Buffett Quote Series #2

Here is the second part to my Buffett Quote series.

"I buy expensive suits.  They just look cheap on me."

"Someone is sitting in the shade today because someone planted a tree a long time ago."

American Express Small Business Saturday

Forget Black Friday!  If you have an American Express card, I urge you to take advantage of their Small Business Saturday promotion.  Sign up on their website and you can get a $25 credit for buying something at a small business.  Most local restaurants and stores count so treat yourself to a nice meal while helping your local businesses.  Just make sure you spend at least $25 in one transaction after registering to get the credit.  It is too good a deal to pass up!

Buffett Quote Series #1

So I haven't posted in almost a month now mainly because I've been pretty busy with school work.  I thought I'd try to do a series of posts on something I've been wanting to do for a while which is talk about some of the great quotes from one person I admire greatly (along with many others), Warren Buffett.  Here is the first part of my series with two quotes I pulled.

To Itemize Or Not

It is a big relief to be finished with my hell week. I had 5 midterms in 4 days this past week so I've been extremely busy the past couple weekends studying. I thought I'd talk this week about itemizing deductions on an individual tax return and when you should do it over taking the standard deduction.  of course, this means you stay organized throughout the year and keep track of all your expenses. 

Internet Safety

I found a very interesting video online that matched the theme of my last post on password security.  We all access information online nowadays and it is important to keep vigilant when connecting to important financial accounts.    Always be on the safe side when browsing the internet and make sure you have up to date security.  I  use Microsoft Security Essentials but just make sure that whatever software protection you use  is up to date.

Protecting Your Passwords and PINs

There is a surprising (or perhaps unsurprising) lack of sophistication with how many people set PINs and passwords.  A study done by Data Genetics analyzed passwords from released or exposed password tables and found that the most common 4 digit password was "1234."  "1111," "0000," and other strings of the same number were also very common.  A list of most common passwords published by SplashData include "password" and "123456."  Others on the list that might be slightly more sophisticated include "qwerty" and "qazwsx" for passwords and "2580" for PINs.  You can easily see that these just have to deal with the placement of the characters on the keypad or keyboard to help people remember them easily.  However, this makes it extremely easy for someone to just guess what your secret code is if you lose your ATM or credit card.

International Access to Money

Roughly 60% of Americans do not have a passport according to the State Department as of January 2012.  If you belong in that majority and plan on staying in it, this post will probably not be very relevant.  However, for those of us who do have a passport and plan on using it, we have to prepare before going abroad.  Especially within my age group, many students study abroad, backpack across a different continent over the summer, or even attend college in a different country.  For those of us who haven't, learning how to get access to money is the first step.

Rising Income Tax Rates

There is a lot of talk about an upcoming "fiscal cliff" in the U.S. where current policy has a lot of tax increases and spending cuts going into effect in the beginning of 2013.  If a different solution cannot be agreed upon by both parties, it is said that the economy will go off this "fiscal cliff" into another recession and have the U.S. face a similar crisis in Europe.  It seems like higher taxes will be a certainty in the future; it is only to what extent.  A lot of it will also depend on the results of this year's election as well.

Retirement Planning Excel Sheet

I apologize for the small image and the late post but I have a small treat today.  I've uploaded a link in this post below if you are interested in downloading it and playing around with the spreadsheet. This is a simple little excel model I created to project one way of how to plan for retirement.  I'll quickly talk about how to think about this tool and how to use it.

What's Your Allocation?

Studies have shown that a very large driver of variation in returns for portfolios is derived from different asset allocations.  Focusing on having the right asset allocation can help improve your returns on investment over time and is a more reliable driver of returns than either stock picking or market timing.  There is often much debate over any "ideal" asset allocation as it differs among individuals.  I'll just go over some of the general themes and rules of thumb on how to think about asset allocation.

How to Effectively Save for Retirement

I've talked about the 401(k) and the IRA separately before, but I thought I'd do a more consolidated post comparing the two.  There are two main types of accounts that you can use to get tax advantages to save for retirement and they each come in two forms.  The two main types of accounts are 401(k)s and IRAs and the two forms are traditional and Roth.

Online Savings Accounts

I haven't blogged about one critical tool almost everyone has for their personal finances: the savings account. I've introduced bank accounts before and analyzed what are the important features to look for in a bank account, but I don't think I've specifically addressed which are the best bank accounts to have.  In a savings account, you really only care about 3 things: convenience, security, and returns.  You want it to be easy to use when checking your balance or making transfers, you want to make sure that your money is safe, and you want to make sure that you are earning as much as you can on your savings.

Income Analysis 2012 YTD

There are always two sides to the financial health equation.  The past couple weeks I have been taking a closer look at the expense side of things, analyzing how much I spend on food, transportation, and bills this year compared to last year.  Why do we automatically think that budgeting means controlling our spending?  There is the income side that you need to look at as well.  The thing is that controlling expenses is relatively easy while increasing your income can be difficult to do, at least in the short-term.  However, arguably there is much more potential to improve your financial health by increasing your income.

Expense Analysis 2012 YTD

Although it sounds extremely dorky, I actually enjoyed looking at the data and making the charts for my last post looking at my credit card rewards for the first half of this year.  I took a slightly more in depth look at my expenses overall, especially with my handy budgeting app, and wanted to share the results.

Credit Card Expenses YTD 2012

Some of the benefits of budgeting is that you can get a really good look at how your expenses shape up year after year.  Are your consumer habits changing?  Maybe you didn't realize that eating out every day rather than every week was having that big of an impact.  Taking the time to check with a budget can be really helpful.  I am going to take a look at my records for the first half of 2012.

Duolingo: Learn a language for free

Waiting4 pay with W4

With many people beginning internships, it may be a good idea to think ahead about the taxes that will be withheld from your paychecks.  I've posted before about whether you should file a tax return or not, but when you begin to fill out the paperwork necessary to begin working, you'll likely come across the W4.

Falling Investor Confidence

With the end of the month finalizes the DOW's worst May since 1940, dropping almost 8%.  With worries in Europe turning toward Spain recently, market volatility has increased.  Facebook's IPO disaster recently also helped reinforce investor fears in risky assets leading to more risk aversion and avoidance of stocks altogether.

Sell in May and Go Away

There is a saying in the investing community to sell in may and go away, referring to selling your stocks and staying away from the market for six months before buying back in around October or November.  The reason is that historically, the six months following May tend to underperform the six months leading up to it.  In both 2010 and 2011, the stock market peaked at the end of April and it looks like this year has been the same.  For 2012, April had been the shaky month but the S&P 500 had increased about 11% until the end of April.  And since then, the market has fallen around 6%.

Delaying Gratification

Have you ever heard of the marshmallow test?  It is a really interesting (and cute!) experiment looks at whether or not four-year-old children are able to delay the gratification of eating a marshmallow for 20 minutes in order to get a second marshmallow.  According to the youtube video description, those kids who were able to wait had higher SAT scores of 210 points on average.  I had learned more about this is my psychology class as we talked about the id which is our instinctual desire to eat the marshmallow immediately, the super-ego which says we shouldn't eat the marshmallow at all since it has no nutritional value, and the ego which says we should do as the experimenter suggests to get twice as many marshmallows and as a four year old we don't have to worry as much about nutritional value just yet.

Personal Finance Overview

It has been a little more than a year since I first started this blog, and I think it would be appropriate to summarize the main takeaways from all the information I have so far compiled on this site.  The overarching problem I try to address is that we are going to need money for our entire life over our entire life.  The problem is that the time when we earn money isn't as evenly spread out with most of us earning a lot more in the middle of our lives rather than near the beginning and end.  When we are kids, our parents help provide for us but when we grow old, we will rely on our middle-aged selves to push some of the income into retirement through saving.  And we look at the process through the lens of personal finance.

Research Labs

As a young adult, we often try to focus on increasing our income as much as we can.  Students with part-time jobs don't earn very much, so it's important to find alternate sources of income.  Passive income from dividends and interest don't amount to very much unless you already have a lot of money and alternate sources of income generally amount to other part-time jobs.  However, especially for college students, research labs provide an excellent opportunity to make a little money on the side by simply giving some time to fill out surveys or participate in simple experiments.

Citi Credit Card Review

I have a couple credit cards from Citi and I feel like I may have been a bit unfair in my previous posts recommending credit cards.  Currently, I have the Citi Forward credit card for students and the Citi Dividend Visa.  Citi has been one of those companies who didn't seem very stellar but their cards grew on me as I looked more closely at the facts about them.

Paying Off Your Debt

You always want to pay off your debt.  Any debt at all usually is detrimental to your financial position (unless it is a friendly loan of a few dollars).  This is usually because loans always have very high interest rates, at least higher than the interest you can earn from a bank.  The main reason is because banks and other lenders take larger risks lending to individuals and demand a higher rate of return whereas banks offer FDIC secured accounts and can offer lower rates.

SavingAdvice

I think I may have found one of the greatest forums (for personal finance) on the internet.  The website is Saving Advice and I must say how mildly disturbed I am by my own fascination with the place.  Most of the people on the forum are well established adults, so it feels a little weird as a college student.  Most people (from what I've read) already have a family and a mortgage and a lot of retirement accounts.  But what I'm most impressed with about the site is its quality.

How to Write a Resume

So you're in college, it's your second or third year, and you realize that spring semester is almost coming to an end.  A question pops into your head: what will I be doing this summer?  If you are like most professionally driven students, you will turn your thoughts toward getting an internship.  For graduating and graduated students, the job hunt is right on your doorstep.  But regardless of where you are in the process, it is important to have a good, clear resume for you to submit on your applications.  This post will probably be the most helpful for high school students or college freshmen looking to get ahead early on and develop habits that make it easy for you to update your resume and keep it fresh, but the tips are very relevant for anyone about to apply to a position and want to check their general format.

The Best Way To Earn Money

The best way to earn money is sometimes to spend.  I have talked a lot about utilizing credit card rewards, but that is just a way to earn some cash on your normal expenditures.  There are often lots of opportunities to be made by just spending all the money in your wallet or maxing out your credit cards.  There is a saying that you can't earn money until you spend, and whether you are running a business or just looking to consume goods, that can't be more true.  The extra benefit that we get out of just making a purchase can often help us be better at our jobs and give us more earning power to get more money in the future.

The Eisenhower Box

We all try to make the best use of our short time here on Earth.  It is important to manage our time wisely to maximize its value, so I thought I'd spend a post talking about how to become more productive and how best to plan ways to budget your time to reach your goals.  I thought I'd focus on a really interesting method to prioritize your to-do lists called the Eisenhower Box.  I will also talk about Pareto analysis and the POSEC method in a future post.

How to Apply for a Credit Card

So although my first few posts were about why you should use a credit card and my recommendations for credit cards, I have yet to actually describe the process of applying for one.  I thought I'd spend this week's post explaining the process in detail, specifically applying online and receiving the card in the mail a few weeks later.

Retirement Investment Strategies

Dreaming about vacation spots on beaches or taking a trip on a cruise ship?  Imagining the future when you aren't working and don't have a care in the world with all the money you need already saved up from years of work?  If you answered yes then you are probably thinking about an ideal retirement scenario.  Aside from my initial post introducing The Smart Nickel, it seems like my retirement post has been one of the most viewed.  In order to make some of those dreams more realistically achievable, I thought I'd write another post looking at my idea of an ideal retirement strategy.  I will talk about the basic strategies that go into investment planning and how that will apply to planning for retirement.

The Small Balance Credit

Recently, I decided to forgo maximizing my rewards (since this usually amounted to getting an extra quarter each month) to using each and every one of my cards at least once a month.  This way, I can hopefully start focusing on building a better credit score which should benefit me in the future after graduating.  I raise my credit score by charging a small balance on each one and keep these balances low relative to my credit limit.  This helps show credit companies that I know how to manage my credit effectively with low risk which in turn raises my credit score.  This often results in balances of maybe a couple dollars since I just buy one thing from the grocery store or a fast food restaurant.  Amazingly, after just one month of starting this, I came across a very interesting phenomenon.

What Free Gifts?

Everyone gets such a great feeling from getting a gift, especially since it is usually something unexpected, something we wouldn't get for ourselves, and it shows the feelings of the giver.  It also feels great to give gifts to others, but we have to beware that the act of gift giving may not always be free.  Yes, I am talking about a gift tax.

The Excel Macro

So I thought I'd share a very useful tool we could all use to improve productivity if you ever work with excel.  A lot of people who use Excel don't use the programming side, and you do need some programming experience to get adept at it.  However, there are some useful tools you can use even if you aren't a programmer.  If you plan to never touch excel, then you can feel free to stop reading here.  But I think these techniques can be really helpful if you ever need to sort or make sense of a lot of data.  This is probably most useful if you are in some kind of corporate role and need to organize excel data.

Tax Strategies

Now you should know whether or not you should file your own tax forms, but before learning about the forms themselves, it may be good to learn a little bit about tax strategies to minimize your bill to Uncle Sam and maximize how much in cash you take home from your hard work.  There is a way you should approach your taxes so as to maximize the cash that reaches your pocket and it is good to learn these early so that they can work to your advantage for they ears to come.  I also go over some of the basics in an earlier post on taxes.

Should You File?

So tax season is approaching for all those who have to file for year 2011.  Deadline for filing your federal tax return this year falls on April 17th (fun fact: tax day is usually the 15th but this year it's two days later since the 15th falls on a Sunday followed by a holiday celebrated in the District of Columbia).  Many of us college students probably don't deal with our own tax return yet.  If you don't work part-time or had a paid internship over the summer, you probably don't have income to report.  For others of us, we still fall under the category of dependent and just let our parents file our taxes under their return.  However, after we graduate and step out into the real world, it is essential to know how to file your tax forms so that the IRS doesn't have to hunt you down.

Membership Programs and Mailing Lists

There are always two sides to the budget equation: revenues and expenses.  If you want more spending power, you have to look toward increasing the revenue side of the equation, meaning you have to either get a raise at your job (or get a job if you don't have one) or find alternate sources of income.  This is generally pretty difficult considering you have no direct control over how much you can move this bar.  However, increasing your revenues will often lead to a bigger change in your budget than penny-pinching your expenses, which is often much easier to do.  This post is going to look at a couple benefits you can get by finding some discounts right under your nose to help with the expense side.

Credit Card for 2012

After looking at my credit cards in 2011, I have decided to pick my favorite for those of you looking for a new card in 2012.  Keep in mind that if you are new to credit cards, you may want to try to get a student credit card first or ask your parents to add you to one of their credit lines before applying for your own. Well, without further ado, my pick for 2012 is the Chase Freedom card.

Buy Fear and Sell Euphoria

I can't quite remember this quote originated, but I quite like the idea of "buying fear and selling euphoria."  It goes along with Warren Buffet's quote: "You should try to be fearful when others are greedy and greedy when others are fearful."  It essentially means when other investors worry and sell their assets in a panic, the people who buy and hold tend to do very well.  When everything is going great and people are putting all their money into the markets, those who get out tend to take advantage of the higher prices and do very well again.  This past year, the markets have been very fearful with all the volatility but those who were greedy and bought when everyone else was selling would be sitting on some gains right now.

Cars: Benefits of Leasing

For those of us looking at cars entering into college or graduating out of college, we may not be all to familiar with the process of buying a car.  I haven't bought my own car yet so I can't say I am an expert in the area, but a friend of mine is looking to get a car soon and I will eventually need to look into it as well.  I thought I'd post some information about an alternative to buying a car: leasing one.  What is a lease?  A lease is kind of like renting a car but you have some restrictions for what you can do with the car (like stay within a certain mileage for a specified period of time) and you have the option of purchasing the car you lease at the end of the term.  If you fulfill your side of the contract, you can return your car and just walk away.