Savvy Ladies Community

Spend Your Remaining FSA Dollars... In Under an Hour!

Would you like to experience less (financial) stress and more (money) joy this holiday season?

If you're a flexible spending account (FSA) user, there's an easy way for you to get both: take a look at your current FSA account balance and spend down any remaining funds.  

Yes, you heard that correctly.  I'm encouraging you to SPEND! The reason is that if you don't spend all of the money in your FSA by the end of your plan year, that money will be forfeited as a result of the "use it or lose it" rule. 

Here's a simple 6-point plan you can follow to spend down those remaining FSA dollars in less than an hour.

• Find Out How Much You Can Spend. Call your provider or check your most recent paper or online statement to find out what your remaining FSA balance is.  Some FSA administrators, such as WageWorks (a firm I'm proud to work with on consumer awareness) even give you the option of using your smart phone or other mobile device to log in to your account.  Time: 5 minutes.

• Find Out Your “Spend By” Date. Reach out to your benefits or HR department to find out if you must spend your FSA dollars by December 31st or whether your workplace gives you a “grace period” until March 15th.  Also, take note of your final day to make purchases versus your final day to request reimbursement; your employer may offer some flexibility there as well.  Time: 5 minutes

• Review Eligible Expenses.  Now that you know how much you have to spend and by when, it’s time to start using whatever funds are left. Review the extensive list of FSA eligible expenses and create a list of what you need. Two sites with great lists of eligible expenses and other resources include SaveSmartSpendHealthy.com and WageWorks.com/spendit. Time:  10 minutes.

• Look For Any Gaps.  Sit down and review your medical care from the past year.  Are there any expenses you haven’t submitted yet? Are there any appointments you haven't had yet such as routine dental or eye exams?  If so, call your providers and get those on the calendar. Time:  10 minutes.

• Restock OTC Items.  In addition to items you may have identified in the previous step, don't forget to restock commonly-used OTC products and medications, (Note, as of January 1, 2011 OTC medications require a doctor's prescription to qualify for FSA reimbursement.) And if the thought of braving holiday crowds is making you feel slightly nauseous, not to worry.  You can shop online with companies like FSAStore.com from the comfort of your couch. Time (including check out!): 15 minutes.

• Claim Your Miles:  Did you know you can get a tax-break on any miles you had to drive for any doctors appointments or pharmacy visit in the past year? Reimbursement for travel between January 1 and June 30, 2011 is set at 19 cents per mile, and travel between July 1 and December 31, 2011 was increased to 23.5 cents per mile.  To make this a super easy process, just use an online directions website such as Google Maps or MapQuest and enter your start and finish addresses.  Print off the resulting map (which will show point-to-point mileage) and submit it to your FSA provider along with the receipts for the associated doctor or pharmacy visit.  Time: 10 minutes

By the way, if you are wondering what the logic is behind the whole “use it or lose it” rule - I hear you loud and clear. Personally, I'd much rather see the government allow us to either cash out balances at year-end (paying our fair share of taxes on that amount) or roll it over to the next plan year. If you agree with me, you can visit SaveMyFlexPlan.org for more information on how you can make your voice heard on this issue.

Here's to a 2012 full of health, happiness, and financial peace of mind!

 

 

Celebrity Inc

              
                                                                 
What can four drunk airplane passengers, first time parents, and a delightful new book called Celebrity, Inc. do for your wallet?

Plenty.

Let me start with the drunks and new parents. Monday night I boarded a very delayed flight from Houston to Los Angeles. Behind me were four 20/30-somethings boisterously swigging from "coffee" cups. (Our gate was across from a Cantina and you could practically smell the tequila in their paper cups.)

As the boarding continued they grew increasingly animated. Their frenetic energy seemed to wind up not just each other but everyone around them. Fellow passengers were visibly agitated. 

Just before the plane doors closed, a young couple came on with a sleeping baby. The last two open seats were amongst this motley crew. 

Suddenly, everything changed.  

The presence of the earnest and exhausted parents had an immediate calming effect on both the inebriated passengers and those around them. It was as if a mirror had been placed in the center of the plane to remind us all of our humanity.

Enter, Jo Piazza's delicious new book, Celebrity, Inc: how famous people make money.

To me, this book is the figurative version of the newborn's parents getting on the plane. It serves as a mirror reflecting back the reality what's in the "coffee" cups of the celebrity scene. 

That got me wondering what other financial lessons the author of Celebrity, Inc. might have stumbled across while writing this fascinating book. Thankfully, Jo Piazza was willing to share with us...

 Q: Of the celebrities you profile in Celebrity, Inc. whose money attitude were you most impressed with and why?

Jo: Despite current controversy I was completely impressed with the Kardashian's money attitude and their work ethic. I have never met a celebrity crew who works so hard to maintain their brand. I don't necessarily agree with the massive amounts they are paid to do what they do, but unlike a lot of celebs they truly do work for it. And beyond that they manage their money well. They budget, they funnel funds back into new projects, they try not to spend excessively and they do donate a portion of their income to charity each year.

(2) What surprised you the most about the money habits you observed during your Celebrity, Inc. research?

Jo:  So many of the people I talked to over-spent their budgets on a consistent basis even though they were making crazy amounts of money. Spencer Pratt told me he and Heidi Montag pulled in about $10 million in 4 years but because they thought it would keep coming at the same rate they blew through it all. That's a common thread I found with a lot of celebs. They're making so much but they're spending just as quickly. They buy $5 million houses and spend half a million on a security detail and they rarely save a dime. I just don't think they realize the shelf life of fame is shorter than ever and they may not be famous tomorrow.

(3) What personal finance lessons do you think the rest of us can take away from the way famous people live their lives?

Jo: Budgeting for a rainy day is the best thing we can learn from celebrities in terms of personal finance. I saw so many cases of celebs who thought it would last forever and then forever came up really... quick.

I was inspired by the extent to which celebs expand their personal brands. Tim McGraw went from country singer to fragrance king. When Valerie Bertinelli's career as an actress seemed like it was over she reinvented herself through a weight loss campaign. I don't think we see these instances of celeb entrepreneurship as inspiring enough and I truly think they should be a lesson in taking chances, building a new business and making lemonade out of lemons.

In many ways our celebrity culture is like a group of chaotic drunk people. It lurches rapidly from one topic and fad to the next. In the heat of the excitement money can feel like no object. But the financial hangover of being, or trying to emulate, that lifestyle can result in a serious financial crash.

 So pick up a copy of Celebrity, Inc. and tell me what you think. Does our national obsession with the lifestyles of the rich and famous ever cause you to do things with your money that you later regret?

 

The Big Enough Company

Is a larger business always a better business?

As a newly minted MBA my first job back in 1997 was as a buy-side equity analyst. My task was to evaluate the financial prospects of publically traded companies and make recommendations as to whether or not their stocks should be bought or sold. This was back in the heady days of the internet bubble years when double digit revenue or profit growth was scorned upon. The prevailing wisdom: Who wants 15% growth when there are dot coms generating 150% growth?

I never quite got that obsession with size. Wearing my analyst hat all I could think when I saw a rapidly growing company were the pitfalls. How would they handle the logistics, the infrastructure, the accounting of such a sprawling concern? Back then my aversion to rapid growth for the sake of growth made me an investment outlier.

Today - a breath of fresh air arrives. It's in the form of a delightful new book by Adelaide Lancaster and Amy Adams called The Big Enough Company. It's a marvelous guidebook that helps entrepreneurs to "build a business you enjoy running without caving under the pressure to grow."

So if you are an entrepreneur, want to be an entrepreneur, or love an entrepreneur... read on.  Adelaide was kind enough to answer some questions about the financial implications of choosing to be a "Big Enough Company."  Oh - and here's the book trailer, I double dare you to watch and not be moved!

(1) What are the most common financial issues you see entrepreneurs struggle with?

Entrepreneurship is ripe with “financial issues”, as entrepreneurs are constantly negotiating investment (money, time, commitment, sacrifice, etc.) and reward (money, satisfaction, freedom, meaning, etc.) Most entrepreneurs learn many of the same classic financial lessons (often the hard way), such as understanding the value of their time, what their product or services are worth, and the very real difference in revenue versus profit. However I’d say the three most problematic and persistent financial challenges are the following:

• Shorting themselves in favor of the business. Entrepreneurs often take better care of their business finances than they do their personal finances. We’ve heard lots of stories of incurring major personal credit card debt and foregoing a salary. Even when it turns out okay in the end, we get concerned about the setting the wrong precedent and potentially fostering underlying feelings of financial insecurity or resentment. There is a big difference between making a significant investment in your business and putting yourself at significant financial risk for your business. 
• Fear of growing because of the expenses involved. A major deterrent to growth is fear of the expenses involved, not just the short-term growth expenses but the ongoing operating expenses too. It’s a reasonable enough concern. However we’ve met lots of entrepreneurs who would actually be more satisfied with a bigger business but stay small because of their expense aversion. In these cases, expenses are not a good enough reason not to grow. Unfortunately, if you want to grow your company to be bigger you almost always have to experience the increased expenses before you experience the increased income.  
• Getting the right amount of money to bridge growth gaps.  It’s often difficult to find ways to access the $10-50k range that lots of businesses need in order to make it to the next level. It’s short of a formal capital investment, but often bigger than early lines of credit and small loans. We are interested to see how a few newer peer-to-peer investment and lending models might change this..

 (2) What are some of the financial benefits that can come from deciding NOT to grow your company bigger?

Ironically, we’ve met lots of entrepreneurs whose take home pay ended up being more with a smaller company than it was with a larger company because of the extraordinary overhead involved. Assuming you can support yourself with your company as is, I think that money alone is a bad reason to grow. Instead, consider your motivations for becoming an entrepreneur (what were you after in the first place), how you like to spend your time (i.e. what is your ideal job), and what you want your company to be known for (not all goals are equally accomplished by small and large companies). I know it can sound cliché but it’s harder to make money when you’re miserable, especially when something very important to you (creative freedom, autonomy, the right role, or the right impact) is being compromised.

(3) What are the most frequent issues you've noticed entrepreneurs grappling with when it comes to the "values" versus "monetary benefit" trade-off?

Contrary to some stereotypes, most entrepreneurs aren’t in it for the money. If the goal was to make as much money as possible, many say they wouldn’t be entrepreneurs. Instead it’s the allure of freedom, autonomy, and meaning that often motivate them to strike out on their own. However, even our clients who were primarily motivated by money often make choices that result in less income in favor of other values – business related values such as an ethical company culture, or socially responsible business goals, and also more personal values such as outside of work time, extracurricular hobbies, and family.

The experience of being an entrepreneur makes you understand the quantifiable value of your values. You are constantly making decisions about what is worth it. You also learn that not all dollars are equal. For example, a new client could present a huge sales opportunity but require a significant values compromise. Anecdotally, in these cases most entrepreneurs choose their values and believe in their ability to cultivate other more congruent business opportunities. It takes some time to have this kind of confidence but most entrepreneurs learn that the “right” business opportunities don’t require a huge compromise on either front.

[This post originally appeared at ManishaThakor.com.] Want more financial love? You can follow personal finance expert & author, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative online basic personal finance course called “Money Rules.” 

Want To Take Your Success to the Next Level? Think Collaboratively in the New, New Economy

 

Picture this, you're reading your local news, Financial Times, or the WSJ and the article is highlighting the success of somebody you know, somebody who has gone further, faster, toward YOUR dream of success.  Instead of saying... “..that proves it can be done, or well done -  how can I add to that fabulous idea, often times our competitive thinking jumps in first to say, "That $%@!  she will succeed instead of me! 

                                             So, what should a Savvy Lady do? 

Begin by changing your thinking.  That [old] way of thinking about your competition is so 2008- back then it was about crushing your competition because otherwise how would you get your piece of the pie?  Not the approach to attracting success in the new, new economy. 

                       Fresh activity is the only means of overcoming adversity. -Goethe 

Part of what keeps people from reaching the next level of success or from implementing their ideas, is because they are still trying to re-enter their same field, grow their business or career in the same old ways; they are beating their heads against the wall repeating old tactics that no longer work. 

                                             Hello, you had me at Collaboration 

The way we do business, any business, is changing. Are you ready for the coming economic shift in how you'll conduct your business going forward?  The days (and ways) of doing business via simply supplying your clients with the right information, at the right price, are gone.   The new social era is made up of consumers that are smarter and they are looking for smarter suppliers.   One of the most impactful ways to embrace this new era is finding intelligent and empathetic businesses and individuals.   Seek out those that can deliver innovative, one stop shopping solutions, through collaborative “partnerships”.  The power of collective wisdom should never be underestimated! No one is creating success in a vacuum and you shouldn’t either.

Collaboration should be a main ingredient added to your success mix.  If you want build your wealth, expand your financial acumen, grow your customer base, manage your team more effectively – and more, you should be seeking out collaborative partners that will can allow all stakeholders to capitalize.   Investing time to find the right collaborators is worth it.  Apply the same principles and perform the same due diligence identifying the right collaborative partners, as you would to diversifying your portfolio.  Knowledge is power and applying it collaboratively can have your return on investment increase exponentially.    

A "Hair"-oing Tale: What Does It Mean For Your Career?

 

57% of men entering the workforce negotiate their salaries, while only 7% of women do.

Ouch. This is one of the many powerful messages I took away from Facebook COO Sheryl Sandberg's riveting TEDWomen presentation on why we have too few women leaders. I highly recommend watching this 15-minute talk. Sheryl's comments are game-changing in the same way Gloria Steinem's iconic "If Men Could Menstruate" OpEd was. Specifically Sheryl encourages working women to:

1. Sit at the table
2. Make your partner a real partner
3. Don't leave before you leave (re: balancing having a career & children)

These are all lessons she learned the hard way... through her own life experiences climbing the ladder from whip smart Harvard undergrad to one of the most powerful women in global business. After reading a recent profile about Sheryl in The New Yorker I felt aglow about the possibilities for women being financially rewarded for the business results they generate without having to tamp down their feminine sides. (While I've never met Sheryl, by all accounts she is warm, kind, supportive of others, and believes in "bringing your whole self to work.” A working mom, she's both feminine and ferociously effective in her career). 

So what does this have to do with hair... and more importantly with your career and financial future?

First, let me confess that I'm very sensitive about hair. I have some of it growing in places where honestly, no woman should have to deal with it (yep, dreaded facial hair). And the bits on the top of my head have a mind of their own. They generally prefer to live in a state of frizz and are not easily tamed. Why this is relevant you shall soon see.

Right after reading The New Yorker article, I stumbled upon a piece in The Daily Beast called "Rebekah Brooks' Distracting 'Do." Rebekah Brooks is the former CEO of News Corp.'s News International. She recently resigned amidst the fury over the News Of The World phone hacking scandal.

Oh - and she has long, red, curly hair.

As part of the ongoing investigation into who knew what and when, Rebekah spoke last week at a British Parliament hearing. Here are some excerpts from the article describing ex-CEO Brooks' presentation:

 
Her hair hung thick and loose below her shoulders like a dense tangle of vines. It was free and unruly; it was hair that had been released from any need to be controlled and tidy.

Brooks’ hair was a distraction because it was a ballsy rebuke of our expectations governing how people on the defensive are supposed to tread. There was no suggestion of humility, timidity, or caution. There was no attempt to disappear into doleful anonymity.

That was look-at-me hair—stare at me, remember me. Me, me, me.

By the time I finished reading, I literally had to start deep breathing exercises to calm down. My joy at Sheryl Sandberg's success had turned into despair for womankind. For goodness sakes, here was a scathing attack. Not upon Lady Gaga's latest outfit at a concert but upon a professional woman's NATURAL HAIR. (Would "don't-look-at-me-when-I-speak-in-Parliament-hair" have been better? And what exactly would that hair even look like?)

Reading this article made me feel like someone was putting a bag over my head, trying to smother my ambition and sense of feminine self. For I too am a working woman with free-spirited hair. In frustration, I reached out to an older, wiser friend who reminded me Rebekah is merely one of many executive level women derided for the body she was born with. She pointed out it was not long ago that Hillary Clinton was taken to task simply for having breasts.

In the past I have written about how one key component in the wage gap between men and women is that we women don't "Ask For It" - and by that I mean raises. In a world where a C-suite level woman speaking in Parliament, dressed authentically as herself, is derided for having "look-at-me-hair"... is it any wonder that so many of us women feel conflicted about standing tall in our authentic selves at work and asking for stretch assignments and raises? 

After watching Sheryl Sandberg's TEDWomen video & reading The Daily Beast piece on Rebekah Brook's "Distracting 'Do"... how do you feel about this whole to do?

[Note: Rebekah Brooks photo credit - PA/AP]

 [This post originally appeared at ManishaThakor.com.] Want more financial love? You can follow personal finance expert & author, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative online basic personal finance course called “Money Rules.”  

Turn Your Kids Into Personal Finance Champs

Do your children think you are a walking ATM?

 If you are tired of "must-have-that-toy-right-now" tantrums as you walk down the aisles of Target or Toys “R” Us, go straight to your nearest bookstore and buy Alisa T. Weinstein's new book, EARN IT, LEARN IT.  Alisa tosses the old allowance-based system of teaching your kids about money and replaces it with: J.O.B.S.  But not in the way you might think...

Innovative learning lessons can transform a child's life. When I was growing up one of my pivotal memories was sitting down with my dad who showed me how to calculate how much money I'd have in my IRA down the road if I contributed my babysitting and lawn mowing money to it and it grew at 6%, 8%, 10%, etc.  Yeesh. Once I saw that if I saved $2,000 a year (the annual max contribution back then) for 50 years and earned 8% average annual returns I'd have over $1,000,000 - I was hooked. It changed my attitude about money forever. Learning to be responsible with money became fun. Now most kids aren't as wonky as I was so punching the keys of an HP12C financial calculator might not do it for them, but I have a strong hunch Alisa's unique approach will.

How did you come up with this concept of using jobs to teach kids about money?

I credit my daughter completely. She wanted “one more lip balm Mommy!” and I thought 13 lip balms were plenty for a four-year-old (a four-year-old!). In my exasperation I told her to “get a job.” As soon as I said it, I just knew that was how she was going to earn her allowance: by test-driving real jobs.

How does EARN IT, LEARN IT work?

For the book, I interviewed 49 people with 49 different careers. I then translated their day-to-day responsibilities into kid-friendly tasks, many of which take 15 minutes. So when Mia was a Toy Designer, she cut out a paper version of her favorite stuffed toy and we talked about things like hard costs (which she apparently doesn’t have because “Mom, I don’t pay for [that stuff]. You do!”)

What is the most surprising reaction you've had so far from a child?

I say this with a big smile: the most surprising reactions don’t come from kids. The real surprise reactions are from parents, who didn’t realize it could be so easy, and take so little time, to get their kids engaged in something totally worthwhile.

What is the most common challenge parents have today when teaching their children about money?

It has to be just getting started. Talking about money makes people uncomfortable. On top of this, the traditional methods (paying for chores, odd jobs, or no strings attached) aren’t much fun. Since we’re all so busy, it would seem easier to avoid the subject altogether. But then you end up with a kid who thinks the world exists to provide her with another lip balm.

What have you personally learned about money while writing this book?

I was lucky. My parents taught me early on that what we do to earn money can be even more valuable than the money itself. Which means being more open to finding a career that simply makes us feel good. And this not only makes life richer, it makes living with (and learning about) money a lot more fun. [You can follow Alisa on Twitter at @EarnMyKeep]

What experiences have you had teaching your kids about money?

[This post originally appeared at ManishaThakor.com.] Want more financial love? You can follow Women's Financial Literacy Initiative founder, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative new online personal finance course called “Money Rules.”  

 

Generation Earn: A Chat With Kimberly Palmer

By Manisha Thakor

US News & World Report senior editor and personal finance columnist, Kim Palmer, has written an excellent new book for young professionals: GENERATION EARN.  Kim was kind enough to share her thoughts both on the writing of the book and to highlight "5 Money Tips for Today's Young Professionals."

What motivated you to write GENERATION EARN?
I felt frustrated with the constant focus on how bad our generation is with money. We’re told that we have too much debt and are clueless about finances, but the fact is, we’ve learned a lot from the recession. We were forced to learn how dangerous debt can be and how important it is to save and understand where your money is. As a result, we probably know more about money than any previous generation did at our age. I wanted to help people with their new goals-- financial security, supporting growing families, and giving back in meaningful way.

What has surprised you the most as you've talked to people about GENERATION EARN?
That there has been a huge shift in how young people think about money. We care more about having money in the bank than impressing people with big houses or fancy cars. Financial security is the new measure of success. But that doesn’t mean we’re greedy – in fact, the focus on giving back is a hallmark of our generation. We also want to make sure we’re spending our money in ways that support the bigger causes, from environmentalism to social justice, that we believe in.

What do you know today that you wish you had known 5 years ago about personal finance?
That the only way to get ahead financially is to save at least one-third of your income. It sounds impossible, and sometimes it is. But if you don’t start saving that much for your emergency fund, goals, and retirement in your twenties and thirties, it’s just going to get harder later, when you have even more responsibilities. Sometimes that means living in a tiny apartment for a lot longer than you ever thought you would.

5 Money Tips for Today’s Young Professionals... from Kimberly Palmer

1. Save one-third of your income. Yes, saving such a big chunk of money each month means sacrificing some comforts and indulgences for the short-term, but it’s the only way to get closer to that ultimate goal of financial security.
2. Don’t scrimp on career-related investments. There’s one area where it’s okay to be a spendaholic, and that’s when it comes to investing in your future earning power. The category includes not only education expenses, but also voice lessons for an aspiring podcaster, how-to books for those with potentially lucrative hobbies, and even a new wardrobe for office workers who need to impress the higher-ups.
3. Pay off all but your cheapest student loans early. Student loans that carry a 5 or 6 percent interest rate (or higher) are costing you much more than your savings can earn in our current low-interest rate environment. That means paying off a chunk of your loans will immediately start saving you more money than you could if you continue to make those slow and steady monthly payments.
4. Don’t wait to invest until you have “extra money." Waiting to start a retirement account until you feel like you can afford it might mean you can never retire. Don’t wait to open up a 401(k) account if your workplace offers it, even if you start by contributing just 2 percent of your salary.
5. Give back – on your own terms. Use Charity Navigator to check up on the background of your chosen organization before donating any money to make sure they’re going to use the money the way you want them to.

What about you - what advice do you have for today's young professionals?

 

 

The Four Most Dangerous Words To Your Portfolio

By Manisha Thakor

How Should I Invest?

As we head into the New Year, media outlets ranging from CNBC to The Washington Post are full of financial commentary addressing this question. On the surface it seems like a logical query. 

But if you were getting ready to go out, would you ask "What Should I Wear?"... without describing where you are heading?  Of course not. The clothes you'd wear to shovel snow in will be very different from the clothes you'd wear to a wedding. 

That's why "How Should I Invest?" are the four most dangerous words to your portfolio.  The answer to that question is often given as if one size fits all, when it's anything but. To protect yourself, here are 5 things to think about to make sure your hard earned money is invested in a way that is appropriate for your specific situation.

1. When do you need to spend that money? If it's in the next 5 years you typically want to protect that money against inflation in savings accounts, money market funds/accounts or CDS rather than take market risk in stocks or bonds.
2. Do you have any outstanding high-interest debt? If so, paying off that debt may be the best investment you can make as it gives a "guaranteed" return - especially when interest rates on savings vehicles are so low.
3. How steady is your income?  A professor with tenure may feel more comfortable taking higher short-run risk than an entrepreneur with variable cash flow.
4. How old are you?  The older you are, the less time you have on your side to bounce back from volatile markets and thus the more conservative you'll want your portfolio to be.  For women, a rough rule of thumb is to take 110 minus your age to arrive at the ideal maximum percentage of your portfolio in stocks.  For example, if you are a 40-year old woman... 110 minus 40 equals 70.  So up to 70% of your portfolio could be in stocks and 30% in bonds (for men, who have shorter life spans, use John Bogle's oft quoted 100 minus your age).
5. How interested are you in investing to begin with?  Unless you are inherently passionate about picking individual stocks or studying active money managers, I love target date retirement funds and/or utilizing low cost index funds and ETFs.  My favorite "basic portfolio recipe" comes from Boglehead Mel Lindauer. His recommendation: for the percentage of your portfolio devoted to stocks, put 1/2 in a total US stock market index and 1/2 in a total international index. For the portion that goes into bonds, put 1/2 in a total US bond market index and 1/2 into Treasury Inflation Protected Securities ("TIPs") via funds, ETFs, or direct purchase. From there you can add some additional investment spice in the form of REITS or commodities, but for most people this core recipe will do just dandy.

Bottom line, always remember that before anyone can give you meaningful investment guidance they need to understand where it is that you specifically want to go. 

So, where are you headed, financially, in 2011?

 

 

[This post originally appeared at ManishaThakor.com.] Want more financial love? You can follow Women's Financial Literacy Initiative founder, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative new online personal finance course called “Money Rules.”  

 

Bounce Back Boot Camp

Recently, I received an email from one of my “Bounce Back Boot Camp” members who has difficulty planning a budget with a fluctuating income.  I’ve found that uncertain incomes are a common occurrence and can make your wallet stretch beyond its means.  There are so many jobs out there with incomes dependant on jobs completed and not salary-based which make preparing a budget a difficult, but an imperative tool to learn.  Because monthly income fluctuates like it does, budgeting could be one of the best skills you may acquire toward your path to becoming financially independent and secure. 

 

My friend recently the mistake of setting her savings goals on a fixed dollar amount per month or year.   A more flexible method would have been for her to try saving a percentage of the earnings she had each month to allow more flexibility.  Many advisors will recommend you save between 10% and 20% of your take home income and use 80% to 90% for living expenses.  I would recommend you follow these guidelines.  Aim to spend only 80% of your earnings on living expenses and save 20%.  Because of uncertain income, choosing to save closer to 10% during the less lucrative months and 20% when you make the big bucks is a good idea. 

 

If you have any outstanding bills that are overdue, then the beginning months may include 5% or 10% of your savings to contribute towards overdue bills.  My husband’s co worker had overdue bills of $1200, and he took home about $10,000 this month- so I advised him to  save about $1,000.  10% of the $1,000 is $100 he used to pay off his debt. Its efficient and it doesn’t set you back too much!

Depending on your personal situation and comfort level, you may decide to adjust these proportions to better suit your needs. 

Stacy Francis
Savvy Ladies
www.savvyladies.org

Your Cell Phone Bill: Is Prepaid a Better Option?

At a recent family get-together, the conversation turned to cell phones. More specifically, my sister-in-law had received a statement that morning. Stunned that she had used less than a third of the minutes she paid for, she wanted to know whether prepaid would be a better option.

What an excellent question! And indeed, many families could save big by making the switch. However, below are a few things to consider first:

1. How many minutes do you use – really? If you normally spend 600 minutes per month on the phone and the measly 100 minutes on your latest statement is the result of your phone being broken most of the month, you should probably stick with your plan. But if you find that during the past six months or so, you have never even used half of your minutes, prepaid could be for you.
2. Could it be that you just have the wrong plan? Have you looked at different plans and providers? From unlimited plans with majors such as T-Mobile and AT&T to cheaper options with lesser-known companies like Tracfone, chances are you could find a plan better tailored to your needs.
3. What about the handset? When you commit to a plan, most providers will throw in a free (or at least heavily discounted) handset. With prepaid, you typically need to purchase your own. If you have an extra handset, this may not make a difference. But if you don’t, you need to factor this price into the calculation.
4. Are you shopping for yourself or for your entire family? Family plans tend to be cheaper than individual ones. On the other hand, if you have teens, between chatting with friends and text messaging, a prepaid plan could save you a fortune.

Stacy Francis, Savvy Ladies

www.savvyladies.com