The legend that everyone goes to the beach for the Memorial Day Weekend is about to be tested.
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الخميس، 26 مايو 2016
Business Briefcase: E-burg attorney gets state bar position
Vogt named Zone 5 Governor East Stroudsburg attorney Charles J. Vogt, of the Law Offices of Charles J. Vogt LLC, began his term as Zone 5 Governor for the Pennsylvania Bar Association House of Delegates May 13. A graduate of Dickinson College and Dickinson School of Law, Vogt now represents Association member lawyers in Monroe [...]
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Major Keys: DJ Khaled Just Schooled Us All About Money
“We didn’t make these rules… it costs money to put this velour suit on,” posits musician and Snapchat sensation DJ Khaled on Wednesday’s episode of the Netflix talk show “Chelsea.”
In her quest to entertain and educate her audience on the new show she considers the college education she never had, host and comedian Chelsea Handler welcomed Khaled as her chief financial correspondent this week.
Curious about the financial advice you’ll get from someone who thinks stolen credit card information is a funny spoof?
So were we.
Major Keys
Unlike the life advice he offers to Snapchat followers, Khaled isn’t doling out money tips on his own.
Instead, Handler apparently pegged him as the perfect man to garner nuggets of wisdom from the experts.
Either that, or she thinks it’s hilarious to watch him try.
In Wednesday’s episode, Khaled sat down with entrepreneur and wealth advisor Jeremy Office and shared these Major Keys…
1. Money Never Sleeps
“Is it true that money don’t sleep?” Khaled begins.
“Money never sleeps,” the adviser responds plainly.
Take note.
2. Stay Away from “They”
“Stay away from any kind of get-rich-quick schemes,” Office warns upfront, confirming the Major Key Khaled describes as “stay away from ‘they.’”
“When you see ‘they,’ run,” Khaled adds. “Exit the building fast.”
Wait, who’s “they”?
“’They’ is that one person in the room when you get a raise, then that one person in the corner be like, ‘Man, I hate that person,’” he explained recently on “The Ellen Show.”
“’They’ are the people who don’t believe in you, that say you won’t succeed, so we stay away from ‘They’.”
So, maybe it’s not quite the interpretation Office was aiming for. But both men offer sound advice for success.
3. Secure Your Bag
“What’s the 4-1-1 on the 401(k)s?” Khaled asks.
As Office explains, a retirement plan used to be a guaranteed reward for loyalty to your employer. Companies used to set up pensions and continue to pay you throughout retirement.
Now, more often, you have to take charge of your own retirement plan.
Find out if your company offers a 401(k) match, or open an Individual Retirement Account (IRA) to build your own nest egg.
4. Weather the Storm
When it comes to investing for beginners, Khaled wonders, “Is a bond a good investment?”
Because the government ostensibly promises to repay them, bonds are safe, Office says.
But “in terms of long-term growth, that’s an individual choice,” the adviser carefully adds, suggesting your money might have a better chance for growth in other types of investments.
And, he points out, “life isn’t linear.”
Khaled clarifies, “Life is like an elevator: up, down, up down…”
You want to end on a high, but you also have to be prepared for the lows.
5. Don’t Ever Play Yourself
At the beginning of the segment, Office says the first way you can avoid “play[ing] yourself” is to avoid greed.
“Greed kills everything,” he says.
Use money as a tool to achieve your goals — not as the end goal.
“Associate yourself with people who are well-balanced,” he adds. Keep positive energy around you to achieve work-life balance.
“I keep flowers (and) certain types of candles around me,” Khaled says, by way of example.
“It was palpable,” Office says of the positive energy in the room.
And you can “smell success from the candles,” Khaled points out.
6. Do Business With People You Like and Trust
The segment winds down with these pieces of rapid-fire advice from Office:
“Really know your craft,” Office says. Understand what you’re investing in.
Another one…
Office says investing is a long race. “If you think you’re going to invest money in the market tomorrow, and you’re going to get rich the day after, this is not the game for you,” he explains.
Another one…
“If it seems too good to be true, it is,” Office confirms.
And another one…
Office closes with a final Major Key: “Do business with people who you like and you trust.”
Financial Advice for Chelsea Handler
After the segment, Khaled joins Handler on set to be sworn in as her chief financial correspondent and promise to uphold the responsibilities of the position.
He also shares a few more pieces of financial advice with the host and live audience. He even gets into Handler’s personal finances.
“I support a lot of people in my family,” Handler asks. “Do you think that’s a good thing to do, or should I just cut them off — later this afternoon?”
Khaled, in all seriousness, says you should take care of your family no matter what, especially your mother and father. But everybody else, “while you help them, make sure you help them to help themselves, too.”
You may be generous, but you shouldn’t train people to lean on you.
“Yes, support and help,” he said, “but at the same time, educate them to get money.” They’re going to need it.
Because, as he says in the intro to his segment:
“It costs (money) to eat.
“It costs for mortgages.
“It costs for water.
“We have no choice — secure your bag.”
And, of course, they close out the interview with a Snapchat-streamed rap… from Handler.
Your Turn: Will you tune in for financial advice from DJ Khaled?
Dana Sitar (@danasitar) is a staff writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more, attempting humor wherever it’s allowed (and sometimes where it’s not).
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Pizza Hut Just Hired a Robot Waiter. Should You be Concerned?
“Veggie Lover’s or Super Supreme?”
“Would you like to add breadsticks to your order?”
Next time you have these interactions at Pizza Hut, you just might be chatting with a robot — by which I mean an actual, mechanized humanoid machine, not a really bored college student.
SoftBank is bringing its (admittedly adorable) humanoid bot, Pepper, to Asian Pizza Hut storefronts by the end of 2016. Using MasterCard’s MasterPass technology, Pepper will be able to process customers’ full orders, from greeting to checkout.
What’s more, Pepper will provide customized recommendations and remind patrons about ongoing specials and deals. The robot’s even got human-like hand gestures and a friendly intonation to help make the whole interaction a little less creepy.
Maybe.
Robot Waiters are the Future
Pizza Hut is by no means the only company outsourcing its minimum-wage jobs to technology.
Last month, China’s Taste and Aroma restaurant unveiled a fleet of robot waiters — although they’re much less high-tech than Pepper, only carrying predefined orders along set paths.
Hotels in Japan and Belgium employ robotic staff, too, and TEDxSydney welcomed a tiny robot usher to the famous Opera House.
And this kind of technological outsourcing isn’t just happening abroad.
You’re probably already familiar with the new(ish) self-checkout lanes in many American grocery stores. And in response to recent minimum wage hikes, Wendy’s and McDonald’s are planning to install labor-reducing, self-serve kiosks in U.S. locations.
Ex-McDonald’s CEO Edward Rensi says the new minimum wage makes a robot fast-food takeover inevitable, predicting a “job loss like you can’t believe.”
After all, it’s simple math: Although a robot’s one-time setup expense may be high, it’s quickly more cost-effective than paying a flesh-and-blood human being $15 per hour.
Plus, robots are infinitely more reliable than people. They never wake up with a headache and arrive late to work, and they don’t require health care, time off or incentives to do the best job they can.
Will Robots Take Your Job?
Whether or not you’d be comfortable giving your order to a humanoid automaton, we’re willing to bet you’re not comfortable handing over your job to one.
Servers at nice restaurants might be safe for a little while longer. Some Chinese robot waitstaff have shown an unfortunate tendency to deliver patrons’ orders… straight into their laps. Not exactly service with a smile.
But with big-name companies making concrete plans to roll out automation technology this year, it’s not unreasonable for fast-food workers to start getting concerned about their jobs.
Fortunately, you probably didn’t want to sling fries for the rest of your life anyway — minimum-wage food industry jobs tend to be pretty boring and thankless, in general.
Prepare for the Robot Revolution
If you’re looking for ways to prepare for the coming robot takeover, here are some resources for you to consider.
It might be time to go back to school, which can be expensive. Check out these 100 college scholarships to help you get educated on the cheap (or free) — and don’t forget that even prestigious schools might offer generous need-based aid.
If you really don’t like the idea of a traditional, four-year degree, check out these six alternative certifications with gainful prospects.
Or, skip the schooling entirely and strike out on your own. Here’s our guide to getting your dream freelance business off the ground.
And even if none of these options are on the table for you right now, you can look into other high-paying retail jobs. Luckily, it looks like they’re still working out some pretty major kinks on robotic clothes-folding technology.
Your Turn: Are you prepared for the coming robot takeover? What other jobs are threatened by automation?
Jamie Cattanach (@jamiecattanach) is a staff writer at The Penny Hoarder. Her creative writing has been featured in DMQ Review, Sweet: A Literary Confection and elsewhere. She’s really glad that robots can’t write good articles or poetry… yet.
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Go, Girl! This Valedictorian Won $2.8 Million in College Scholarships
Mari Filer just graduated from high school as valedictorian.
With 39 college acceptances.
And $2.8 million in scholarships.
Say what?!
The Valedictorian Who Won $2.8 Million in College Scholarships
At least that’s what the freshly minted high school grad posted on Twitter last week.
Graduated as valedictorian with a 4.56 GPA, over 24 college credits, and $2.8 million in scholarships! S/OtoGOD❤️ http://pic.twitter.com/f7Myk45Yhy
— mari. (@__simplyMari) May 18, 2016
Her tweet quickly went viral, and has now received over 44,000 retweets and 83,000 likes.
Many praised her success, but others were… skeptical.
One person asked, “$2.8 million in scholarships where you going Mars University?” and another simply said, “I don’t believe you.”
The number doesn’t seem so outrageous, though, since the top 10 students in Filer’s graduating class received a “record $5 million in scholarship money” between them, according to Fox 6 News.
And regardless, she has no need to worry about her haters; she’s already decided to attend Florida A&M University in Tallahassee on a full ride.
How Do You Win $2.8 Million in College Scholarships?
I reached out to Filer to ask how she won so much scholarship money, but haven’t heard back yet. I’ll update you here if and when I do. I suspect her 4.56 GPA had something to do with it.
In the meantime, here are some spectacular scholarship resources from our archives:
“This type of success is available to anybody,” Filer says.
While we’re not entirely sure about that, we do know this: Hard work pays off.
Sometimes in really big ways.
Your Turn: Are you amazed or skeptical about this girl’s success?
Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at susanshain.com, or say hi on Twitter @susan_shain.
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Suspicious fire destroys 2 buildings at Penn Hills Resort
A fire in the early hours of Friday morning destroyed two outbuildings at the former Penn Hills Resort.The Stroud Township Volunteer Fire Department responded to a large fire just before 2 a.m. on Friday. The fire was located in the southwest region of the resort, near Brodhead Creek, chief Bill Unruh said. A closed garage and connecting storage building was destroyed before the fire was put down.As of Friday afternoon, the blaze was being investigated by the fire marshal and [...]
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Santander slashes Help to Buy Isa rate for new customers
Santander has slashed the rate on its Help to Buy Isa, meaning new customers will be paid just 2% interest, or 2.5% if they hold a 123 Current Account.
The interest rate on the account was increased to 4% in March, to match the rate offered by Halifax. But Halifax cut its Help to Buy Isa rate for new customers to 2.5% earlier this month, and it did not take Santander long to follow.
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Loan Origination Fees – More Painful than Interest
Personal loans are undoubtedly a great way to meet short term needs. Whether you’re looking to consolidate debts, partake in home improvement projects, or pay for unexpected expenses, a personal loan can help you achieve your goals.
Personal loans, like any credit product, come with costs.. The most obvious cost of the loan is the interest rate charged to the borrower. These interest rates are incurred over the life of the loan and are charged against the amount you borrowed. However, one of the more obscure costs that you might incur are Origination Fees.
What are Origination Fees?
An Origination Fee, at its core, is simple to understand but many people don’t. Some lenders call it a service fee, commission fee, closing fee, or even a setup fee. Whatever you decide to call it, it’s a fee that the lender charges the borrower for “originating”, or issuing, the loan. Here’s a simplistic way to think about origination fees:
Some other lender is lending you $10,000 at a 20% interest rate for three years. At the end of the application, you find there is an Origination Fee of 5%.
As soon as you sign the dotted line to finalize the loan agreement, the lender is automatically charging a 5% Origination Fee. So instead of the $10,000 that you thought you were borrowing, you’re only receiving $9,500.
But guess what? You still pay interest on the full $10,000 AND when you pay the lender back, you still owe them $10,000 PLUS interest. Sounds a little unfair, no? Paying 5% sounds like a small number, but think about what you’d be able to do with that extra $500 in your pocket.
What’s the Big Deal with Origination Fees?
So now that we know what origination fees are and how much some lenders charge, the real question is – Why should you care?.
Two reasons:
- As mentioned above, if you apply for a $10,000 loan, you won’t get that full amount. If you qualify for a $10,000 loan (with a 5% origination fee) to pay for that home improvement project, you’ll only get $9,500 that you can use. Here’s a quick example of how origination fees can impact your loan.
- If you intend to pay back the loan before the full term, that $500 origination fee you paid will still have to be paid back. Lenders may advertise that they don’t have any prepayment penalties, but these origination fees essentially act as a prepayment penalty in disguise.
Depending on how fast you expect to pay off the loan, the true cost of the loan will vary. If you look at the chart below, it assumes you pay a 5% origination fee. It illustrates a $10,000 loan for 36 months that with a 5% origination fee. Here’s how to read it:
- If you intend to pay back a loan within 6 months with an interest rate of 25%, you’re better off getting a loan that has an APR of up to 33.11% without origination fees.
- If you intend to pay back the loan within 12 months with an interest rate of 20%, you’re better off getting a loan that has an APR of of up to 22.91% without origination fees.
So what type of fees are lenders charging?
The fees that lenders charge varies. Some go by the “grade” of the loan (how qualified you are) and others may charge you an origination fee based on your loan amount.
Lending Club: Lending Club charges anywhere from 1-6% in origination fees depending on your credit-worthiness. You’ll need to be a super-prime borrower – basically a pristine credit score and a really low debt-to-income ratio. In 2016, only 17% of borrowers qualified for an “A” grading and even if you qualify for this grade, you’re not even guaranteed the lowest origination fee.
Prosper: You’ll notice a very similar pattern with Prosper as well. In order to be charged a 1-6% “closing fee” (aka origination fee), you’ll need to be a super-prime borrower. Otherwise, you’ll be charged at least 3.95% in origination fees, see chart below.
Other Lenders that Charge an Origination Fee:
- Upstart: 1-5%
- BestEgg: 0.99-4.99%
- Cirleback Lending: 0.99-4.99%
- Pave: 1-6%
- Peerform: 1-5%
- Payoff: 2-5%
- And the list goes on….
Are Origination Fees Prepayment Penalties in Disguise?
Let’s do a quick recap of origination fees on personal loans and how it affects your loan.
- You’re approved for a $10,000 loan with a 5% origination fee
- You actually receive $9,500 ($500 in origination fees).
- Your loan balance is still $10,000
- You continue to pay interest on the $10,000 loan amount when you only technically receive $9,500.
What happens if you decide to pay off the loan in the next week? Or even the next day. You’re not entitled to any refund on the origination fee you just paid. So the origination fee is disguised like a prepayment penalty.
To say that origination fees are the same as pre-payment fees is technically incorrect. However, these origination fees are embedded into the loan to ACT like a prepayment fee. If you ever decide to pay off the loan in full in advance, the only person who really benefits from this is the lender. You, as the borrower, are getting the short end of the stick.
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Would You Become a Professional Cuddler? This Company Pays $40/Hour
In my opinion, there’s nothing better than a good, long snuggle. But would you cuddle a stranger for cash?
The practice isn’t unheard of. People like Samantha Hess have started successful cuddling businesses on their own.
As it turns out, lots of folks are willing to hire a professional when they feel the need for a squeeze — and today, a growing number of professional cuddling companies exists throughout the U.S.
And one of them has its “Help Wanted” sign out.
Professional Cuddling: Yup, It’s a Thing
You may be wondering: Why would someone hire a professional cuddler? Isn’t a huge part of the appeal of cuddling the intimacy you share with someone you actually know and care about?
Human touch can be healing in and of itself — especially for people who don’t have much access to it, says Travis Sigley, founder of San Francisco’s Cuddle Therapy.
That makes sense. Everyone needs a hug sometimes, right?
Professional cuddlers have the power to bring their clients catharsis and help abate their loneliness… but there may be some concern about the session getting a little too physical.
While Sigley asserts that he went three years without a client making a sexual advance, some other professional cuddlers — especially women — tell a different story.
But if you know how to be firm about your boundaries, professional cuddling still might be a lucrative side gig. Nationwide cuddling company The Snuggle Buddies is hiring snugglers right now — and you’ll make $40 per hour.
You can also earn $15 for each hour you spend in transit to the cuddle location (though as the application stresses, you’ll see a huge increase in bookings if you can host cuddlers in your own home).
And if you’re worried about clients getting handsy, having a company behind you is a safer bet than striking out on your own.
All clients of The Snuggle Buddies snugglers are required to read and agree to their Client Service Contract, which includes a number of stipulations to keep you safe and comfortable: No kissing, no nudity and no undue contact outside of cuddle sessions except to set up the next meeting.
And, of course, you have the right — in writing — to leave the session immediately should your client make you feel unsafe, harassed or threatened.
How to Be a Professional Cuddler
If you want to try your hand — or… body? — at professional cuddling, you do need a few qualifications.
Obviously, a warm, kind personality is key.
And you need to be willing to accept any cuddle client regardless of age, race or gender. (According to The Snuggle Buddies, most clients are men over the age of 50.)
You also need to maintain proper hygiene — the client contract stipulates that both cuddler and client must have brushed their teeth and showered within 12 hours of the session.
You can expect 5-15 hours worth of work, and in many cases, you’ll be paid in cash. And you can be based anywhere in the U.S., Canada, the U.K. or Australia!
Sound good?
Head over to the listing to see the full deets, and then fill in the application here. Supply recent photos and biographical details so your clients know who they’ll be holding.
Then, check your email within 24 hours for a response to your application — and get those huggin’ arms ready!
Your Turn: Would you be a professional snuggler for $40/hour?
Jamie Cattanach (@jamiecattanach) is a staff writer at The Penny Hoarder. Her creative writing has been featured in DMQ Review, Sweet: A Literary Confection and elsewhere.
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9 Common Pieces of Financial Advice That I Consider Mostly Useless
I read a lot of personal finance books and personal finance articles. You’ll often find me at the library digging through the personal finance section, pulling out issues of Money or Kiplinger’s, or sitting at a table taking notes.
Unsurprisingly, I see a lot of the same advice trotted out again and again in publication after publication. Most of this advice is really good stuff. Spend less than you earn. Pay off your debts. Contribute to your retirement fund. It’s all sensible advice that will reward almost anyone that follows it.
However, time and time again, I see people putting out skewed advice. That advice isn’t bad per se, but it’s usually worse than other options and can lead to bad financial problems if it’s not perfectly followed, whereas the best financial advice is practically foolproof.
Why are these pieces of advice given out, then? For one, the author of the article or book often has an ulterior motive in giving that advice – self-promotion, for one. For another, they’re sometimes repeating advice that they’ve read and used elsewhere without thinking about whether it applies in these other situations. Add those two together and you end up seeing a lot of questionable nuggets of financial advice.
Here are nine pieces of dodgy financial advice that I often see shared. While these pieces of advice can be good, they’re often given in situations where they’re complete overkill or they don’t really make much sense at all.
Dodgy Piece of Advice #1: Hire a Financial Advisor
Let me be clear right off the bat: Financial advisors can be great and they can be incredibly helpful in certain situations. If you have a complex financial situation, such as dealing with a large or challenging inheritance, a financial advisor can help you piece through your situation and come up with a sensible plan. If you’re considering hiring one because you’re in a tough situation, here’s my detailed guide for finding the right financial help for you.
However, they are not a be-all-end-all solution for all financial questions. In the vast majority of situations, they don’t really provide anything you can’t do yourself for a lot less expense. People turn to financial advisors to answer questions that can be found in any personal finance book. They also turn to them for things as simple as investing their extra money, something you can do in five minutes from your personal computer at home.
They also sometimes provide a crutch for people to avoid learning about personal finance themselves. Many people just turn over all of the keys to their financial situation and their planning to their advisor without having any clear idea of what’s going on or what’s happening. That’s fine if you have a great financial advisor, but what happens when that advisor isn’t highly competent or, worse, has nefarious plans for your money?
Another problem comes in when you look at commission-based financial planners. Commission-based planners have a financial interest in guiding you toward investment options that provide a larger commission for them. Even the best and most honest advisors can be swayed unconsciously by the lure of commissions.
All in all, the best solution is to teach yourself about personal finance and handle routine financial situations, such as setting up a Roth IRA, on your own without any sort of financial professional help. Not only will this save you money, it will improve your own understanding of your financial choices.
Dodgy Piece of Advice #2: Invest in Things You Don’t Understand
This one might shock some people. After all, you’ll never, ever see a financial writer say anything directly like this. Yet, if you read closely, many financial writers are actually saying this indirectly and doing it over and over.
All you have to do is read articles on new investments or listings of mutual funds to see it. These articles trumpet these investments, practically guaranteeing big returns if you put your money in them, but never seem to actually talk about what the investment actually is, what the philosophy behind the mutual fund is, or who’s involved with it other than the name of the company. Yet, the conclusion is that you should be investing in these things.
That’s a foolish mistake. If someone is telling you about an investment and proclaiming that you should be invested in it but isn’t giving you enough information to really understand what it is you’re investing in or providing direct pointers to learn more, then you should run away from that advice. Never invest in something you don’t understand, and reading an article that briefly mentions an investment does not count as understanding that investment.
If you’re going to invest, do your homework. Don’t trust a one paragraph summary from any financial writer. Learn about what the investment is, and keep going until you really understand it to the point where you can explain it in one sentence and then handle follow-up questions, too.
Dodgy Piece of Advice #3: If You’re Not Invested in X, You’re Making a Big Mistake
I don’t see this too often, but I see it often enough that I can’t help but worry that people fall for these kinds of pressure tactics. Simply put, some authors like to make the case that the investment they’re talking about is such a perfect investment for everyone and can generate such amazing returns that literally everyone should invest in it, and thus anyone that does not is a fool making a giant mistake.
There are two root causes for this kind of nonsense. One, someone is really a true believer in this particular type of investment. They really believe that this is the best option for everyone. That person is usually just overenthusiastic and perhaps a bit misguided.
The other side of the coin is more nefarious. Salespeople who are overzealous in their promotion of a product like to use these kinds of pitches, like the people who promote penny stocks from highly troubled companies. They want you to buy in so that they can make money, whether it’s from pumping and dumping a stock or continuing to inflate a housing bubble.
The reality of the matter comes from almost every other piece of financial writing out there. Unless you are an extremely skilled investor who spends most of his or her time focusing on investments, the best strategy to use is diversification at a low cost. Putting all of your money – or even most of your money – into one particular investment is a bad move, because if that one market fails, you’re going to be in a bad place.
Dodgy Piece of Advice #4: Don’t Bother with Frugality – It Won’t Build Your Wealth
Few pieces of “advice” irritate me more than this one, because it is absolutely false. Over a five-year period, Sarah and I paid off a six-figure mortgage, two separate five-figure piles of student loans, three different car loans, and an untold amount of credit card debt. I attribute that change to frugality above all else. What happened at the end of all of that debt repayment? We had tons of money to invest each month. We currently live off of approximately 50% of our income, which means that we have literally tens of thousands of dollars to invest each year.
You can be the greatest investor in the world, but if you don’t have any capital to invest, you’re never going to be able to build wealth. If you’re living paycheck to paycheck, you’ll never have any money with which to invest. The only way to get money to invest from your life is to spend less than you earn, and frugality is one of the key tools to make that happen.
Usually, financial writers who want to make this point use some sort of weak example of frugality. They’ll find some really ineffective frugal tactic, like washing Ziploc bags, point out how doing that only saves a nickel, and then act as if that’s proof that frugality doesn’t work. What foolishness. For one, most frugal tactics are far more effective than washing Ziplocs. For another, most frugal tactics save money because they’re repeated frequently – if you do something that saves a dollar a day, that’s $365 after a year. That’s a car payment on a pretty nice car.
Take a look at Warren Buffett. He’s a billionaire dozens of times over, yet he lives in a modest home in Omaha. Why? Because he knows that the more money you spend on nonessential things in your life, the less money you have to invest. What’s frugality all about? It’s minimizing spending on nonessential things in your life, so you’ll have more money left over.
Anyone that tells you not to bother with frugality is never going to help you build wealth. To build wealth, you have to spend less than you earn, and frugality is how you keep your spending low. It’s about being smart with your spending.
If frugality works for billionaire Warren Buffett, it can work for you. Photo: Fortune Live Media
Dodgy Piece of Advice #5: Following a Budget is Essential
Many personal finance writers suggest using a formal budget as a tool for getting your money straight. Their books or articles will include some sort of template for making a budget and the writer makes it sound like filling out this form is essential for getting your finances in order.
It’s not.
Don’t get me wrong – a budget can be a powerful tool. I’ve used a budget for many years, on and off, as a way to get a “big picture” of our spending and where our money is going. If you build one correctly, it can provide a powerful window into where all of your money is actually going. In fact, here’s my original guide for making a budget along with some tips for making that budget great.
However, just because it is a powerful tool doesn’t mean it’s right for everyone. A budget tends to work best for people who are very analytic and are comfortable with numbers and charts. For many people – including myself – sensible arrangements of data convey a lot of meaning and can directly relate to other aspects of life.
For other people, that connection doesn’t really exist, and for those people, a budget is an exercise in futility. For people without that connection, other strategies come to the forefront, such as focusing on behavior and spending choices.
You can succeed financially without a budget. It is undoubtedly a powerful tool and it can be incredibly helpful for some people, but it’s not essential.
Dodgy Piece of Advice #6: Buying an Insurance Policy Allows You to Bank on Yourself
One oft-promoted financial strategy is one in which you purchase a high value whole life insurance policy, allow it to build cash value, and then use that cash value as a “bank” of sorts, borrowing money from that policy and then repaying it just as you would with a normal bank.
While this system sounds good on paper, it really doesn’t add up. The actual numbers behind a whole life insurance policy make this strategy either prohibitively expensive (due to the commissions you’re paying on that policy) or ineffective due to the relatively small size of a modestly-priced policy. If you want details on why this system doesn’t work, this article spells it out.
Yet, I often see many otherwise sensible financial writers touting this type of strategy. Sometimes, it turns out that the people touting these strategies are themselves insurance salespeople who stand to make a nice profit from plans like this. Others who tout the suggestion are buying into the brief elevator pitch and don’t look into it too closely.
For me, the “bank on yourself” system is the poster child for looking into the details of a financial idea before getting hyped about it… well, along with multi-level marketing and network marketing schemes.
Dodgy Piece of Advice #7: The Only Way to Build Real Wealth Is Through Entrepreneurship
I am a big fan of entrepreneurship. I think that most people should spend at least some of their time trying to build a side gig, at the very least. Entrepreneurship can be a great way to channel interests and ideas that aren’t met within your normal career and can end up providing more income or even a new career path.
Having said that, the reality is that the vast majority of entrepreneurial endeavors fail and end up costing the business owner time and money. So how do people ever succeed in business? Usually, it’s not money that decides it. It’s a combination of a good idea and a lot of work ethic and sweat equity. Even then, about half of all businesses fail within the first five years, and more fail later on or only become a very modest success.
The reason so many people point to entrepreneurship is because the outliers – the relatively rare people who succeed wildly – are huge outliers. Thousands and thousands of dot-coms start every year, but there’s only a handful that have ever made it truly big.
Not only that, there are many other ways to build wealth. Living frugally and investing your money is a great way to do it, for one. That’s the path Sarah and I are following and we’re walking steadily toward financial independence. Another strong strategy is to build a skill set that makes you highly valuable in the professional marketplace, then using that large salary to invest.
Dodgy Piece of Advice #8: Leverage Is the Best Way to Build Wealth Quickly
For starters, let’s talk about exactly what leverage means here. Leverage means that you borrow money in order to invest it in something, with the idea that the investment will earn a greater return than the interest on the loan that you took out.
If leverage works, it works great. It can generate money seemingly out of thin air, since you don’t actually need initial funds to start earning money. All you need to be able to do is to invest money that returns more than the interest rate on your loans and money just generates itself.
However, when it doesn’t work, things fall apart pretty rapidly. If your investment isn’t returning enough money, you either have to cover the loan payments out of pocket or you have to hijack the investment to keep your head above water for the moment.
Essentially, leverage means you’re multiplying both the risk and the reward of an investment. If it goes well, then the rewards are great. If it goes poorly, then you can quickly be left with a pile of debt.
Many businesses use leverage to get started because they have big dreams and little capital, but in those situations, the actual business owners are protected (to a large extent) by the business structure.
Many financial writers, however, talk about extending the principle of leverage into one’s personal life or into a very small business owned by someone without a lot of money in the bank already. Often, this centers on real estate investing – taking out mortgages to buy more and more and more houses and using the rent from those properties to pay the interest on the mortgages. That works great, assuming you can fill those properties with reliable tenants. If you can’t… it’s going to be a disaster and you’ll have to hope that it doesn’t take you down along with it.
Leverage is a bad idea unless you can make good on any failed loans. If you’re facing debts that you won’t be able to handle. If you even want to think about this, you need to make absolutely sure that you’re not personally liable for the debts, and it is difficult finding a lender who will give out such a loan to a business without a very positive reputation.
Avoid leverage unless you know exactly what you’re doing, and if you’re just taking advice from some financial writer who wrote a few articles about using leverage to generate wealth, you don’t know exactly what you’re doing and need to be doing a lot more homework first.
Dodgy Piece of Advice #9: Fake It Until You Make It
Many career advice books talk about the value of dressing for success – wearing an expensive suit, driving a nice car, and so on – to give the impression that you’re already a huge success and thus money will be attracted to you somehow.
In reality, money is earned by people who have a plan and know how to execute it. It’s earned by people with valuable skills. It’s earned by people who put in a lot of time and sweat equity into their careers and businesses and lives.
The idea of “faking it until you make it” is appealing on some level, but competent people can almost always see right through the veneer. What matters is what’s behind that veneer. Is it a person who’s trying hard to build something successful? Or is it someone who’s skating by with a promise and a false smile?
A nice suit can be useful in a business environment. A nice car can help in some public-facing jobs. However, if those tools aren’t backed up by competence, it won’t take long for wise people to see right through you and that creates an even worse reputation – not only are you less competent than you were billed, but you’re also a faker.
Put on the suit and drive the nice car if it will help, but the most important factor in success is being competent. If you don’t really have the skills, all the flash in the world will eventually backfire right in your face.
Final Thoughts
Even though I’ve pointed out several pieces of suspect advice above, the truth is that the vast majority of advice that I read in personal finance books and magazines and websites is really sensible stuff. However, there are enough questionable things floating around out there that it’s always worthwhile to be on guard. Don’t fully trust everything you read. If you’re going to take action on it, take some time to verify it first.
Good luck.
Related Articles:
- The Secret Behind Financial and Entrepreneurial Classes and Seminars
- The Eight Worst Pieces of Financial Advice I’ve Ever Received — and Why They’re Wrong
- Seven Hidden Benefits of Frugal Living
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Mortgage price war: lowest fixed rate deal launched
Yorkshire Building Society (YBS) has reclaimed its position as the lowest-rate mortgage provider, after shaving a fraction off its rate in response to a rate cut by rival HSBC.
YBS’s new two-year fixed-rate mortgage costs 1.14% for people borrowing up to 65% of their property value. It comes with fees of £1,710.
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We Can’t Believe the Crazy Way This Guy Makes Money Hanging Out With Dogs
Tyler Hooff was working in a restaurant in New York City 10 years ago, when he found out his friend bought a Siberian husky.
Hooff grew up with other Arctic dog breeds and was excited to meet the husky — but was shocked to see the dog was overweight and out of shape.
Huskies need hours of exercise, and with a relatively sedentary owner and typical cozy New York apartment, the dog was forced to be a couch potato.
Hooff stepped in and offered to get the dog some exercise. Now, it’s turned into a business that earns him $36,000 for nine months worth of work.
Not bad, huh?
Getting Started Urban Mushing
It started out simply with long walks, but Hooff quickly found the dog wanted to do what he was bred to do — run. Fast.
So Hooff hooked the dog up to a harness and had the pup pull him along on his skateboard.
Hooff began mushing the dog — a sport where lone dogs or teams of them pull a person on a bike, scooter or specially made dry-sled rig — along bike paths and wide sidewalks through New York City parks.
The dog ended up slimming down and gaining muscle tone and the 36-year old managed to make a rapidly growing business out of a little-known sport.
Building a Following of Dog Owners
Other dog owners saw Hooff and the very happy husky and approached him about working with their dogs, too. He realized there was a real demand for intense exercise for high-energy dogs in the city.
So he became an accidental entrepreneur.
“I did a lot of research,” Hooff says. “No one else was doing anything like this, so I was doing everything from scratch.”
He read a series of books on dog sledding and urban mushing. He learned how to train dogs of all breeds to mush safely; the driver has no control other than voice command and potentially a handbrake, so it takes a good deal of work.
From there, Hooff invested in a dog scooter, his most expensive purchase.
The dog scooter, or kick bikes, are created for urban mushing, so they have tall, rugged wheels to handle rough terrain, as well as sturdy necks to connect to the harness and can hold the weight of an adult.
They can range in price, starting at $250 for a barebones version all the way up to $1,000 for a top of the line model. He purchased several X-back harnesses at $30 a piece in various sizes to fit different dogs.
In November 2014, he launched NYC Dog Mushers as an LLC.
He began to get a steady stream of clients. Many he visited on a one-on-one basis while the owners were at work, to give the dog a mid-day break from being cooped up and to get some exercise.
Individual sessions are $120 per day for one dog and include the use of equipment, dog boots for bad weather and a log book. Sessions vary in time, depending on the dog; many can only do a few minutes at a time, while others can run for a full hour.
Hooff recommends owners sign up for just one to two workouts a week to give their dogs time to get used to the new exercise regimen and build muscle.
Owners were thrilled with the results; their dogs were happily tuckered out and content, and formerly destructive dogs now laid quietly at their owners’ feet.
Pictures of Hooff mushing through Central Park began popping up on Instagram and word of mouth grew the business quickly.
Soon Hooff began hosting one-day workshops on Saturdays, where people interested in mushing could come by and watch or have their dogs try it out for $35.
Sometimes just five or six people show up, and sometimes 20 or 30. It’s promoted through breed meetup groups on social media and general Instagram followers.
Hooff partners new dogs with his established canine veterans, who show the others the ropes. He watches each dog carefully — many are out of shape and can’t mush for more than a few minutes.
“I call this canine CrossFit because most dogs don’t get this level of exercise anymore,” Hooff said. “Mushing for fun and exercise isn’t a new idea; it’s just novel in the city.”
Although he’s taking a brief hiatus for family reasons, Hooff usually works about four hours per day on weekdays and eight hours on Saturdays, September through May.
So, for 30 hours each week, he averages $1,000, completely replacing the income from his restaurant job.
Dog Mushing Safety Concerns
Hooff works with different breeds, from classic sled dogs like samoyeds and huskies to pit bulls and golden retrievers.
He requires dogs be at least 30 pounds and in good health. He recommends owners consult with their veterinarians before they put their dog in front of a scooter.
Some owners aren’t thrilled with his restrictions, however.
“I had one owner bring her Shih Tzu, barely 10 lbs,” Hooff explains. “She was outraged when I wouldn’t put him in the harness next to the malamutes and huskies.”
Hooff is careful with all of the dogs, no matter how fit they are.
He refuses to work with aggressive dogs, as it puts him and other dogs at risk. He applies balm to the dogs’ feet to keep them protected and never runs dogs in the summer months, to prevent overheating. Instead, he sticks to general walking.
He also had to get a special insurance policy to cover his LLC.
“This isn’t a business someone can just pick up and start making money,” Hooff cautions. “You need to understand dog behavior and health, or you’re putting your clients’ pets at risk.”
But with Hooff’s specialized knowledge, he has tapped into an unmet need most people didn’t realize they had. What started as a simple hobby has now turned into a flourishing business.
“I didn’t expect this to turn into a money-making project,” Hooff explains. “But teaching dogs to do what they were meant to do helps them realize their full potential.”
The takeaway? Helping people with busy schedules make their lives simpler could be the way to launch a successful business.
Your Turn: Would you try dog mushing? Have you started a creative business?
Kat Tretina is a freelance writer located in Orlando specializing in personal finance. She is also an urban musher with her Samoyed, Anya.
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4 Helpful Tips for Beginning Freelance Writers
By Angie Nelson Freelance writing is one of the best jobs in the world if you love to write. The freedom to make your own schedule, work in the fields you love, travel to new places, meet amazing people, and truly make a difference with the written word is one of the draws of the profession. […]
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Grab June's Moneywise, on sale now
Get your 10-year retirement plan in the June edition of Moneywise, which goes on sale in WH Smith stores today.
We explain how to kick-start your investments, understand the new state pension, and boost your income with social media.
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PPI complaints continue to soar, but borrowers urged to avoid claims firms
Payment protection insurance (PPI) remains the most complained-about financial product, with arbitrator the Financial Ombudsman Service receiving up to 4,000 PPI cases each week.
In the year to 31 March 2016, it received 188,712 PPI complaints in total, which equates to 56% of all new complaints made to the Ombudsman over that time frame.
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Cap on pension exit fees proposed
Exit fees on pensions should be capped at 1%, according to the Financial Conduct Authority.
The regulator will now consult on its proposal, which would apply to all personal pension contracts – including workplace pensions.
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People Supposedly Quit These Jobs Most. Did Yours Make the List?
After burning through dozens of jobs in my life, I consider myself a job-quitting expert.
I’ve written about how to make more money at work and what to do before you decide to quit, but my favorite is how to quit your job.
So when I saw a WiseBread article titled “The 4 Jobs People Quit the Most,” I was curious.
Here’s its list:
1. Most Jobs at Amazon
2. Jobs in the Life Insurance Industry
3. Registered Nurses (RNs)
4. Jobs in the Leisure and Hospitality Industry
How Bad Are These Jobs?
An Amazon worker told the New York Times employees regularly cry at their desks because of the stress.
Selling life insurance, like other commission-based jobs, can be tough.
Nurses face long hours and stressful situations.
And jobs in the leisure and hospitality industry often come with low wages.
But if you work in any of these fields, don’t put in your two-week notice just yet: The data doesn’t really back up the “quit the most” claim.
The first two jobs were plucked from a PayScale.com list of “most and least loyal employees” based on “median employee tenure.” Amazon’s is one year, making it number 464 out of 466 companies. Several insurance companies also show up near the bottom of the list.
But is that a fair measurement of how often employees quit, of “loyalty” or how bad a job is?
After all, if a company with amazing jobs had launched six months before the survey and hired 1,000 employees, it would be at the bottom of the list due to its median employee tenure.
A more relevant example: Amazon hired 100,000 employees for the holiday season, which shortened its median employee tenure in a major way.
Some companies routinely hire temporary workers and then lay them off. It’s not about “quitting,” nor does it say much about loyalty or work conditions.
And consider this interesting fact: Eastman Kodak tops the loyalty list (median employee tenure of 20 years) but only 45% of its employees report high job satisfaction.
Meanwhile, Amazon and many others near the bottom of the list get high job satisfaction ratings from more than 70% of employees.
Clearly, data can tell a lot of different stories. The high turnover rate for nurses probably is due to stress and working conditions, but the list doesn’t address how or why.
And those leisure and hospitality industry jobs may be staffed largely by young workers who quit even good jobs more often — or work temporarily while they’re in school.
Which Jobs are Really the Worst?
Which jobs are so bad you should quit, or never consider in the first place?
You can’t always trust lists and ratings, and any company can get bad reviews.
Consider Amazon, which has a bad reputation and a poor showing on the “employee loyalty” list. But Leena Rao’s investigation turned up many workers who loved their jobs, despite the high-pressure atmosphere.
If you’ve ever had a job you hated, you can probably recall a few employees who loved the work and the workplace. And if you’ve ever had a job you really loved, someone else probably hated it.
How you feel about your job is personal.
For example, if you hate stressful work, like I do, you’ll probably want to avoid the careers on this list of the most stressful jobs.
This post on the lowest paying jobs also has some positions you may want to avoid, like day laborer and fast food worker. Of course, the former may give you experience you need for a better job — and the latter can offer fast advancement.
Then there’s our list of careers with the highest divorce rates. If you have one of those jobs, your spouse might want you to quit.
If you have a hard time dealing with supervisors, you should probably avoid working for anyone on the New York Post’s list of the “worst bosses of all time.”
Theater and film producer Scott Rudin apparently screams at and throws things at employees, while Dish Network co-founder Charlie Ergen is said to have created a “culture of horror.”
Finally, there are the truly dirty jobs. No matter how excellent your employer, you might consider quitting if you work as a sheep castrator or septic tank cleaner. But then again, you might love that work.
Your Turn: Are you satisfied with your job, and how long do you plan to be there?
Steve Gillman is the author of “101 Weird Ways to Make Money” and creator of EveryWayToMakeMoney.com. He’s been a repo-man, walking stick carver, search engine evaluator, house flipper, tram driver, process server, mock juror, and roulette croupier, but of more than 100 ways he has made money, writing is his favorite (so far).
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Providers warn against extending Lifetime Isa to include loans
When announcing the launch of the Lifetime Isa in March's Budget, chancellor George Osborne said he would consider exploring whether flexibility should be introduced that would enable savers to borrow from their own fund.
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House prices have 'neared their limit', says estate agency boss
Property prices in the UK may be starting to slump, the boss of a leading estate agent has suggested.
Paul Smith, chief executive of Haart, says: “There is trouble in paradise as we are starting to see a big slump in buyer demand.”
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