Debit versus Credit

Achieving Wealth and Prosperity
As a personal finance blogger I find it interesting to read other personal finance blogs not only to learn from these individuals but also to see how they perceive money and the world around them. You can always find links to some of my favorite finance blogs in my blogroll, but today I want to talk a little bit about a fantastic personal finance blog that has been around for a while now: MoneyNing.

I bring up MoneyNing for two reasons. The first reason is that David knows his stuff and he is committed to sharing with his readers what he’s learned from his own financial life. The second reason is that I’m actually being featured on his blog today with a guest post that I wrote about my journey to prosperity.

A Journey To Prosperity

For today’s post I’d like to expound a little bit more on the goals that I’ve set for myself on my journey to prosperity. Before you continue reading here you definitely ought to check out Debit and Credits Plan to Prosperity over at MoneyNing (clicking the link will open in a new window) and then come on back for some further clarification.

Ok. Did you read it? What did you think? Please if you have any comments related specifically to that article leave them over at MoneyNing. Otherwise let me help you understand a little bit more about my financial goals.

Being Rich Requires Thinking Rich

Like I mentioned over at MoneyNing I think that being prosperous is so much more than just being lucky. It requires hard work and dedication to achieve wealth. As an example let’s take a look at the worlds richest man, Warren Buffett. This is a man who has worked hard and smart every single day of his life. His wealth didn’t come easy to him, but because he was willing to learn and willing to work hard he’s been able to achieve extraordinary things. Being extraordinary doesn’t just come from hard work though, it requires some level of goal setting and follow-through. Think of it this way: If you want to be rich then you need to learn how to be rich.

I’ve set several goals for myself. Let me share them with you now, along with how I plan to achieve them:

Be in a position to retire by the age of 55

I will contribute as much as possible to my 401k retirement plan. Currently this number is 10% of my income.
I will make smart financial decisions such as only buying a house that I can easily afford.

Build my personal net worth to $1 million plus dollars

I will keep my liabilities (debt) to a minimum by buying only what I can afford.
I will make smart investment decisions to grow my net worth at a minimum of 10% a year.
I will continue to save money out of my paychecks beyond what I’m saving for retirement.

Avoid debt as much as possible

I will not use my credit cards for everyday purchases unless I have the cash set aside to pay them off immediately.
I will not make foolish decisions and purchase things that I can’t afford with cash and that I don’t really need.
When I make large purchases (such as a house or car) I will compare my options and borrow as little as possible.

Those are the goals that I’ve set for myself; my roadmap to prosperity, if you will. Do you have a plan to achieve prosperity? I want you all to sit down and think about what you really want out of life and how you can achieve it. It might require some cutting back at first but in the long-run you’ll thank me, but more importantly you’ll thank yourself.
November 14, 2008
Saving Money With A Library Card

You don’t have to enjoy reading to take advantage of everything that your library has to offer. In fact you don’t even have to like reading at all. My bet is that your library still has plenty of entertainment options available. Most modern libraries are not only stocked with books but also music cd’s, movies, magazines and computers connected to the Internet. If you aren’t already a library member then go sign up – it’s free as long as it’s your local city library. Once you are a member then let the savings commence. Check out these ways to save money with your library card:

Buy books no more. Instead of going to Barnes and Noble to buy that new novel that you’re only going to read once why not just pick up a copy of it at the library? It’s free! You’re only going to read the book once anyway so there really is no reason to buy it.

Keep up on all your favorite gossip magazines. I’m willing to bet that your library stocks Entertainment Weekly and US Weekly. Why pay for these magazines when you can take a trip down to your library and read about Britney Spears or Brad Pitt to your hearts content. If you don’t enjoy gossip magazines (I’ll stand up and be counted here) you still have plenty of other options including business magazines, money magazines (my personal favorite), car magazines and sports magazines.

Goodbye Netflix. Sure it may not be quite as convenient as having movies delivered to your mailbox but your library is probably pretty well stocked with all of the latest movies to come out on DVD. Why not take a stroll down to check out their collection? You may be pleasantly surprised.

Can you think of any other ways to save money with your library card? Please leave your comment and if it’s a great idea I’d be more than happy to update this post with a shout out!

November 12, 2008
Personal Finance Tips & Advice to Start the Week

We all have bad habits, especially those related to our own financial well-being. Some of us have a compulsive shoe buying habit while others might not be able to go without that Vente latte from Starbucks in the morning. Then there are some who just need some advice on where to park their money or how to budget or how to get started investing. To be honest sometimes we all need some personal finance tips to steer us in the right direction. So today I’d like to list a few of my favorite posts here at Debit versus Credit as well as a few that I’ve run into at other personal finance blogs. We’ll start with some recent posts of mine:

Buffet’s Buying – But Should You?

Investing for Beginners – Analyzing Financial Statements

4 Ways College Students Can Save Money

Never Lie to Your Insurance Company

Do You Really Need Cable?

Of course there’s a plethora of great financial tips and advice out there on the internet. For example my friends over at the Blueprint for Financial Prosperity posted a list of 50 Financial Skills Every Person Needs to Know and MoneyNing tells us why personal finance is like taking a shower in If You Have Time for a Shower You Have Time for Personal Finance. After you’re done reading those then check out the “No Spending Day” idea posted over at I Will Teach You To Be Rich (and don’t forget to check out his other tips on frugality).

That’s going to do it for today. If you have any personal finance questions or need personal finance advice then either comment here and ask your question or feel free to send me an e-mail at joseph [at] debitversuscredit [dot] com

Make it a good Monday!

November 10, 2008
Investing for Beginners: Analyzing Financial Statements, pt. 2

Today we’ll be continuing the Investing for Beginners series with an introduction to interpreting a companies Balance Sheet as well as their Statement of Cash Flows. Let’s begin with the balance sheet.

The Balance Sheet

There are a lot more rows to this one eh? Don’t get intimidated, there is nothing to it! I promise.

Let’s start from the top. We’re looking at Apple’s balance sheet, which shows all of their assets, liabilities and their stockholder equity (sometimes known as owners equity). Just about everything listed on the balance sheet is pretty important but for simplicities sake we’ll just go over cash, receivables and inventory on the “assets side” plus accounts payable on the “liabilities side.” We’ll also look at Total Assets and Total Liabilities.

Breakdown of the Assets:

Cash Equivalents:
Anything that can be immediately converted to cash.

The cash and cash equivalents increased by 83% from the year ended 2006 over the year ended 2005. For the year ended 2007 their cash increased 46%. These are some fantastic numbers. There’s nothing much to worry about with the exponential decrease in cash from 2006 to 2007, as it’d be impossible to maintain such high increases YoY (year over year). Naturally you’re going to be wanting to look for a company that has increasing cash YoY on the assets side. If their cash does drop you’ll need a good reason why, otherwise it could be a warning sign that the company is struggling.

Receivables:
Receivables are also known as accounts receivable and is any monies owed to the company for the receipt of sales and services.

Now let’s take a look at receivables. These numbers can be somewhat deceiving, in that increasing receivables tends to imply increasing sales, but could just as well mean that a company is resorting to cheap financing tricks to “temporarily” boost their numbers. So be careful with this one. I happen to know that Apple truly is experiencing some vastly increasing sales numbers, so the increases in Receivables, while a little high, are not too far off. So what are the numbers? 2006 over 2005 saw an increase in receivables of 181% while 2007 over 2006 saw an increase of 39%.

(more…)

November 5, 2008
Choosing the Right Financial Institutions
I’ve been an employee of a local credit union for about two years now, and I’ve heard stories from a lot of people who have savings, checking accounts, loans or investment accounts at other financial institutions. I myself used to bank with one of the big banks and ever since I switched my accounts over to the credit union, I have been much happier with the handling of my finances. Most people think enough about their finances to be aware of how much they make and how much they spend. Unfortunately I don’t believe many people really ever think about choosing financial institutions that will benefit them the most, but rather which one is closest to their house, or which one their parents, siblings or spouse do business with. I think this quote from Sandra Masterson’s Banking Blog is a fantastic way of stating the need to think when choosing ones financial institution(s).

Choosing a [financial institution] is not a decision that should be made on a whim. A [financial institution] is supposed to save you [or help you earn] money, but without the proper amount of research it is possible to end up with one that costs you money.

I could not have said it better myself. I truly believe that time and effort should be put into researching local (or maybe even not local) institutions and the different products, rates and fees that they offer and charge. Here’s a quick list of the features I look for when choosing a bank (or credit union) as an example.

Convenience (this doesn’t necessarily mean closest)

Product Offerings (how competitive are their rates? what fees are associated with their deposit accounts?)

I have a large majority of all my financial accounts at two financial institutions: Desert Schools Federal Credit Union and USAA. Why did I choose to do my business with these institutions? I’ll start with Desert Schools, which I’ll refer to as DSFCU. I have had a savings and checking account at DSFCU for about three years. Before I banked with DSFCU, I banked with Chase and at one point Bank of America. I don’t have any horror stories from either of these big banks, but they always seemed to leave me longing for more. I learned about Desert Schools through a friend and decided to go check them out. I was pleasantly surprised to learn that not only did they offer free checking, but their savings rates were some of the highest I’d ever found (this is not including online savings banks which have low overhead and can thus offer higher rates). I became especially impressed with them when I noticed how typically friendly and helpful their staff was. Finally I appreciated the fact that they offered overdraft protection through a personal line of credit, which has saved me from overdraft fees on more than one occasion.

USAA is a financial institution that I am especially happy with. They cater themselves mostly to those in the military, which I find especially upsetting because the majority of my friends and family are not able to do business with them. USAA is a full-service financial services provider. They offer products including banking, insurance, and investing. I utilize at least one product from each of these categories. USAA is convenient to me because almost everything can be done online, and this includes depositing checks. I can make insurance payments, transfer funds (between USAA and other institutions) and purchase stocks or mutual funds. They also offer very competitive rates.

I’d like to make a quick list for you of some financial institutions that I’ve done business with in the past or that I am currently doing business with that I have found to be useful in helping me achieve my financial goals. I’ll list them by category.

Banks/Credit Unions

Desert Schools FCU (Phoenix, AZ based)

USAA

HSBC Online Savings

Brokerages/Retirement Accounts

Scottrade

Sharebuilder

USAA

Insurance

Geico

USAA

I hope that this has helped everyone recognize the value of researching financial institutions before doing business with them. I also hope that if you are currently unhappy with your financial institutions you do business with that you will take a day to sort out your finances and transfer your accounts to somewhere which will help you along the way to financial independence. Good luck!

People in the real estate business usually have a health insurance as well as other deals and those who work from home particularly use their business cards effectively.
November 4, 2008
Congratulations to the Winners!

The month of October has come and gone, and so has the very first contest that I’ve ever held at Debit versus Credit. I’m happy to announce the winners of the contest.

Drumroll please…

The grand prize winner is Lisa.

The first prize goes to Jules.

The second prize winner is Cady.

Congratulations to our winning contestants. They’ll be contacted by e-mail shortly

Don’t forget to subscribe to the Debit versus Credit feed so you’ll stay up to date on any contests that we hold in the future, as well as continue to receive great information about personal finance, retirement, investing and frugality.

November 3, 2008
Last Day to Win $25 Cash and a Personal Finance Book
Happy Halloween! If you haven’t already heard I’m sponsoring a contest where I’m giving away cash and three copies of the book, Scratch Beginnings. It’s easy to enter. All you have to do is go to the contest link, do any (or all) of the following and leave a comment at the contest post.

1 Entry – Subscribe to my feed via e-mail

1 Entry – Follow me on Twitter

2 Entries – Write a short blog post about Debit versus Credit and why you think your readers and friends ought to check it out.

1 Entry – Link to Debit versus Credit

Good luck everyone! Don’t forget to leave your comment so you’ll be officially entered in the contest! I’ll announce the winners sometime next week!
October 30, 2008