for another week I’ll be gone in July, so if you would like to guest post on Frugal Rules, simply contact me and I’ll get you added.

Blog Post of the Week

How I Paid Off Over $50,000 Of Credit Card Debt on Debt RoundUp

My favorite post this week, by far, was that of my blogging buddy Grayson. There were many reasons why I enjoyed it, probably because I can relate to it so much due to my own bout with credit card debt. Grayson touched on the salient point that all too many miss by saying that it comes down to figuring out the difference between wants and needs. I know it was something that I struggled with in my crazy credit card spending days and once I realized that and put a plan in place I was able to put my head down and tackle the debt. I also loved this post because Grayson laid out how he paid off his debt in very important, yet simple steps that build on the previous one. If you’re currently in debt, I encourage you to read Grayson’s article to get proof that paying off a mountain of debt IS possible.

Other Blog Posts That Ruled

Our 3 Best Money Choices – #2 on Money Counselor

The Rule of 72 and Compound Interest on Common Cents Wealth

Reader Writes: Short Term Savings on Money Smart Guides

Should You Take on Debt to Get a Tax Break? on Celebrating Financial Freedom

How to Overcome Laziness and Save Money in 5 Easy Steps on Canadian Budget Binder

Is The Stock Market Rigged? on Out of Your Rut

Odd Search Terms

What to buy my Dad if he likes beer…Let me think about this – BEER!

Can you use napkins to wipe your butt…I would be concerned about chafing issues.

He drove her to literally pull her hair out…He sounds like a winner!

How to become high…I could tell you, but this is a family blog!

Wife spent $300 on shoes…thankfully something Mrs. Frugal Rules does not do!

Can you work while taking 12 years of college…It sounds to me like your focus should be on college & not working!

Why do I scratch my head when I think…You have to power up your brain somehow!

Blindfolded and bound…I don’t even want to know!

What are your thoughts? Yay or Nay on the government hand on your soda? Do you have anything fun planned for this weekend?

Photo courtesy of: Rex SorgatzSimilar Posts:

• Should We Really be Concerned About the Fiscal Cliff?
• Frugal Friday: Blog Posts That Ruled This Week, 100 Posts Edition
• Frugal Friday: Can You Ride Your Motorcycle Into Retirement?
• Frugal Friday: Posts That Ruled This Week, the Election is Over Edition!
• Frugal Friday: Posts That Ruled This Week, the Clark W. Griswold Edition

The post Frugal Friday: Should the Government Get Its Hands Off My Big Gulp? appeared first on Frugal Rules.

When I was thirteen, my father started giving me money lessons. He didn’t focus on how it worked, but instead helped me develop a good relationship with money. He taught me how our emotions drive our spending, so if I wasn’t careful my emotions, be it anger, fear, frustration or even happiness could leave me with an empty pocketbook and no money for the things that truly mattered to me. His lessons changed how I viewed money and ultimately led me to became a Certified Financial Planner, so that I could help others build a positive relationship with their money. Financial literacy is my passion and I love what I do, but there are some troubling trends that concern me. We live in amazing times, yet our financial literacy continues to erode year-after-year.

• 61% of adults surveyed in the National Financial Capability Study received a failing grade in 2012 versus 58% in 2009 according to CNBC.

I look at my daughters and their friends who want to conquer the world, but I know without a strong grasp of finances, the world might conquer them instead. There is great debate around who is responsible for teaching children about money. Some say parents; some say schools. I say both. Parents are ultimately the best teacher, but so many are unaware they even need to talk to their kids about money or are too embarrassed by their own lack of financial knowledge. Even if kids start learning about personal finance in school, parents are not off the hook. Our kids are always observing us, including how we handle money. Some parents are unintentionally passing along poor money habits and beliefs to their kids. This leads some to wonder who we should educate first: parents or kids? It’s a little bit like the chicken or egg debate—does it really matter who came first? Let’s educate both. What I don’t want is another generation of kids to grow up financially illiterate while we wait for their parents to get educated. This cycle stops now. There is no reason why parents and children cannot learn about money together. In our family, we refer to our money as family money and often give the girls a voice in how we use it. This is something I strongly encourage you to do as well and suggest you start by setting family save, spend and share goals.

Save Family Money for What Matters Most

You can decide together or beforehand, but just make sure the goal is something the family will be excited to achieve and is obtainable. For us, this is often our family vacation. We announce our plans over a favorite meal, and then we talk about it, often.

Success Tip: This also becomes your answer when your kids get the “I wants”. Instead of saying “no,” remind them of the family save goal. For example, “I like that doll too. It’s really nice! But remember, we’re saving our money for our big trip to Disneyland, which is so important to me. Is it important to you too? Good. That’s why I’m choosing to use our family money to go to Disneyland with you over the toy. What ride should we go on first?” Essentially you’re eliminating any feelings of deprivation by refocusing their attention on the family goal.

Spend Family Money and Make Conscious Decisions

Here is where you really have a chance to flex those decision-making muscles as a family. Every day we spend money and sometimes without much thought. The real trick to handling money is making conscious decisions that honor your values and goals. One way we demonstrate this is through our entertainment budget. I give the girls various options, with one choice using the entire budget and others of varying cost. To my surprise, they often choose the more inexpensive options, so they can do more things. But best of all—they understand that afterwards the money is gone and they don’t beg me or their Dad to spend money on other things.

Success Tip: Create a grocery challenge with the goal to lower your monthly bills and use the extra money for a fun family day (unless the money is better served going towards debt repayment). Have them help you plan meals and search for coupons and sales.

Share Family Money to Enrich Lives

At a recent event, I asked a group of children how their family shared their money. Absolute silence. Now, I know for a fact their parents are philanthropic, but clearly their kids were unaware of how their parents were sharing their time and money. Our girls are very aware of the various organizations we support and when appropriate, they help out too. I want my daughters to not view sharing as something they ought to do, but something they LOVE to do. At first there was a little trepidation on their part, but I’m proud to say that today they are eager to share their money (and even their toys and clothes) with others.

Success Tip: If your kids are new to sharing, I would start with something tangible, rather than sending a check. Buy groceries together and deliver them to your local food shelf. See if they can even restock the shelves with the groceries you bought.

Wait … There’s Just One More Thing You Need to Do to Assess Your Financial Literacy

This should all seem easy and fun. And truthfully, learning about money is fun because you are ultimately figuring out the things that matter most to you and spending your money on those things, rather than keeping up with the Joneses and buying things you care little about. However, there is one caveat. Before you leap into the fun part—dreaming about how you will use your money—you need to know how strong your financial foundation is to ensure it can withstand your goals and dreams. To get you started, I’ve included a Wellness Checklist to help put your financial house in order. As parents, one of the most loving acts we can give our children is the gift of financial literacy. The ability to make smart money decisions will help them create the life they want and support their long-term financial well-being. They will now have the tools to truly conquer the world.

Shannon’s Bio: Shannon Ryan, CFP® is a Mom on a mission to help busy parents teach their children simple, value-based principles that guide their money decisions and support their long-term financial well-being. Visit http://theheavypurse.com/to learn more on how to raise Money Smart Kids.

Editor’s note: I love Shannon’s thoughts here, which is exactly why I asked her to guest post. I could not agree more that giving our children the gift of financial literacy is one of the most loving things we can do. If you have the time, please take a look at the Wellness Checklist Shannon included, it’s awesome!Similar Posts:

• Financial Literacy: Taking Your First Financial Steps
• How to Save Money and Not Spend $300K Raising a Child
• Retirement Planning and Saving For College: Can They Co-exist?
• 6 Simple Ways to Automate Your Savings
• My Wife and I Split

The post The Gift of Financial Literacy appeared first on Frugal Rules.

The issue that I am looking at this month comes from a Yahoo Finance article I read a few weeks ago that covered the topic of amateur investors increasingly raiding their 401k(s) and retirement accounts to purchase property. The story highlighted a 48 year-old woman, with heart disease, who took a $50,000 loan against her 401k in order to purchase an investment property. The lady was quoted as saying that since she has heart disease she’s looking to further diversify and views purchases like this as life insurance. I’ll readily admit that while many should have life insurance, it’s not a necessity for all, and last I checked real estate was not life insurance. The ultimate driver behind this, as quoted by one analyst, was that people are lacking trust in the stock market and thus viewing the hard asset of real estate as the appropriate destination for these funds.

Should We View our 401k as a Coffer?             

I’ll readily admit that investing in the stock market is not for everyone and there is real fear out there amongst investors who lost a big chunk of their portfolios during the Great Recession. That fear is real, but does that really mean that we should avoid it altogether? No, it doesn’t. The point though, is that while it may be convenient to take loans against your 401k and there may be times where it may be beneficial to you, your 401k should not be viewed as a coffer from which to take money out and throw it at other things. The inherent problem behind taking a loan from your 401k is with changing jobs or encountering unemployment; you run into the risk of early withdrawal fees if you’re younger than 59 ½ as well as income tax on any unpaid portion of the loan. When you’re talking about tens of thousands of dollars in a 401k loan then you’re potentially talking about a decent chunk of money, not to mention the risk of loss of value in real estate.

Diversification is Good – to a Point

I’m not meaning to bemoan owning real estate as we know people who invest in real estate. I think that owning real estate is a great way to further diversify your investing. If we had the time and resources in the Frugal Rules home then we would likely look at it. The housing market has been showing signs of being on an upswing and I think it can be a great tool to use as you seek to build wealth. That said, the article cited that 401k raiding is increasing and that some people are looking to purchase multiple properties. I think it’s great to pursue something like this, as long as it’s in your best interest. As opposed to raiding retirement accounts why can’t there be an option to raise the cash outside the 401k and use that as a down payment on a house? I guess my point is that, as with any type of investing,  there needs to be balance.

The Problem of Following the Herd

The real issue I have with this growing practice is the problem of following the herd mentality. Herd mentality thinking can take place in various scenarios and we see it all the time in the stock market and we’re seeing it here. The article stated that there has been so much demand for real estate that property prices are starting to rise. Not only are individuals snapping up properties, but Wall Street has taken notice; hedge fund managers to private equity investors to foreign investors are all snapping up property because prices are going up. Added to that, many of these properties are also located in the same locales that were going crazy prior to the downturn – Las Vegas, Phoenix and several cities in Florida. All of this has resulted in many retail investors seeing as little as 2% return, if they’re lucky, by chasing after this real estate. What all this means for those that are raiding their 401k(s) to try investing in real estate is that they are, generally, playing with fire for little potential return and are taking a major risk with their retirement planning. For those that do not have a solid cash cushion or willingness to deal with the unique problems surrounding owning real estate, they could end up in a situation where they’re unable to repay their 401k loans. Additionally, they also have to deal with the real possibility that they could earn a much better return by simply staying in the market.

Please don’t get me wrong, I believe that investing in real estate can be a great thing but it needs to be done within reason just like investing in the stock market. The issue is that investors need to do what’s right for their specific situation and not chase gains, wherever those may be, because they see others doing it. I know that not all people who take loans from their 401k(s) will end up miserably, but it is not a risk I would take on without doing my research first.

What are your thoughts? Would you borrow against your retirement accounts to fund a real estate purchase?

Photo courtesy of: Sherwood CCSimilar Posts:

• Why I Don’t Invest in Penny Stocks
• 5 Things I Wish I Knew Before I Graduated From College
• 5 Investing Mistakes That Are Easy to Make
• Is it Time to Get Out of the Stock Market?
• Options to Avoid When Paying Off Debt

The post Things I Would Never Do: Raid My 401k to Buy Property appeared first on Frugal Rules.

Why, when you’re in a crowded place, do people completely space seeing a double freaking stroller being pushed? I mean, it’s the size of a Subaru people, how ON EARTH can you miss it? Oh yeah, me nicking your heel after you nearly took out my 3 year-old is just me telling you to start paying attention…and I saw that glare of annoyance you shot at me.

Why some people insist on going through the self check-out lane at the grocery store with a cart and a half of crap – can’t they read? Worse yet, why do the checkers allow them to come through? It really should not take 20 minutes to buy a bag of flour because you have 50 frozen dinners to check out.

In late spring in the Midwest, why on earth do the local stations insist on taking up half the screen with warnings about the weather, isn’t the streamer at the bottom of the screen enough?! (I know, first world problems.)

Why our three year-old races out of the bathtub butt naked to run around the house and stand in front of the big bay window in our living room? This really does not rile me up to be fair, just more so makes me shake my head and hope that someone from child protective services isn’t driving by our house.

How difficult can it be to park in a parking spot? It’s two big yellow (I might give you a pass on the white ones) lines that demarcate where you are to put your vehicle. Is it REALLY that difficult to put your car between them? If you’re that blind then I hope you do not drive that way!

If you’re looking to buy a house, don’t buy a corner lot. We made that mistake and people seem to think it means we’re the neighborhood dump. I mean, seriously people, you couldn’t wait the two blocks to your house to unload that lovely BK bag in my front yard?

Back on the topic of having a corner lot, why is it that we’re a magnet for every lawn care, security system, and food delivery truck salesperson known to man? I know that we may be easier to get to, but don’t you have a list that shows how many times we have shot your company down and why on earth can’t you take no for an answer when I say that I am not interested as we’re in the middle of dinner? I guess the big “No Soliciting” sign is too difficult to read and is there for merely decorative purposes.

Why on earth does our 16 month-old insist that his head is a weapon to be used at any and all times? Again, not a complaint, more of an occupational hazard, but that thing can do some serious damage. He nearly broke my nose a few months ago, Lol!

If you’re going to tail me on the highway and then pass me at least have the decency to go faster than I am. I know that driving can be a bit monotonous, especially on long road trips, but I am in no mood for the pass and slow down game. It’s called cruise control and if you don’t have it, learn how to not fluctuate your speed by 25 mph at the drop of a hat.

I like to multitask with the best of them, you can even ask Mrs. Frugal Rules that as she hates it when I multitask while we’re trying to have a conversation. But, must you really talk on your cell phone while on the can? I know time is short, but for the love of Pete, I really don’t care to listen to your conversation while I am doing my business.

I am a straight shooter.  I say what I mean and I mean what I say. Life is too short for games and I can’t stand it when I feel like someone is playing games with me. If you have something to say to me, just say it. Don’t blow smoke up my skirt. ( I haven’t worn one since college anyway…and that is a VERY different story for a different day)

This last one is for the lovely Mrs. Frugal Rules…when is she going to learn that our five year-old has no concept of time? I know that having her bestie (I NEVER thought I’d be using bestie on Frugal Rules by the way) over for a sleepover is fun and exciting, but do I REALLY want to hear about it nonstop every day for the next three weeks?

Ok guys, I turn it over to you. What riles you up or what just downright ticks you off?

Photo courtesy of: Efrain LugoSimilar Posts:

• Taking The Plunge is Not Just For Polar Bears – Part 1
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• 4 Simple Ways to Make Filing Taxes Easier Every Year
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• What is Mobile Wallet and is it Worth the Risk?

The post Rant Alert: What Riles You Up?! appeared first on Frugal Rules.

The Economic Downsizing Has Done a Funny Thing

In my previous post I discussed the conversation my family had over Christmas break in which my Dad said that companies do not care about their employers anymore and my younger brothers argued that they never really did. The picture my Dad painted was one of the “good ole’ times” where you put in your 30 or 40 years with one company and you would retire with a nice pension, social security you could count on and a gold watch. I am not an economist but I do know that we have had numerous recessions since my Dad’s generation joined the workforce, but how many of them were as bad as The Great Recession? The Great Recession caused, on some level, businesses to cut back and the area that many chose to cut back on was on the number of employees they carried. It seemed as if every day there were more companies announcing layoffs and cutbacks and you were almost guaranteed to know someone who had lost their job. I was able to come through relatively unscathed with only a 3% pay cut but still had my job. As we look back we can see the impact of these decisions on the unemployment rate and ability for many people to retain decent jobs. We personally know others who’ve had to resort to things like taking on multiple jobs to make ends meet. The other big thing that I believe we have seen arise out of this is a desire from people to exert greater control over their livelihood and do things like start their own businesses. I believe this is a stark difference in what my father’s generation saw and has created, to a certain extent, a climate where we are acting in light of the changing corporate culture. The question that rolls around in my mind now is what impact this shifting sand will have.

Is this a Generational Issue?

The argument my father made in regards to my brothers’ beliefs is that they come from Gen Y and thus are generally out for themselves. While his statement was just a bit of an overgeneralization I do believe that he struck a chord that we hear ringing in the marketplace today. In prior generations individuals (in general) were more comfortable staying with their employer for years and it was frowned upon if you were job hopping. Bring this forward to Gen Y and job hopping is almost expected. According to this Forbes article 91 percent of Gen Y’ers polled expected to be in their jobs less than three years and expect to have 15 to 20 jobs over their lifetimes. Is this necessarily a bad thing? I think not. I think it points to what the article states as Gen Y’ers generally want to work for companies that share their values and I think that’s great and is part of the reason why I left my last job as a stockbroker. Beyond that, more individuals are moving to a freelancing or entrepreneurial mindset as recent studies have shown that 1 in 3 workers find themselves in this type of situation. With that in mind, I think to put it all as a generational issue is a generalization and is only part of the change I believe we’re seeing. I think it’s a shift of people wanting to not be tied to a corporation and being more comfortable with the idea of starting something on their own and have it be something fulfilling as opposed to merely a generational issue.

Regardless if You do or Don’t, What does that Mean for you?

Going back to the purpose of this post, I think there is a growing number of individuals that do not care about their employers to a certain extent and I believe that it requires introspection to see if that is you. I think it’s beyond not being happy in your job, but being truly fulfilled and caring, or lack of caring, about your employer. In a certain sense, it is a natural reaction to the changing corporate culture we have been seeing over the last number of years. If you find yourself in this situation, or even if you don’t, it requires looking inward to determine what this means for you. This culture we see ourselves in is one that requires us to be adaptable and open to change. We have seen this in the corporate landscape and if a large firm can change then so can you. It may not be as easy, but it can be done. As much as I dislike the term on some levels, it requires you to be mindful of your ‘personal brand’ and what you want it to communicate. Speaking personally, I found that my brand did not mesh with my last job, so much so in fact that it was the final kick in the pants I needed to take the plunge. It also requires you to view your career as your business, regardless if you run your own business or not. It means that you need to be mindful of what’s going to put you in the best position to further yourself and benefit your long term potential. It means simply that whether or not you do care about your employer, you grow yourself so that you can be able to make the changes necessary over the span of your career to put you in the position you want.

What are your thoughts? Do you see a growing lack of care towards employers and if so how do you think that will continue to play out?

Photo courtesy of: Tina LawsonSimilar Posts:

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The post Do We Care About Our Employers Anymore? appeared first on Frugal Rules.

It’s been another great week in the blogosphere for Frugal Rules. Traffic has really seen a solid uptick the last couple of months which is always good to see. Hopefully in the next month or two I can get at least 40,000 page views per month without breaking a sweat. Thanks to everyone who gave me a shout out last week or included me in their blog Carnivals. Have a great rest of the weekend everyone!

Shout Outs

How to Blog Carnival on Bloggers Classifieds

Working at Home Blog Carnival #341 on Working at Home on the Internet

Carnival of Financial Independence #12 on Reach Financial Independence

Carnival of Retirement on Master The Art of Saving

The Wealth Builder Carnival #128 on My Wealth Builder

Personal Bankruptcy Blog Carnival on Personal Bankruptcy Canada

Festival of Frugality #390 on Frugal Rules

Photo courtesy of: MowT

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The post Shout Out Saturday #21 appeared first on Frugal Rules.