Debit versus Credit » Miscellaneous

Infographic: Surprising Side Effects of Rising College Costs

Joseph — Thu, 22 Mar 2012 15:00:11 +0000

How many of you find this rings true? Have you found yourself delaying ‘life’ because of high debt incurred while getting an education?

Infographic courtesy of onlinecollege.org

Plan for the future and save for your vacations

Joseph — Thu, 19 Jan 2012 15:00:29 +0000

On a recent trip to South America many things stood out, but the thing that was most staggering was not the adventure itself, but rather meeting people who had cashed in their 401K’s and those who were traveling across the country on credit. I also met those who were traveling across the country with the funds in their debit accounts, which gave me hope.

Traveling with your debit card

Understanding your cash flow, in and out, each month will help you with conscious spending. The use of your debit pulls funds that you have earned; the money is in your account and you are not borrowing on interest. With debit you are paying yourself and purchasing things that you want or need. Many people look at their bills and think “I work so hard for this money and still can not get the things I want” (hence the credit concerns that are currently effecting our national economy).

Allow “shift” to happen, shift your thoughts into the power of the money you have earned and the ability you have to pay your bills. Being grateful that you get to pay for electricity and water each month, being grateful that you get to pay your mortgage or rent. Shifting the thought that you have towards money allows the relationship to become positive and in turn may even increase the financial inflow that you have. Understanding the power that debit has as well as the power credit can have, when not abused, is a key component to financial well-being.

Traveling with your credit card

Is it all generational or cultural- this push for credit and purchases that we can not afford? Recently in Peru I met a couple riding across the country on their BMW motorbikes, they talked of withdrawing monies from the ATM from their card. The deeper the conversation went I realized they were talking about debit; they were using monies they had earned and saved because they had it…neither owned a credit card. They were Australian and the generalization to the country may be way off, but as an American in a debt riddled country it was an inspiration. The thought that life without credit could lead to 7 months traveling from coast to coast!

With the way our economy works, it is recommend to still have a credit card. The benefit of knowing that if you ever have an emergency–not the weekend sale at Macy’s–a true emergency you have a way to cover it yourself. Think of credit building in terms of G² (G-squared), the 2 G’s that if placed on credit and paid off each month will help build your limit and increase your financial standing. Groceries and Gas. If you only use your credit card, outside of emergencies, on groceries and gas and pay it off before your interest accrues you will build your credit and if you pick the right card you will also earn rewards (trips, gift cards… even cash). Those rewards can even be placed back into your banking account thus creating the full circle of debit vs. credit.

Today’s post is brought to you by Danell Lynn, M. Ed. Photo courtesy of Wade Stubbs, Bergaliaboys.com

Top 5 Things You Shouldn’t Skimp On During Holidays

Joseph — Fri, 16 Dec 2011 15:00:48 +0000

Today we’re featuring a guest post from Ally at HowtoSaveMoney.com.au

If you read personal finance blogs around the holiday season, you’d think they are more concerned about saving money and to actually enjoy the holidays. “It’s commercialization”, they said. Or, “You don’t need gifts.” Well, those are technically true but there is a line between being frugal and being cheap.

Here are the top 5 things you should not skimp on during the holidays so that you don’t cross that line:

Charity

It’s a cliché that the secret to living is giving but that doesn’t make it less true. When money is tight and the economy tanks, the first in line to suffer are the charities – simply because that’s the expense people cut out first.

But what if no matter how much you are making you contribute a certain percentage of your money to charity? Try it out this holiday season: your $10 can change a person’s life and that fact alone puts your troubles in global perspective.

Healthy Food

Studies have shown that people tend to gain weight over the holiday season because they put their diet on hold. Instead, they stuffed themselves with turkey, cookies, muffins and all the “traditional” foods.

But have you ever stopped to think that those “traditional foods” aren’t so traditional? Don’t you think the holiday season is the best time for you to get healthy? After all, all those distant relatives are coming and you don’t want them to see that new tire around your waist, do you?

Family Safety

The holiday season is also a time for parties, decorations and… accidents. So don’t try to skimp on things like child proofing your home if you have a toddler at home. And if you’re busy with the shopping, and the decorations, and your work, make sure you get someone to take care of your child – even if he seems old enough to take care of himself.

Trust me, nothing spoils the holiday mood more than accidents.

Debt

And instead of getting into more debt over the holidays, why not pay it off? Remember that debt is costing you money. A lot of people skimp on their repayments over the holidays thinking they would “get to it” when the new year dawns. But when did that ever work out?

If you add to your debt over the holidays, you’ll probably spend the rest of next year paying it off. Not only that, that $50 purse you bought with credit will actually cost you more like $70 when interests are calculated.

Gifts

Lastly, there’s never a better time to show your appreciation to the people you love. Of course, that doesn’t mean you need to spend a fortune on gifts. In fact, a handmade gift is almost always better – provided you actually put in the effort. (For example, I just learned of papercraft and I think it makes great gifts!)

And if you think you don’t have the skills to make a handmade gift, try giving your most precious resource: time. Sometime all your family wants is a weekend away, camping. Or perhaps go on a fishing trip with your long lost buddy? There are plenty of ways to gift without spending a fortune.

Ally is part of the team that manages personal finance blogs in Sydney, Australia, which feature tips about how to save money and budgeting spreadsheet . Before joining the team, she was a Media Planner in McCann Worldgroup Philippines, Inc., with award-winning executions, including the Levi’s 501 “Live Unbuttoned” global campaign.

Why Don’t You Have An Emergency Fund Yet?

Joseph — Wed, 30 Nov 2011 15:00:27 +0000

A single mom’s car breaks down and the repair is going to cost her $500 dollars. If she doesn’t have the money in an emergency fund then what choice does she have but to borrow the $500, as she can’t get to work without her car? Maybe she has good enough credit where she can get a loan from the bank at a fairly reasonable rate. Maybe she has a credit card with a high enough limit that she can get the cash off of the card (again, with a fairly reasonable rate). What if neither of these are an option though? What if a payday loan is her last and only option?

Finding yourself in an emergency situation requiring hundreds (or thousands) of dollars is never good. It’s made all the worse when you don’t have any money set aside for emergencies. If you don’t yet have an emergency fund then I have to ask… Why not?

A while back I read that saving the first $500 is the hardest. It’s absolutely true, but definitely possible. It doesn’t matter who you are and what your situation is there is no reason that you can’t start saving up for an emergency fund. Cut expenses somewhere, anywhere, if you have to. Better yet, earn more money than you make now.

Easier said than done, absolutely. It’s not impossible though. If you’re not saving an emergency fund already then stop making excuses and just do it.

I’d love to hear your successes, failures, stories, etc with regard to emergencies and emergency funds. Please leave your comments below.

I’ll end this with a bit of humor. Here’s a quote from the show 30 Rock (somehow I ran across this while doing research):

You wanna party? It’s $500 for kissing and $10,000 for snuggling; end of list. – Liz Lemon

I’ve got to ask Liz, with $500 kissing and $10,000 snuggling who exactly is your target audience?

I’m Thankful For

Joseph — Sat, 26 Nov 2011 02:29:55 +0000

Happy Thanksgiving weekend everyone! I thought it’d be a nice time to publicly share the things I’m thankful for with all of you. This will probably be just a short little post, so bear with me. It’d be awesome to hear from some of you what you’re thankful for as well.

I’m thankful for my new job, my wife, my lovely house, my garden, my family and the ridiculously awesome weather this time of year in Phoenix.

I’m thankful for turkey and the nap that results from eating way too much of it in one sitting. I’m thankful for Lowe’s, Best Buy and Amazon for having so much awesome stuff (of course on the flip side I’m not too thankful that they keep draining my wallet because they have too much cool stuff). I’m thankful for Duct Tape, because it can basically do anything (including remove warts – gross!).

I am thankful for the fire pit in the back yard where I can sit around the fire, talk to friends & family and toast marshmallows (which result in Smore’s). I’m thankful for Smore’s as well, although that’s probably a given. I’m thankful for Skyrim, because it’s fun to explore new worlds where I can shoot fire and lightning out of my hands. I’m thankful for Avatar: The Last Airbender (NOT the movie though) because it’s just as much fun to watch quirky characters in an imaginative world as it is to play them.

Finally, I’m thankful for this blog and for all of you as well. I’ve learned a lot and really enjoyed myself over the past several years blogging and I can’t imagine my life without it. Happy Thanksgiving everyone and Happy Holidays as well!

Thank you blog for keeping me in line

Joseph — Tue, 15 Nov 2011 16:00:07 +0000

I finally called to start the process of rolling over my 401k and it’s all thanks to my blog. Well, sort of. I’m a wicked procrastinator, so last week I figured I’d write a post about how I need to roll over my old 401k and I set a goal for myself to do it within a week. It’s been a week now and I’m proud to report that I called USAA and got the process started. Granted it will take 2-4 weeks for the account to fully roll over, but at this point all the hard work is now out of my hands.

I couldn’t be happier.

Through all of this I was reminded how important it is to know your own strengths and weaknesses. Like I said already my weakness is procrastination. Without something to remind me or push me into doing something I know I need to do, I’ll likely keep putting it off over and over and over again.

I knew I needed to do this. I knew what I needed to do. I just couldn’t find the inspiration – if you will – to actually get it done.

Here’s where psychology comes into play, along with the benefit of recognizing your strengths and weaknesses. I knew that if I held myself accountable (which I did through my blog post last week) that I would get it done. Sure enough I did.

Human behavior (psychology) is something that personal finance bloggers don’t talk about nearly enough. As Ramit said during a speech at the financial blogger conference (I’m paraphrasing here): people know they need to get out of debt, and they generally have the knowledge on how to pay it off as well, but they just can’t find the will to actually get out of debt.

Why is that? Ultimately it’s just who we are. The best way to overcome that is to figure out what your shortcomings are and then find ways to overcome them. That’s what I did to help with my procrastinating. That’s what I’d like all of you to do as well.

Saturday November 5th is Bank Transfer Day

Joseph — Fri, 04 Nov 2011 16:00:41 +0000

Just yesterday I was blogging about saying no to bank fees and today I ran across this little bit of news:

This Saturday (November 5th) is Bank Transfer Day.

This was the first I’d heard about it (although I’m sure plenty of people have, considering there are already 76k people signed up on the Facebook event page). I wanted to pass it on to all of you as well. I talked about quitting your bank yesterday and what better time to do it than on Bank Transfer Day? The timing couldn’t have been better on this one.

So do yourself a favor and if you use a big bank switch it up. Go local or online, but don’t go national.

Here’s a few resources for you: (and don’t forget to check out the Facebook page for bank transfer day as well for more tips/resources)

My personal favorites for online banks (if you prefer to go that route instead of going local) are USAA (if you’re eligible), ING Direct, Ally Bank and PerkStreet Financial.

So will you be participating? Let me know in the comments!

Occupy Wall Street or Phoenix or Chicago or…

Joseph — Tue, 01 Nov 2011 14:30:04 +0000

Unless you’ve been living under a rock somewhere you’ve surely heard about the protests going on all around the United States and even other parts of the world. It started as Occupy Wall Street and has grown into protests going on in basically every major city in the U.S. Here in my hometown of Phoenix Arizona the protestors have been hanging out downtown protesting everything from politicians to corporate greed. In fact, I was reading an article when I saw this little snippet from an interview, which gave me a bit of a chuckle.

What Phoenix’s occupiers are mad about varies, depending on whom you ask.
According to Darren Lansing, who was interviewed while shirtless and blowing bubbles, his gripe’s with politicians.
“[We've got to] get the money out of the hands of the politicians and back to the public,” he tells New Times.
When asked how he plans to do it, Lansing says, “We’re doing it right now, man.”
Apparently, blowing bubbles is the key to redistributing wealth. Who knew?

No offense meant to any of the protestors, but there has got to be a better way to protest. The act of protesting alone will not likely solve anything. His bubble blowing form of protest certainly isn’t getting the money “out of the hands of the politicians.”

I’m lucky. I’ve got a job and so does my wife. We make pretty decent money between both of our jobs and we are wise with our money. We’ve saved an emergency fund, starting saving for retirement and have even started to set aside money for a new car, house upgrades and vacations. We’re frugal on the things we don’t care much about but are happy to spend our money on things that we enjoy.

We aren’t out of a job like a lot of the protestors. I get that.

I wish there were more jobs to go around for everyone who wants one. There just aren’t right now. A lot of things that have happened are out of a lot of peoples control — home values dropping in half, high unemployment, high rents. Life’s tough for a lot of people. Like I said, I get that. What I don’t get is why so many people today feel like they don’t have the ability to take their destiny into their own hands.

Instead of ‘Occupying Wall Street’ all day, every day, why don’t more people start a small business, or get training for a new job? Yes, jobs are scarce, but they aren’t nonexistent – not to those with skills.

One really awesome suggestion I found:

If you really want to do something radical, help start a new community bank. The number of banks has shrunk over the past few years.

Create more funding institutions to help decentralize financial power. If you don’t have the expertise, see who you could bring together in your community to create a new lender.

Banks are a huge part of this protest. People are mad about excessive fees, bailouts and just about everything else. If you want to take power out of the banks hands, then start a community bank (or credit union). I can’t think of a better way to take power out of the hands of the bankers and the politicians.

A tribute to Steve Jobs

Joseph — Thu, 06 Oct 2011 13:00:14 +0000

I’m a total business geek.

I love to read and talk about business trends, marketing, finance and accounting. That might be somewhat obvious to you accountants out there due to the name of this blog (debit and credit being accounting terms). I’m also a total tech geek. Gadgets, technology and business — you combine these things into one and it really makes for some interesting conversation. Hence why I’ve been a fan of Steve Jobs, and consequently Apple, for the last decade.

As most of you likely heard by now, on Wednesday Steve Jobs passed away. He was 56 years old.

For some wonderful tributes to Steve Jobs read here, here and here. Mine is below.

There are a few people in this world who are an inspiration to me. Steve Jobs was one of those people. The passion he had for Apple and technology was unequaled and his business acumen rarely seen. The man was a genius when it came to business.

When Steve Jobs returned to Apple in 1997 – after being away from the company he founded for 12 years – the company was in a difficult financial situation and very likely near bankruptcy. He facilitated what may have been the greatest business turnaround ever. In fact, recently Apple became the largest company in the world when based strictly on market capitalization. From near-bankruptcy to the largest company in the world in just over a decade. That’s an amazing accomplishment.

The business geek in me looked up to Steve Jobs for this remarkable transformation that Apple has seen since 1997 and the tech geek has looked up to him for the plethora of amazing products he’s had a hand in creating. The iPod, iPhone, iPad and even Apple computers such as the MacBook Air are all amazing technology products. They just work, and they do it while looking beautiful.

Steve Jobs will certainly go down in history as one of the great minds of our time. He was a great man because he understood that a great leader needs a great team. Johnny Ive, Tim Cook, Phil Schiller, Scott Forstall, even Steve Wozniak. These men are also amazing at what they do and I’m sure were all hand-picked by Steve Jobs at one point to help him build arguably the greatest technology company ever.

Steve Jobs always surrounded himself with greatness. That’s what made him great. May he rest in peace.

A Day in the Life of a Financial Advisor (a little humor for your Monday)

Joseph — Mon, 12 Sep 2011 14:00:09 +0000

Here’s a pretty funny video that was shown to me. I got a total kick out of it.

Disclaimer: there is swearing at the end of the video when the financial advisor drops an f-bomb.

Watch it? Good. For those who don’t mind thinking a little today, (I know, I know it’s Monday, but bear with me here) I just wanted to have a short discussion about the video, so keep on reading!

Spoiler alert for those who have not watched the video yet (what are you waiting for?)

The client lies about having children because she doesn’t think the financial advisor needs to know such a thing. She has unrealistic expectations for retirement, especially considering that she wants to pull a fifth of what she has in her 401k out to buy herself a new car. On top of all of that she insists on investing in things like gold and possibly using some of her 401k money to help pay for her kid’s college as well. This may or may not be a realistic portrayal of one client, but I guarantee a financial advisor will run into each of these situations individually every single day. By the end of the video it’s obvious that she really only wants advice from the advisor if it coincides with what she wants to do. She won’t be swayed. Of course, she also won’t be retiring in 5 years.

Thoughts?