Category: Budgeting & Saving

Once you’ve changed your spending habits to increase your income and have mastered the art of reducing your existing expenses, you should be ready to look for more ways to increase your income.

In The Wealth Number, I suggest several ways to increase your income so you may accelerate savings.

Of course, the more you increase your income and save, the sooner you’ll be able to walk away from your mind-numbing day job.

One of the ways that I attempt to increase my current income is through real estate, entrepreneurship, book sales, and this blog.

Earlier year this year I flipped a house for a $40,000 gross profit, I’m working on a Software as a Service (SaaS) application, and I’m still trying to promote my book and this blog until they generate extra income.

The later two didn’t succeed as of yet, but they are projects that I choose to spend time building with the extra time that I have. These are projects that I work on with my “other eight hours.”

What Do You Do With Your Other “Eight Hours?”

Like you, I work about eight hours per day and sleep for another eight hours. In between those times there exists another eight hours, which can be used to work on projects, or side hustles, so you can increase your income to accelerate your savings.

Here are 15 ways that you can use your other eight hours to increase your income:

1. Dominate Your Existing Salary by asking for a raise – If you are a top performer, you may be able to make a successful case. The key to getting a raise is documenting everything, so you can make your case with specifics. Keep a log detailing your accomplishments both at and away from your job, including new degrees or certifications and ways you’ve saved the company money or have enhanced revenues. Be sure to research the going salary for someone with your education, skills, and experience. Use sites such as Salary.com and SalaryExpert, When you meet with your supervisor, don’t say you are asking for extra money because you need it; instead, make the case for how you’ve strengthened the company’s bottom line.

2. Search for Better Paying Jobs – Using he same research that you use in the tactic above, see what other jobs would be willing to pay  you for your increased skills and organization contributions. As long as you are growing your wealth number, you should have to worry about how you’re going to get by during a job transition. You’ll already be prepared.

3. Take a Second Job in the Evening or on the Weekend – Some 3.6 million Americans took on a second job part-time in 2011, according to the Bureau of Labor Statistics. Aside from providing extra money, an extra job can help you explore a potential career or learn skills that may apply to your primary employment, says Hansen, of Quintessential Careers.

4. Become an Uber or Lyft Driver – If these driving services are in your city, they may be looking for new drivers. If you’re a people person and don’t mind driving strangers around in the evenings or the weekends, this side hustle may be just for you.

5. Start a Website (or a Blog) – If you have a lot to say and are passionate about writing and sharing this content, consider starting your own blog. Once blogs begin receiving a decent amount of traffic, they can earn money by way of indirect and direct advertisements, selling affiliate products, or selling sponsored posts, among other things. Don’t know how to get started, check out our free guide to start a blog.

6. Start working on a side business – Is your wealth number not large enough yet? That’s ok. Use crowd funding and let your friends, family, or strangers invest in your project. Crowd-funding sites like Kickstarter and Indiegogo allow anyone to raise money from friends and strangers who want little more than to help bring an idea to life. Of the more than 30,000 projects successfully funded on Kickstarter since its 2009 launch, the vast majority have been the work of individuals, not companies, says a Kickstarter representative.

7. Rent Out Your Extra Home Space – One way to lower monthly housing costs is to take a renter into your home. According to the U.S. Census Bureau, 6.2 million adults lived with someone who wasn’t a relative in 2010 (the most recent figures), up from 5.3 million in 2007. City dwellers who don’t want to take on a long-term tenant can consider hosting tourists passing through town. Mikey Rox and Everett Morrow regularly rent the guest bedroom in their New York City condo to visitors who pay nearly $90 a night. In three years, they’ve made more than $75,000 by advertising on Craigslist, as well as on Airbnb and Roomorama, which take a percentage of the total booking fee paid by the guest.

8. Become A House, Child, or Pet-Sitter – If you don’t mind pet-sitting, check out sites such as Rover.com or Care.com and sign-up to become a sitter.

9. Become a Virtual Assistant – If you have lots of time on your hand and don’t mind working administrative tasks, consider listing your services as a virtual assistant on sites like Elance or Odesk.

10. Freelance Your Skills – There are many freelance jobs. You can work in graphic design, in video production, as a consultant or as a writer. Look at the skills that you currently have and then consider how you can offer those skills as a service to small businesses or families. Then begin marketing yourself and making contacts.

11. Sell What You’re Good At – You may have great skills as a stylist or barber. Or perhaps you enjoy cutting grass or painting. Find a way to get the word out to your family and friends and then begin selling this service.

12. Look for a Tutoring Gig – You can also teach what you know to others as a tutor. In addition to spreading the word locally, would-be tutors can post their offerings on websites like Tutorspree and WyzAnt. And people who are strong in math, science or other sought-after school subjects can teach individual students online through websites like Tutor.com.

See how Ryan made extra income as a tutor.

13. Build it, Then Sell It – Craft sites like Etsy and ArtFire aren’t just for artists selling their work; people make money selling a wide range of products, including handmade furniture and purses.

14. Self-publish a book or create an eBook – The explosive popularity of e-books has made it easier to turn prose into extra income. In 2010, Web strategist Scott McIntosh dashed off a 61-page e-book based on his knowledge of search engine optimization, then uploaded it onto the websites of Amazon for the Kindle and Barnes & Noble for the Nook. With your skills and  combinations of services from sites such as Fiverr.com and Createspace, you can have your own book listed on Amazon or your own personal site for less than $100.

15. Create an App – Yep. If you have an idea for an App, it can become a reality by using sites such as Elance or Odesk. Benny Hsu knew nothing about programming when the 35-year-old manager of his family’s Jacksonville, Fla., restaurant seized on an idea last year that he thought would make a perfect iPhone app. Hsu’s total cost was just $1,900, much of that the fee he had to pay the programmer. The 99-cent app, Photo 365, proved so user-friendly it was featured by Apple, and it has so far earned Hsu $55,000.

Summary

You can get as creative as you want when it comes to earning extra money. Me, I like to focus on just a few things, which is why I’m only focusing on this blog and my app. I think both can become big wins as long as I’m consistently working to achieve my end goal.

Figure out how you’re going to use your other eight hours and make a goal to bring in an extra $100 monthly. You can do it.

Remember, the quicker you increase your income, the more you can save. And the more you save, the quicker you’ll be able to “walk away” from a job you don’t really like.

Originally posted 2014-12-04 06:00:11.

Now that I’m in my mid-twenties, everyone I know is getting engaged. In 2012 the average engagement ring cost $4,000, according to a 2013 report from Jewelers of America. That same year, the median salary of a twenty-something with a bachelor’s degree was $46,900. That means that if you were 25 years old and getting engaged, you’d spend about 10% of your salary on a ring.

I don’t think most people I know are contributing 10% of their salary to a retirement account, but somehow it’s considered normal to spend that amount on a diamond? I hope it’ll be keeping you warm when you’re collecting social security.

But no matter what I think about engagement rings, there are still ways to get one AND be financially responsible. So here are four examples of when not to buy an engagement ring.

You don’t have an emergency fund

Traditional ring-shopping guidelines say you should spend two-month’s salary on a ring. Most personal finance experts recommend you have three to six month’s worth of expenses as an emergency fund. So in between all this saving (which can take years to do) how are you supposed to prioritize? What’s the point of having a two-carat diamond on your finger when you can’t afford to fix the transmission on your car? Before you buy the ring, have three month’s worth of expenses in your bank account. And if your partner isn’t financially savvy, figure out their assets. You don’t want to drop $5,000 on a ring to find out that your future wife has $20,000 in credit card debt.

You aren’t contributing enough to retirement

Most experts recommend putting 10-15% of your gross salary toward your retirement. At the very least, you should put away enough to get whatever match your employer might offer. So before you head to your local jeweler, check that your contributions are on par. If you’ve switched jobs lately or gotten a promotion, confirm that your 401k has increased as well.

You don’t have the cash to pay for it

If I had to list the worst personal finance decisions I’ve heard of, taking a loan out to pay for an engagement ring would be right up there with getting furniture on layaway or trying your hand at day trading. Loans are sometimes necessary. I wouldn’t have been able to go to the college I chose without taking loans. And sometimes it makes more to take out a loan if the interest rate is super low. But I doubt whatever loan you get for a ring would be better than saving the money yourself. Plus once you get the ring, you can start saving that money for your wedding, honeymoon or down payment. Creating a habit of saving can also make you think twice before you buy that diamond. Once you see it’s taken you months to save for something, you’ll have more of an appreciation for your money.

You’re in debt

When you spend thousands on a ring when you have thousands (or more) in debt, you’re only continuing the notion that it’s ok to buy what you want when you can’t pay for it. Why start your married life with a loan? There’s no rule that says the ring you get at the beginning of your marriage should be the final one. Maybe you get a placeholder rock until it makes sense to buy a diamond. Maybe you get a pre-owned ring for 50% off or scour vintage stores for unique ideas. Be honest with your fiance. Most people prefer to marry someone that is thinking about their future instead of buying something just because society tells him to.

If you want an engagement ring, then get one. Discuss your budget, pick it out together and make sure it’s what you both want. But before you do, make sure that you can truly afford it.

Originally posted 2014-11-17 06:00:47.

Young people graduating from college have a lot of things on their minds.  The usual suspects are student loans, finding a job and eating food.  And not necessarily in that order.  One thing many graduates don’t think about is their credit score, and this can end up costing them a lot of money in the long run.  All it takes is using a credit card responsibly and appropriately to start a long term history of great credit.

Most people will end up buying a house or a car in their lifetime.  They might also rent an apartment or sign up for a credit card.  In most of these cases, the company will want to know what kind of borrower you are.  Instead of taking the time to look through all of your transactions, the company will look at your credit score.

Fair or not, it is essentially a summary of your credit worthiness boiled down to one single number.

How Can I Get a Good Credit Score?

The most widely used credit score is the one by FICO, which calculates your score on a scale from 300-850.  While the exact algorithm the company uses to calculate your score is not known, they do make it known what factors make up your score.  This way, you can easily figure out what you need to do to improve your score.

According to the chart on their website, 80% of your credit score is determined by your payment history (35%), amounts owed (30%) and length of credit history (10%).

Want to check your credit score? Sign up for Score Watch from MyFICO.com.

All three of these factors can be optimized by simply signing up for a credit card early in your career and using it wisely.  Here’s how.

Payment history

This looks at your history of on time payments.  You obviously want a long history of on time and, ideally, in full payments on your credit card.  That means paying off the total amount of your bill before the due date.

Every.

Single.

Time.

Amounts owed

This mainly looks at the amount you owe versus your credit limit, typically referred to as your credit ratio.  If the limit on your card is $1,000 and you routinely spend $999 every month, that doesn’t look good at all.  You want to have a low ratio, meaning if your limit is around $1,000 you want to spend around $200.  This means that increasing your credit limit is actually a good thing, as long as you don’t increase your spending.

Length of credit history

There’s nothing you can really do about this except to get a time machine and zip 10 years into the future.  Lenders want to see that you have an established history of paying your debts on time, so that’s why it’s important to get a card early on and use it wisely.  Getting a card in freshman year and listening to the words of wisdom in this post will already give you a solid 4 years of good credit history.

Looking at the FICO chart can also tell you what NOT to do with that credit card.  Doing things like being late with bills and maxing out your credit limit will throw up numerous red flags and will cause your score to plummet.  While it’s good to acknowledge your mistakes and learn from them, it’s even better to recognize them beforehand and never make them in the first place.

Having a great credit score will give you favorable interest rates on your car loan, mortgage or any other loan you may have to take.  This can lead to savings of thousands of dollars over one’s lifetime.  Starting your credit history with responsible credit card use can go a long way to make this happen.

Are you ready to build credit wisely? Click here to see the card I recommend as the best credit card for young adults. The card allows you to get your credit score free each month.

Originally posted 2014-11-14 06:00:04.

It seems like personal finance doesn’t become a priority to some people until something bad has happened. This can be because you don’t necessarily grow up with personal finance lessons, or maybe you don’t have the best examples to follow. Before things get out of hand, or if you’re in the process of building goals to reach financial independence, following these 5 good money habits will have you in great shape:

Keep Cash on Hand

One thing my family and friends know and can’t stand about me is that I almost never have cash on hand. I take for granted that most places accept debit or credit, so I don’t see a reason to carry cash. Aside from being prepared for those rare moments when an establishment is cash only (or if the parking meter only takes coins and not plastic), you should keep cash on hand for emergency situations, as well as a way to budget better. I’ve noticed that when I have cash on me, I’m more wise about my spending decisions. With my debit card being linked to my checking account, I don’t “see” the money, so it disappears a lot easier as well. Start keeping a set amount of cash in your wallet, even if you get paid via direct deposit.

Check Your Banking Activity Daily

It’s no secret that big companies are not exempt from being hit by hackers. Some of the biggest breaches lately have been Target and Home Depot, where consumers who used their debit or credit cards had their information vulnerable to thieves. While some were safe, just inconvenienced by having to get a new card issued, some people had fraudulent charges on their card, and lost a lot of money. They didn’t realize it because they weren’t monitoring their banking activity. Daily sounds a bit excessive, but it takes less than 5 minutes to check your recent activity in online banking. If you notice a charge that is unfamiliar to you, notify your bank immediately.

Check Your Credit Monthly

This is important, especially when you’re building or repairing your credit. There are 5 major factors that determine your credit score, but you should also keep watch of the things that appear on your credit report. Identity theft happens to many people, and is not found right away because the person either doesn’t have credit monitoring set up, or they don’t manually look over their report themselves. You are entitled to a free credit report from all three bureaus once a year, but it would be a good idea to invest in credit monitoring so that you may keep track of your accounts and your score.

Go to AnnualCreditReport.com to get your no strings attached free credit report. For credit monitoring, try Score Watch from MyFICO.com.

Set Up Automatic Savings Contributions

Saving money is hard to do when you have to remember to do it. To alleviate that pain, you should set up automatic contributions to your savings account. This has been proven to increase savings balances, because it’s set it and forget it. It doesn’t have to be a large amount of money as long as it’s consistent. I have $50 automatically deposited into my Capital One 360 account every payday, and it’s nice to see that account grow without me having to think about it.

Review Your Budget

Your budget this month might not be the same 6 months from now. You should review your budget with new responsibilities or lifestyle changes. See how much money you have leftover after bills have been paid. Can you spend less in one category? Eliminate one altogether? Is one bill set to increase soon? Reviewing your budget and adjusting accordingly will close those opportunities for money to go into the abyss, and can help you save more money in the long run.

Need help creating a budget? Get a budgeting template and tools for financial success in the Young Finances Toolkit.

What are some other money habits you suggest? Do you follow the ones above?

Originally posted 2014-11-12 06:00:27.