Deeds Done, Sunday, April 24, 2016

Deeds Done, Sunday, April 24, 2016

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Barrett TownshipMark Ecker to Neil N. and Stacey M. Nuzzi, Parcel No. 1, Lot 2, "Minor subdivision plan of lands of Mark Ecker and Richard Troiani"; Parcel 2, "Subdivision of lands of Norman A. Price and Gene D. Price," Seese Hill Road, $305,000Chestnuthill TownshipDaniel J. and Stephanie L. Hill to Matthew P. Ciarcia, Lot 57, Old McMichaels Estates, $245,000Coolbaugh TownshipDE&S Properties Inc. (T/A) [...]

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Verizon strikers picket in Bartonsville

A few dozen Verizon employees, retirees, union representatives and family members protested in the parking lot of the Verizon Wireless store on Route 611 in Bartonsville Saturday, continuing 11 days of a strike against the company’s job outsourcing.The strikers, hailing from various Verizon locations in northeast Pennsylvania, are among a group of about 40,000 members of the Communications Workers of America and the International Brotherhood of Electrical Workers to have gone [...]

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Lifeguards in demand in the Poconos

Recruiting lifeguards for area pools and the region’s vaunted water parks has become like the first words of a fairytale for many.When speaking to those in charge at area swim areas, their stories often began with, “Once upon a time.”In the past, a summer job as a lifeguard was a teenager’s rite of passage. Many would do whatever necessary to land the prized employment.However, there are more lifeguard jobs in the Pocono area than other places [...]

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Recruiting lifeguards for area pools and the region’s vaunted water parks has become like the first words of a fairytale for many.When speaking to those in charge at area swim areas, their stories often began with, “Once upon a time.”In the past, a summer job as a lifeguard was a teenager’s rite of passage. Many would do whatever necessary to land the prized employment.However, there are more lifeguard jobs in the Pocono area than other places [...]

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Ten Things You Need to Do Before You Start Investing

Over the years, I’ve answered literally thousands of questions from readers in the weekly Reader Mailbag articles here on The Simple Dollar (these great questions and answers appear every Monday morning), and many of those questions have to do with investments. Readers get excited about the possibility of getting a nice return on their money through investing, so as soon as they have a little bit of cash in hand, they’re ready to invest. They want to make their money work for them, and that’s completely understandable.

However, not everyone is in a financial situation where it makes sense to invest in anything more risky than a savings account or a ready-made retirement plan. People simply see the numbers that a rising stock market is putting out and want to throw all their money in, or else they hear some apocalyptic wannabe guru telling them to invest in gold and they’re ready to start putting their money down. Often, these are people who aren’t financially ready to invest and don’t have the mindset or the knowledge to make it work.

Make no mistake about it, though: the groundwork needed for investing is something that anyone can achieve with some time and effort. It just takes a little time, a little learning, and a little bit of self-evaluation.

Here are ten things that you really should do before you even consider investing in anything beyond your savings account or your retirement plan.

#1 – Your Net Worth Needs to Become the Primary Personal Finance Number You Care About

First of all, what exactly is “net worth”? Net worth simply means the total value of everything you own – your home, your car, any valuables that could easily be resold, and the balances of your checking account, savings accounts, and any investments you have – minus the total of any and all debts you have – mortgage, credit cards, student loans, and so forth. So, if I owned a house worth $100,000 and a car that I could sell for $10,000 but I had $50,000 in student loans (and no other debts), my net worth would be $60,000.

More than anything else, your financial focus should be on this number and how you can make it bigger. There are a lot of ways to make it bigger: paying off debts, not spending money on foolish or wasteful things, improving your income, and, yes, investing.

This might seem like an obvious thing, but it’s not. At an earlier stage in my financial life, my primary focus was on my checking account balance. Did I have enough to make ends meet for the month? How much money did I have left over to just spend on whatever comes to mind?

The best way to sum up the transition is that focusing on your checking account is a very short term perspective, while focusing on your net worth is decidedly a long term perspective. If you don’t have a long term perspective about things, you shouldn’t be investing, and if you find your checking account balance to be more important and compelling than your net worth, you don’t have a long term perspective yet.

#2 – You Need to Pay Off All of Your Credit Cards and Other High Interest Debts

If you have high interest debts – anything above, say, an 8% interest rate – there is absolutely nothing better you can be doing with your money than to pay down that debt. There is no investment that offers anything approaching a stable long-term return that beats what you’ll save from paying off your credit cards.

Think of it this way: making an extra payment on a credit card with a 15% interest rate is functionally the same as making an investment that returns 15% per year after taxes. If you pay off $100 of that balance, that’s $15 in interest charges that you don’t have to pay each year until the card is paid off. There is no investment out there that can even come close to that with any consistency.

Not only that, paying off your credit card will have an immediate positive impact on your net worth and it will cause your net worth to start climbing steadily because it’s not being held back by interest payments and finance charges.

Not only that, getting rid of your debts means fewer monthly bills, which means that you’ll immediately have more money to invest with than ever before.

It’s simple: if you have high interest debts, you should be paying those off as your highest priority, far above any sort of thoughts about investing. Not only will they offer you a better return than any investment, paying them off will rapidly improve your net worth and it will improve your monthly cash flow. This is your first step. Take charge of it.

#3 – You Need to Eliminate Most of Your Worst Personal Spending Habits

When I look at my finances each month, I tend to look at it as a pile of income from which I have expenses that subtract from that income. What’s left is a much smaller pile. I call it “the gap” – the difference between my income and my spending. That “gap” is the money that I can use to invest. Naturally, I want that “gap” to become bigger so that I have more to invest, which means I’ll be able to reach my goals sooner than before!

When it comes down to it, there are really two ways to effectively increase your “gap.” You can either spend less money or earn more money. I could write endlessly about methods of earning more money – getting a better job, getting a raise, starting a business – but I’m actually going to focus on the spending part of the equation because that’s something you can take direct action on right now and see results almost immediately.

The thing is, most people get an immediate bad taste in their mouth when they consider cutting their spending. And they shouldn’t. The reason people get that negative reaction is because they initially think of the spending that they care the most about and they don’t want to cut it. They think about money spent on slightly extravagant meals with good friends. They think of the last hobby item that they bought that they really enjoyed. The idea of cutting those things seems terrible.

And it is terrible. Those aren’t the things you should be cutting.

What you should be cutting are the forgettable things, the purchases you won’t remember in a day, the things that are just quietly purchased and quickly forgotten. A drink at the convenience store. An extra item tossed in the cart at the grocery store. The digital item bought on a whim, enjoyed once, and then forgotten. The latte consumed without thought or real pleasure in the morning. Those are the things you should be cutting, the things you won’t remember a day after you spend them.

Watch for those things. Be on guard for them. When you see yourself about to thoughtlessly spend money on something that doesn’t really matter, stop yourself. Don’t spend that money. Cut that purchase from your life. Focus on eliminating whatever routine that brought you to the point of making that thoughtless purchase.

Do that throughout your life and you’ll find yourself spending a lot less money on unimportant things, which frees up a lot more money for investing.

#4 – You Need to Establish a Cash Emergency Fund

Like it or not, life sometimes intervenes in the best laid plans. You might have a great investment plan, but what happens if you lose your job? What if you get sick? What if your car breaks down?

In those situations, many people turn to credit cards, but credit cards aren’t the best solution. They don’t help you with identity theft problems at all. If you’re struggling financially, banks can sometimes cancel the cards. Not only that, even if everything goes well, you still have a new debt to contend with which can still upset your plans.

That’s why I encourage anyone who is investing to have a healthy cash emergency fund stowed away in a savings account somewhere. It’s there solely to ensure that life’s emergencies don’t upset your bigger financial plans.

I’m an advocate for what I call the “perpetual” emergency fund. Set up an online savings account somewhere with an online bank of your choice (I like Ally and Capital One 360) and then set up an automatic weekly transfer from your primary checking into that account for some small amount that won’t kill your budget but will build up reasonably rapidly. Then forget about it. Let the cash build over time. Then, whenever you need some money for an emergency – a job loss or something else – transfer money back into your checking. I recommend never turning off the transfer; if you find that the balance gets too high for your tastes, take some money out of the account and invest it.

That’s the system I personally use and it works like a charm.

#5 – You Need to Figure Out What Your Big Life Goals Are

One of the key principles of investing is to never invest without a purpose. There are many reasons for that, but the big one is that without a specific purpose in mind, you can’t really assess your timeframe for investing and how much risk you’re willing to take on, both of which are vital questions when it comes to investing.

Take the stock market, for example. It’s very volatile, meaning that there is significant short term risk in an investment in the stock market. However, over the long haul – decades, in other words – the stock market tends to gravitate toward a fairly stable 7% average annual return. You just have to be in for the long term for stability.

Thus, if you have a short term goal, investing in the stock market makes little sense. However, if you’re investing for the long term, it can be a great avenue for you.

All of this thinking should start with your own personal goals. Why are you investing? What are you hoping to do with this money? Are you hoping to become financially independent and live off the returns? That’s a long term goal, so stock investing might make sense. On the other hand, maybe you’re investing to build a house in a few years. In that case, investing in stocks probably isn’t the best idea.

What’s your goal? Why are you doing this? Figure that out before you invest a dime.

#6 – You Need Your Spouse to Be on Board with Your Plans

If you’re married, any investment plan you take on should be discussed in full with your spouse. That discussion needs to cover at least three key points.

First, what is the goal? Why exactly is this investment plan going to happen? What are we hoping to achieve?

Second, what is the plan? How exactly are we investing to achieve this goal? Do the investment choices make sense? Where are the accounts and whose name is on them?

Finally, is this something we both agree on? Is the goal something that we both value? Is the plan something that matches our values while also achieving the goal?

If you don’t have this conversation with your spouse before you start investing, you’re begging for trouble down the road, trouble that can start as soon as your spouse notices the money vanishing into an investment account.

#7 – You Need a Healthy Understanding of Your Investment Options

Another important step before you invest is knowing what different investment options are available to you and how to interpret them. Do you know the basics of what stocks and bonds and mutual funds and ETFs and index funds and precious metals and real estate are? Do you know how to compare two similar investments to each other? You need those skills before you begin to invest.

If this is something you’re unsure about, I highly recommend picking up an investing book and giving it a full readthrough before making any investment moves at all. My personal recommendation for a really good all-in-one investment book is The Bogleheads’ Guide to Investing by Larimore, Lindauer, and LeBoeuf. It is a spectacular one-volume book on investing in how it connects real-life concerns and goals to investment options and explains how different options work and meet those various concerns and goals.

Even if you plan to have an investment advisor handle your investing, you should still take the time to understand the things that your money is going to be invested in. Simply trusting someone else to handle it is usually a bad move.

#8 – You Need to Have a Bank That Handles Online Banking and Automatic Transfers with Ease

This should be a given for most people today, but it needs to be mentioned. Before you start investing, your bank should be equipped to make it easy to do online banking and to set up automatic transfers both to and from the bank quite easily. If your bank doesn’t offer these services, look at another bank.

The reality is that most banks today offer these things. Robust online banking is nearly a standard today, as are automatic transfers to and from checking accounts. Banks that don’t offer these features are intentionally making themselves obsolete.

Why are these features so important? For starters, you’re going to need to make automatic transfers if you want to set up a regular investing plan of any kind. Automation is a big key to investing success – you want your plan to basically run on autopilot. You’re also going to want to be able to check regularly and make sure that money is being transferred out of your accounts, which you’ll need online banking for in order to make it convenient.

If your bank makes any of this difficult, start shopping around for another bank.

#9 – You Need a Social Circle That’s More Supportive of Smart Financial Moves Than Excessive Spending

While it’s absolutely vital that you switch to a mindset that’s focused on net worth and positive toward smart financial moves, you should also keep in mind that you are strongly influenced by your immediate social circle as well. If they’re not committed to those things, it’s going to be substantially harder for you to make those kinds of commitments.

Look at your social circle. Who are the people you see most often, particularly outside of work when you have the freedom to make those choices? Are those people financially minded? Do they make smart spending choices? Or are they constantly buying new things and talking about their latest purchases?

If you find yourself in a social circle that doesn’t ever consider smart personal finance and is constantly talking about the latest things and bragging about their latest expenditures, you should strongly consider shifting your social circle. Spend some of your free time at gatherings of people with a stronger financial perspective. Look for an investing club on Meetup, or simply explore other friendships with people you might not have ever hung out with before. You’ll build some new relationships over time, ones that are supportive of positive financial progress.

#10 – You Need a Healthy Relationship with Your Wants and Desires

This is the final strategy for getting ready for investing and it’s a big one. You need to have a strong grip over your wants and desires. You need to rule them; they shouldn’t be ruling you.

It’s inevitable to want things sometimes. That’s human nature. We see tasty foods, delicious wines, items related to our hobbies and interests, and we want them.

The question is, what do we do then? Do we go ahead and buy that item as soon as reasonably possible? Do we put up the facade of thinking about it for a while before buying? Or are we patient with that desire, giving the impulse plenty of time to fade away before deciding that this is worth paying attention to?

Impulse control is one of the most powerful tools that an investor can have in their toolbox, and one of the most obvious ways that you can see whether you have it or not is when you’re considering purchases that you desire. Do you have the self-control needed to avoid giving in to every momentary want and desire? If so, you’ll not only find it easy to have the resources you need to invest, you’ll also find it easier to have the self-control needed to tolerate the ups and downs of the market.

Final Thoughts

I’m often astonished at how many people want to dive into investing without having the things on this list well in hand. They’re making a mistake, whether they want to hear it or not.

Of course, I do understand why people want to start investing. They hear all of the positive spin on investing on channels like the Fox Business Network and CNBC. They get excited about the possibility of getting a big return on their money. They hear constantly about how the stock market went up 1% today and really want to get on board with those kinds of gains.

There’s always a catch, though, and the catch is that if you don’t have your foundation in order, any building you assemble is just going to crumble right to the ground.

Get your foundation in order. Follow these ten steps and be prepared for investing. Get started on the right foot and you’ll never stumble.

Good luck.

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These 13 People Paid Off a Total of $744,500 in Debt. Here’s How

Debt is a reality for many Americans.

The average household in the red carries more than $15,000 in credit card debt. College grads with student loans leave school, on average, nearly $30,000 in the hole.

If those numbers make you dizzy, don’t despair: Paying off debt is possible with hard work, discipline and focus.

Need some inspiration? Here’s what these 13 people did to become debt-free — and you can, too.

1. Know WHY You Want to Be Debt-Free

“My number one tip is to know why you want to become debt-free,” said Jessi Fearon of The Budget Mama.

Is it so you can travel more, leave your job or go back to school? Having a reason can help you stay on track.

“Write it down along with all the debts and amounts you owe to keep you motivated. It’ll help to keep you from spending money carelessly.”

Fearon and her husband paid off $55,000 in 17 months.

2. Look at the Full Picture

Gather all the information you can on your debt, advises Lance Cothern, the writer behind The Money Manifesto.

“Write down the loan type, the amount owed, the minimum payments, the months left on the loan, the interest rate, whether the loan is variable or fixed and any other information you may need to know,” he said.

Once you’ve done that, you can choose if you want to pay off the loan with the highest interest rate or the lowest balance.  

Cothern paid off the highest-interest-rate loans first, and then variable-rate loans since he knew they could increase at any moment.

He and his wife paid off $80,000 in less than three years.

3. Stop Adding to Your Debt

Jackie Beck, who developed an app to help people get out of debt, said too many Americans think of credit as a means to an end.

If you want to be debt-free, you have to change your mindset.

“That means committing to no longer thinking of debt as a solution,” she said. “In other words, stop borrowing.”

This could mean not applying for a credit card, cutting up your current one or lowering your credit limit.

Beck paid off $147,000 in debt.

4. Only Use Cash

Blogger Jessica Garbarino recommends living on a cash budget if you’re going to pay off debt. That means canceling your credit cards and only keeping your debit card if you want to use plastic.

“Being on a cash budget will force you to make different decisions and change behavior,” she said.

“It helped me pay off $56K in debt [in five years].”

5. Remove Temptation From Your Inbox

Sometimes, paying off debt means turning off external temptation.

“Your email inbox can make or break your debt journey,” said Jacob Wade of I Heart Budgets. “Go to Unroll.Me and remove yourself from all coupon- and store-related email subscriptions.”

If you want to go one step further, Wade recommends subscribing to your favorite personal finance blogs for daily motivation.

“Your inbox will instantly turn from a money-sucking temptation to a motivation and action-based financial planner to help you get your money on track,” he explained.

Wade and his wife paid off $43,000 in six and a half years.

6. Be Candid With Friends

Finding free or frugal ways to have fun is crucial if you’re trying to throw any extra funds toward your debt, said Mindy Jensen, Community Manager at BiggerPockets.com.

“Share your goals with your friends,” she said.

“Ask them to help you out by coming over to your house for entertainment rather than going out. Game night is a great way to spend time with friends, while having fun and saving money.”

Jensen and her husband paid off $60,000, mostly in student loan debt, in five years.

7. Find Free and Cheap Entertainment

Toni Perrien Husbands, co-founder of Debt Free Divas, echoes Jensen’s ideas. She put money toward debt and looked for frugal fun.

“We attended free concerts and movies in the park, attended pot luck game nights with friends, and attended outings hosted by churches or universities,” she said.

She and her husband paid off $107,000 in seven years. Talk about a lucky number.

8. Find Ways to Make More Money

Too many people focus solely on cutting expenses when they’re getting out of debt. Instead, think about making more money, recommends Michelle Schroeder-Gardner of Making Sense of Cents.

“Extra income allowed me to pay off $40,000 in student loans in seven months,” she said. “There’s no way I could have cut that much out of my budget, but I definitely had extra time to devote towards earning more money.”

Some of her side hustles included mystery shopping, taking surveys, working a part-time job and blogging.

9. Ask for Help

You shouldn’t hide what you’re going through, said Thomas Nitzsche, media relations manager for ClearPoint.

“Many creditors have a hardship plan for those who can demonstrate a need, and there are many local nonprofits out there who can help give guidance,” he explained.

“Don’t be too proud to ask for help, but don’t contact anyone without doing your due diligence first!”

Financial counseling organizations can help answer your questions and provide solid feedback. As Nitzsche notes, check for reviews and accreditation with the Better Business Bureau. If you’re worried about missing payments, call your lenders; they’re often able to help.

Nitzsche had 60% of his medical debt written off and then set up a 12-month payment plan for the rest, which was around $2,500.

10. Create a Physical Barrier to Spending

Sometimes paying off debt requires you to get visual.

Financial coach Whitney Hansen taped her budget to her debit card. That way, she had a physical reminder not to spend money.

“It definitely saved my bacon a time or two when I was getting out of debt,” she said. Hansen paid off $30,000 of debt in 10 months.

“If nothing else, it’s a pain in the butt to remove your budget every time you want to make a purchase.”

11. Make a Visual Reminder

Military writer Kate Horrell did something similar.  

“If I’m trying to tackle a particular financial goal, I make a chart and put it somewhere obvious, like on my refrigerator,” she said.

Horrell and her husband were trying to pay off a car loan when Horrell decided to chart their progress. She taped it to their fridge, where she says it became part of her daily thought process.

“It is amazing how fast you can knock something out when you are thinking about it 20 times a day.”

12. Calculate Your Daily Interest Rate

It’s one thing to know your total amount of debt, but it’s another to figure out how much you pay in interest every day, said Melanie Lockert, the blogger behind Dear Debt.

She recommends calculating your daily interest rate, using the following formula: Interest Rate x Current Principal Balance ÷ Number of Days in the Year = Daily Interest.

“Imagine what else you could do with that money,” she said. “Get mad. Take action.”

Lockert paid off $81,000 worth of student loans in nine and a half years.

13. Only Buy Groceries Online

It might sound counterintuitive, but shopping online could help you stick to your budget and pay off debt.

Financial coach Melissa Comstock Thomas recommends buying groceries online.

“You stay on budget when food shopping because you can see your balance owed as you virtually put items in the cart,” she said.

Thomas reduced her grocery bill to $450 a month — not bad for a family of four! This strategy helped her family pay off $43,000 of debt in less than four years.

Your Turn: Do you use any of these strategies or tips to pay off debt?

Zina Kumok writes about paying off $28,000 worth of student loans in three years at Debt Free After Three. She has been featured in DailyWorth, LifeHacker and Time.

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