Sponsored Video: Pension Confusion

by Adam on March 14, 2012

This post is sponsored but the views expressed are those of Magical Penny

When you hear the word ‘pension’ what do you think?

For most people it’s a pretty confusing concept. One of the biggest confusions about pensions is what investments actually go into a pension, and how much does one need to have a retirement that does not mean being being cold and hungry.

Understandably with low understanding comes low levels of trust. I’ve heard countless friends and collegues tell me variations of:

“I don’t trust pensions”

OR

“I haven’t got a clue about my pension

It’s a sad state of affairs because a pension can be a great way to save for retirement – mostly because it allows you to invest money you haven’t paid taxes on and the pension pot grows tax-free year after year. You only pay tax when you start taking out an income (generated by the pension pot when you buy what’s called an annuity).

The confusion and mistrust around pensions have not gone unnoticed:


As the video shows, there’s lots a ‘buzz words’ around pensions.

Ultimately though, there are really two types of pension – defined benefit and defined contributions.  The difference is a defined benefit pension promises you a certain amount of money when you retire, whereas a defined contribution pension gives you you a certain amount of money today to use when you retire.

Defined benefit pensions are also known as final salary pensions and have become increasingly less popular as the risk to deliver an income is placed on the employer rather than the employee. This ‘risk’ has been problamatic for companies in recent years as the economic uncertainty have led some schemes into trouble  running out of money in the fund to pay existing pensions.

A more empowered way to save in a pension is through a defined contribution pension:

How a defined contribution pension works

Most private companies these days offer a defined contribution pension and it’s something you should be doing, especially if they offer what’s called a ‘match’ –where the company ‘matches’ what you put into the scheme up to a certain percentage of 3%.

Let’s give an example:

Say that you earn £20,000 a year and your company offers a 3% ‘match’.

This means that whatever you put into the pension account, the company will put in the same up to 3% of your salary. Therefore to get the most money from your company you need to put in at least what the maximum match is. In this example its 3% of £20,000  = 20k*0.03 = £600.

Put £600 of your own money into the scheme and you’ve just given yourself a £600 raise and you now have £1200 in the scheme! Result! You can actually put in as much as you want, up to 100% of your salary but your company won’t put in any more money into your account than the ‘match’ amount.

As you can see it’s worthwhile but its not the whole story –you need to consider how this money is going to grow and keep up with inflation. You do this by having your pension contributions invested automatically in various investment funds.

Even if you don’t have an employer match it’s worth looking into if a personal pension of your own is good for you.

 

Ultimately, pensions have a bit of a bad reputation given the ever changing rules about them and the failure of some pension schemes to be transparent in what you can expect to receive when it comes to retire. However, with a defined contribution pension you can receive free money today to help fund your future and be in more control than ever.

 

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US Income Tax Changes You Need to Know About Form 1040 For Filing Your 2011 Income

by Adam on March 9, 2012

I’m not an expert in US Tax Law, but thankfully my blogging partner at TOTO, Connor is. If you file in the US, for more information about how you can rock your taxes be sure to visit Tax On Tax Off

It’s Tax Season in the US!

Form 1040, which is the most comprehensive income tax return that can be used for 2011, has a number of changes from the prior year.

The 5 key changes you need to know for filing your 2011 income taxes

Schedule D is revised

Rather than listing capital gain and loss transactions on Schedule D, with additional entries on Schedule D-1, there is a new form-Form 8949-for listing short-term and long-term capital gain and loss transactions. The totals are then transferred to Schedule D, which now acts as merely a summary.

New Form 8938

U.S. citizens and residents with certain foreign assets must now complete this new form, attached to Form 1040. Filling this in may be required in addition to the annual reporting of foreign accounts on TD 90-22.1 (which is filed with the Treasury each June).

Self-employment tax is reduced

Due to the payroll tax cut, self-employed individuals have a 2-percentage-point reduction in the employee portion of Social Security taxes. This reduction is reflected in Schedule SE of Form 1040. However, self-employed individuals continue to deduct the full employer portion of self-employment tax as an adjustment to gross income on page 1 of Form 1040.

Increased AMT exemption on Form 6251

The alternative minimum tax (AMT) exemption amount has increased in 2011 to $48,450 for single filers, $74,450 for married filing jointly or a qualifying widow(er), and $37,225 for married filing separately.

Schedules L and M is no longer used

Schedules you may have used last year are no longer needed on the Form 1040 for 2011. Schedule L, which was used for additional standard deduction amounts, and Schedule M, for the making work pay credit, are now obsolete because the tax breaks they applied to have expired.

 

Have additional questions about your US taxes? Visit Tax On Tax Off today

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How to Stop Yourself Dipping in Your Savings | Saving Lessons from ‘Up’ + BIG BIG NEWS ABOUT THE FUTURE OF MAGICAL PENNY

by Adam on March 5, 2012

Big news below towards the end of this article -keep reading to find out!

It’s early March, spring is in the air, and everything seems to be going great.

Well, apart from having a nice girl by my side, but let’s not go there!

Hopefully you have experienced good times in your life too. It’s great when everything is just ticking over nicely.

Until it isn’t.

Life can change, for better or worse, in a heart-beat, and it always helps to be prepared.

This isn’t new advice, of course.

Spend enough time on the ‘net, and you’ll overdose on the number of times you’ll hear:

“Have an emergency fund”

An emergency fund, funnily enough, is money you have set aside in case of an emergency.

Are you putting money away?

 

It makes a lot of sense but do you actually have one?

For many, building an emergency fund is something that’s on the To-Do list but the act of actually putting money away and LEAVING IT, is a real skill.

It can be very easy to let life get in the way. Perhaps you have begun putting money away for one reason but you find yourself needing to spend it on something more immediate like a car repair or a new boiler for your house.

Even if you are saving for something more specific rather than a general emergency, like a dream holiday to Paradise Falls in South America for example, it can be a real challenge to stop yourself from dipping into your savings.

Are you always dipping into your savings?

 

Tricks To Stop You From Dipping Into Your Savings

Whilst a strong mindset is the most important thing, here are some things that helped me grow my  Emergency Fund.

1) Don’t call it an ‘Emergency fund’

I don’t really like the negative emotion attached to the name. For me I respond much better to positivity than negativity so I named my ‘Emergency Fund’ an ‘Opportunity Fund’.

Subtle difference, perhaps, but the name made me more excited to contribute to it every month. Every pay-day I would move more money into my Opportunity Fund and it felt great -after all, I was helping grow the size and number of opportunities that were becoming available to me. I enjoyed the feeling knowing that if my income disappeared I could jump on a plane and pursue new adventures. If things went wrong, I knew that money would not have to be the driving factor in how I would respond.

2) Make it non-negotiable

I used to move money into my savings account and then take it out again if needed something, figuring at least I was gaining interest on the money before I took it out again. However, this is a slippery slope to losing your savings. I only really started gaining traction when I made a commitment to myself that savings were savings for a reason and they should stay locked away.

If you need to discipline yourself further, consider locking your money away in a 1 year bond or certificate of deposit so you are protected from yourself. But make sure that you can access the money in an emergency if you really need it (most restricted access deposit accounts let you access the money if you need it albeit for a fee or forfeiting any interest you may have earned). Paying a fee might not sound that smart but if it protects your money from your self-sabotaging mind, then it can definitely be worth it.

3) Invest More

Whilst you shouldn’t be investing the money in your ‘Emergency fund’, I definitely found myself saving more (and not touching it), once I began investing parts of my savings into the markets. The act of investing made me really appreciate that the money was now earning and growing on my behalf and the reward of seeing it grow in value over time was fulfilling enough to prevent me from wanting to ‘cash out’ and spend my savings. There was also the risk that I could lose money by selling at a bad time, so by increasing my investments, it made me want to increase my emergency fund further to make sure I would never be forced to sell my investments if I needed extra money in the future.

Click for more information about investing.

4) Care

I wish I could say I had a more ‘sexy’ tip  but there really isn’t anything more important:

To CARE.

To care enough about yourself.

To care enough about achieving your goals and ambitions and not letting money issues hold you back.

When you think about it, it’s really easy to CARE about making things happen in your life because the alternative, living with regrets about things that never happened, is enough to make any one cry….well, at least I do whenever I watch the introduction to Up:

 Carl and Ellie never made it to Paradise Falls together, because they let life get in the way. Sure, they cared enough to save for the trip, but didn’t truly make it a priority.

Don’t be like them….make sure you are funding your Emergency and Opportunity Funds today.

************************************************************************************

What Do I Know?

This post is inspired by recent events in my life…just last week I ended my employment at my day job and am striking it out on my own!

And having my ‘Opportunity fund’ is making me smile so wide my friends and family think I’m a bit crazy!

I’m feeling the empowerment that building an Emergency/Opportunity fund for yourself can bring.  And it’s awesome that you’re reading this and following along for the ride.

The first thing I did was book a plane ticket to Austin, Texas for South by South West this weekend – to network and party with some of the top creative minds on the planet.

Thank you for being here with me -I want you to succeed in growing your pennies and I want to help you live an empowered life!

Now I’ve got more time than ever to help you do just that!

What are your Emergency and Opportunity Funds for?

Leave a comment and share with the Magical Penny community

 

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Changed Your Mind? How To Avoid Buyer’s Remorse

by Adam on February 29, 2012

A guest post by a reader, Louise.

Picture the scene: you’re browsing on Amazon and you suddenly notice a cool looking camera on sale, 50% off.

It’s a great deal; the camera is a good brand, got good specifications and a lot of good reviews…it’s too good an opportunity to miss! So you click ‘Add to Basket’ and eagerly await the delivery of your shiny new camera.

When it arrives, you take a few pictures of your fireplace, the dog and a few passing cars…then leave the camera in a drawer, occasionally taking it out for an annual trip to the zoo or a family Christmas, but mostly you use the 5 megapixel camera on your phone because, well, that’s good enough and it’s more convenient than carrying around a bulky camera all the time.

If this scenario sounds familiar, you’ve suffered from buyer’s remorse. It can be applied to anything; a gorgeous pair of shoes with unfeasibly high heels; “they’ll be fine if I wear jelly insoles”, a camping holiday down in Cornwall; “if it rains we’ll just go to the nearest café”, or a ‘doer-upper’ house “I can finally renovate my own home!”.

Why Do We Do It?

It turns out that we’re very good at lying to ourselves, especially when we want something. The best barrister in the world couldn’t compete with your reasoning if you really, really want that new £45 Xbox 360 game. We’ll convince ourselves that this item will change our lives, that we’ll get hours of fun or use out of it, and that if we ever do decide to sell it on, we’ll get back what we paid for it.

Sadly the reality is often the opposite. That expensive game will be played for an hour, maybe two, then left on the shelf because your busy life just won’t allow you time to relax and play. The pair of shoes will be worn for one night after which you’ll deem them far too painful to ever go near your feet again, and they’ll sit in the bottom of the wardrobe forever.

As for selling them on; have you ever tried to sell a used game months after it was released? They lose value faster than British cars, and you’d be lucky if you got half of your money back. As for shoes; as soon as they’ve been worn once they’re only fit for a car boot where you’d get offered a pound for them from an old lady who thinks her granddaughter might like them.

Shoes and Savings

Buyer’s remorse isn’t just limited to tangible purchases. Have you ever taken out an insurance policy only to find a better deal a month or two later? Or maybe you’ve gotten a new credit card and later found that the APR is much higher than you expected?

While it’s not buyer’s remorse as such, it’s still a horrible feeling of something being wasted, the object of which will (technically) be much harder to get rid of than a camera or pair of shoes. Opening and then cancelling a credit card could look bad on your credit file, and if you try to cancel an insurance policy you’ll probably face penalty charges.

Avoiding Buyer’s Remorse

Fortunately, it’s quite easy to train your mind to prevent buyer’s remorse from happening. It’s simply a matter of really thinking about your purchase and how it will fit into your life. All too often we think abstractly about something instead of taking the time to consider the finer practical details.

The next time you think about buying something; really think about buying it. If it’s a camera, ask yourself how often you’re really likely to use it. Would you be happy carrying it around everywhere or will your phone camera suffice? If you’re eyeing up a pair of shoes; do you actually have any outfits that they’d go with, and do you already have going-out shoes which don’t cripple you?

In the case of financial products, the key word is compare. Whether it’s credit cards, current accounts, insurance policies or a broadband provider; compare as many different ones as you can. It’s the only way to find out what’s truly the best deal and reduce the risk of buyer’s remorse later on.

Have you ever experienced Buyers remorse?

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Introduction to a Stocks and Shares ISA

by Adam on February 1, 2012

We would all love to make a fortune, but most of us don’t know how we will become millionaires. However, it is still possible to make small investments and get a good return on your money (if you’re lucky/make your own luck!), effectively turning a tiny amount into a relative fortune – as long as you invest consistantly and are willing to take on the risk that comes with any investment.

A good example of this is a stocks and shares ISA.

For this type of investment you put your money into an ISA account which then is invested in various stocks and shares (this varies depending on the specific ISA that you have chosen and the options available).

The great thing about ISAs is that your money can grow tax-free, so you don’t have to worry about paying any tax on the interest, capital gains or share dividends you may earn as a result – which is one way you can help turn your small investment into a relative fortune, as the lack of tax helps to boost your return.

You can also choose whether you want to reinvest your dividends in more shares (recommended for simplicity and to compound your returns), and you can generally put as much or as little into your share ISA as you like each month; just don’t go over the total annual limit that is placed on all ISAs which is currently over £10k per year.

Of course, it is important to note the risk that comes with a Stocks and Shares ISA – the stock market is not guaranteed to rise continuously and so your investment has the potential to dip – but if you are able to leave your money in the ISA over the long term, there is a good chance that the investment will grow.

By how much it grows often depends on how the investments inside the ISA perform.

It’s a good idea to investigate the best stocks and shares ISA for your needs, and understand what you are investing in as investment risk varies enormously. For instance, investing in a climate change mutual fund inside your ISA (that invests in energy-conscious businesses) is one of the riskier investments, but it has may perform very well over the long term.

If you are looking to spread out your options, one particular favourite investment is the FTSE all-share tracker fund so you never miss out when the stock market grows. Adding bonds and gilts into your ISA could also be worth considering; these can offer lower returns but they have less risk attached.

Overall, making a fortune requires dedication and care to make sure you make the best investments for your needs and that you manage the risk attached to investments wherever possible. With one eye on the long game and one eye on your current investment portfolio, you should have a decent chance of growing your ISA investment in the months and years to come.

 

Overwhelmed by your options but want to start investing? Sign up for updates and I’ll walk you through it.

 

You may also find helpful:

Why A Pension (and an ISA) Is Like A Water-Proof Envelope

 

 

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Surviving The Sales And Reaping The Rewards

by Adam on January 31, 2012

A guest post by Louise, with a very worthwhile post about new year resolutions…. how many of you are keeping your financial-based resolutions now that it’s almost February?
Like many other people, one of my resolutions this year is to cut back on my spending.
It’s a common resolution to make, yet so many of us fail to stick to it every year simply because we go about it the wrong way.
If you stop to think about it, January is really the worst month to make this decision. Sales are on everywhere and because of the way the human mind works, if something appears really cheap we’ll automatically think it’s a bargain and buy it even if we don’t need it.

Is it really a bargain though?

It’s like those 2-for-1 offers in the supermarket. I always used to fall for those, thinking I was getting a bargain, until I actually looked in my cupboards one day…they were full of food I’d gotten on these offers and never used. Since then I never buy anything on BOGOF unless it’s something I always buy anyway – that way I know it won’t get wasted.

The same applies to the Sales.

I’ve been wanting to get a new car seat for my daughter for a few months now as she’s almost out-grown her old one, but I decided to wait until the sales. On the 27th December I trotted down to Halfords and picked up a shiny new car seat for £60 which my daughter loves, and saved myself £50. But if I hadn’t been looking to get one in the first place that would have been a waste of £60.
The bottom line: It’s only a bargain if you would have bought it at full price anyway!
So if cutting back is one of your resolutions, what can you do to maximise your chances of success?

There are 3 main reasons why people fail at keeping resolutions pertaining to spending.

1 – Going cold turkey and trying to resist spending anything.

Ex-smokers will identify with this; it’s much harder to quit if you just stop the cigarettes altogether and don’t replace them with nicotine patches or gum. It’s the same with spending. People do need to buy things but it’s a case of everything in moderation, or finding a substitute that doesn’t cost as much.
If your passion is for clothes, go to thrift stores and charity shops instead of department stores and boutiques. If, like me, you tend to splash out on books, join a library or again use charity shops.

2 – Looking at your goal in a negative or general way.

Instead of just saying “I have to stop spending this year”, try thinking of something you want to achieve as a result of reducing your spending.
For instance, I’m planning a series of mini-breaks this year costing a total of £400, and this has to be paid by mid-February. So for the next few weeks my husband and I are cutting back all non-essential spending in a bid to save this amount. It’s hard but knowing we’ll have those holidays at the end of it makes it worth it.
You could also try opening a savings account which will allow you to deposit money and see the balance whenever you want. Every time you resist spending money on something, put it into the account and as time goes on you’ll be able to see concrete proof of your efforts. And if it pays a good rate of interest, even better!

3 – Assuming you have iron-clad willpower.

Look at your typical spending habits; do you tend to buy online after seeing an offer in your inbox? Do you regularly go into the city on a weekend with friends and end up with armfuls of purchases? Whatever your particular shopping temptation, it’s easier to avoid it than assume you can handle it.
So unsubscribe from all those emails which shout about the latest offers from your favourite retailer. Cancel your weekends or suggest alternatives which don’t involve shops (but tell your friends why so they don’t stop talking to you!). If you do decide to go out, take a small amount of cash with you and leave your cards at home. Remove temptation, don’t try to resist.

One final tip

Procrastination is your friend when you’re cutting back your spending.
If you see something you want, don’t buy it right away. Remove yourself from the object of temptation (leave the store, click off the website) and make yourself wait a day, a week or a month. Then ask yourself if you still want that item. You probably won’t but if you do, at least you’ll have had time to ponder your purchase and will have avoided impulse buying.
Have you implemented any interesting strategies to save more money in 2012?

Share your tips in the comments

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Questions To Ask Yourself about Car Ownership

by Adam on January 31, 2012

The following is a sponsored post with a very worthwhile message that I’m proud to share

If you’re just starting out in the world, beginning your financial life, it’s likely that you’re looking to get a car.

Buying a car is a pretty ‘normal’ thing to do for many 20 somethings -after all, you’re an adult and you don’t want to have to rely on others for your transport needs.

Unfortunately, car ownership can be surprisingly expensive, and whilst you could be justified that it’s a necessary purchase, it’s important you walk into the deal with all the facts.

The Reality of Car Ownership

With the exception of student debt, a car loan is often the first major debt that young people beginning their careers sign up for: it’s very common to use financing and focusing only the monthly payment rather than the total cost.

But carrying debt can be surprisingly costly and who knows what might happen in the future when it comes to your job.

The cost of car ownership is further compounded by the fact that car valuations can quickly fall leaving you potentially owing more than the car is worth if you are forced to sell.

Car Insurance – Important considerations

Car insurance is another cost that comes with car ownership. But whilst it will always be a significant cost, there are also great ways to save money on your car insurance. For example, by shopping around (it’s a competitive market!), and taking advantage of your situation to lower your premiums like looking to women-only insurance providers for lower premiums if you’re gender-advantaged (!) or considering multi-car savings if you have more than one car.

Saving money with a multi-car policy is no joke!

 

Ultimately when it comes to car ownership you need to make sure you are making CONSCIOUS decisions rather than sleep-walking into an expensive commitment.

Ask yourself these questions:

“Do you need a car now?”

Is the personal freedom today worth the financial burden and will your car payment commitment stop you from growing your pennies for your future?

“Is having a car at this stage of my life really worth it?”

Deciding to wait a little while for a car can mean the difference of tens of thousands of pounds considering how much the pennies you save in your 20s will grow in value over time.

“Is driving an older car a better choice?”

You don’t need a shiny new car to enjoy the crazy adventure of early adult life. Not having a car payment (or a very low one) allows more flexibility to travel, visit friends or simply save for other things like a down-payment on a house.

“Can I get cheaper car insurance somehow?”

Having an older car will lower your insurance premiums and if you have more than one car in your household you can save even more with a multi-car policy.

Making smart choices really will pay off in the future so get your thinking caps on and start asking these questions to yourself today.

Conscious spending at the beginning of your financial journey really can have a Magical impact when it comes to growing your pennies.

Good luck!

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5 tips for Live-in Landlords

by Adam on January 25, 2012

If you’re planning on living with tenants in your own investment property, it’s essential to take out landlord insurance and to choose lodgers carefully.

Sharing a house can be challenging, but there are ways to make your time together bearable or even fun.

I actually have first hand experience of this arrangement and know it can be beneficial for both parties. But there are things you should consider:

Here are five tips for live-in landlords:

Hold interviews before selecting a tenant

Letting out one of the rooms in your house is a great way to utilise space and make extra money – important if you are looking to grow your pennies in the long run. However, it’s important to interview tenants before they move in to ensure they’re suitable for a house share.

Have a good chat over a cup of coffee and find out as much as you can about the other person in a short space of time. Ask them about their job and delve into their personal life without being too evasive. Find out if they’ve got a partner (as this could affect you) and inquire how they’ll be spending their time. Lodgers also have expectations, so ask what they expect from you and decide if you’re compatible. Of course, people usually want to create a good first impression so use your natural instincts if possible.

Draw up a contract

Start off by drawing up a three-month contract and have all tenants sign it before they move in with a deposit for security. This will make things official and will help you throw them out if things don’t work out. Write down the rules and regulations of the house share and make sure everyone understands their responsibilities. Establishing a rota and laying down guidelines from the very start will help everyone know their place and should allow you to live in harmony.

Give each other space

It’s really important to respect your tenants by giving them privacy and space. Just because it’s your house does not mean you can stroll into their room whenever you feel. You wouldn’t like it if they snooped around your bedroom, so never enter their own living quarters without asking permission.

If you want to clean the whole house, always speak to the tenants first. Some might be happy for you to hoover and dust, whereas others would prefer to do it themselves. Everyone needs time to relax and breath, so don’t crowd your lodgers.

Tell your tenants before inviting guests

Always tell your tenants before inviting guests and ask them to do the same. That way everyone will know who’s coming round and will expect different people in the house. You might not care who your housemates bring home, but they might get concerned if they hear strange voices, so keep things fair. You don’t have to sit down and formally introduce everyone who walks through the door or anything like that, but just leave a note or tell everyone quickly. If you respect others, you should find they respect your back.

Talk through any issues

If there’s a problem in the house, it’s essential to talk through any issues before they get worse. Have a calm discussion over dinner with the person who’s bothering you and let them voice their concerns too. Talking face-to-face is one of the best ways to iron out issues and is much more productive than gossiping behind their back. You might find a good chin wag strengthens your relationship and getting everything in the open is sure to improve the atmosphere in the house.

Living amicably with tenants is as important as taking out cheap landlord insurance, so always treat each other with care.

 

Other Property articles on Magical Penny

The UK Loves Their Houses…but Should We?

An Idiots Guide to Home Insurance and How to Get a Cheaper Deal

Would real estate or the stock market be a better investment choice for the long term?

 

 

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How To Get Your 2012 Off to a Good Start

by Adam on January 19, 2012

The following is a guest post by Liz Goldman for Sunbird FX – the currency trading specialist and CFD broker.

According to a U.S. government survey, making better financial decisions is one of the top new year’s resolutions made by Americans, along with vows to lose weight and get more exercise. It’s a great time to make sure you’re getting 2012 off to a good start financially. Here are some ways to give yourself a financial check-up:

Shop around for better interest rates

Interest rates on savings accounts are rock bottom right now, so it’s particularly important to do the best you can. Check local banks, credit unions, and online financial institutions. Make sure there are no fees or hidden terms. Some accounts that look good on the surface are bad deals when you read the fine print.

Shop around for better credit card terms

Banks tightened up on lending, dropping credit card limits and closing accounts, during the worst of the recession. Now many are looking for new customers and dangling attractive introductory rates and reward programs to entice them. The best credit cards often have annual fees, so make sure you’ll get enough benefits to make the cost worthwhile. Ask if the card issuer will waive the fee for the first year. If you find a card with a zero interest promotion, transfer a balance from a high interest card.

Pay more money on your highest interest credit card account

Interest eats up a big chunk of your monthly credit card payment if you’re only paying the minimum due on that card. You’ll lower the actual balance more quickly if you channel more money toward a high interest account. It’s gratifying to see the balance drop more quickly, and once you pay off one of your cards, you can use that extra money to tackle another high interest bill.

Increase your savings

It never hurts to have a money cushion for unexpected bills like car repairs, dental emergencies, or anything else that suddenly causes a major expense. A hefty savings account also cushions you against the effects of a crisis like job loss. Determine how much you can afford to pay each month. Write a check and deposit it into your savings account at the same time you pay your monthly bills. Treat that deposit with the same importance as you’d treat any other bill.

Order your free credit reports

…and make sure no mistakes are bringing down your credit score.

The Fair Credit Reporting Act entitles you to free reports from the three credit bureaus every 12 months. Order them through AnnualCreditReport.com, comb through them carefully, and file disputes on the appropriate credit bureau websites for any problems you find. You may be doing great financially, but a mistake or two on your credit reports can still destroy your credit score.

Talk to a credit counselor

…at a non-profit credit counseling agency if you’re having trouble making a workable budget on your own. Many people think that credit counselors are just for people teetering on the brink of bankruptcy, but that’s not true. Legitimate counseling agencies offer a full spectrum of services, not just debt repayment plans. Find an agency that offers free counseling and educational resources and check its standing with the Better Business Bureau.

_______________________________

Thanks Liz for this post.

Tips are really useful, but also remember, mastering your money is as much a mind-game as it is about taking action on these tips.

Do you have the right mindset for success and wealth in 2012?

Watch the video to find out why mindset is so important.

 

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The Ancient Days of Face to Face Investing

by Adam on January 17, 2012

investing adviceGaining access to investing information has never been easier.

Back in those fuzzy olden days of the early 90s, when I was but a small child, would-be investors had to venture out into the world and search for collections of  bleached paper gathered together with glue, which some affectionately named ‘books’. In these ‘books’ they might read about earnings reports and valuations and price-to-book ratios (‘book’ being different to ‘books’ of course). And they would likely stop reading shortly after due to overwhelm, that and their hands torn to shreds from paper cuts.

But occasionally there were brave souls who pushed through the jargon and decided they would enter the world of investing.

Here’s to the trail-blazers.

Taking a first step in the journey, our would-be hero steps out of his front door, faces the wintry wind, and visits a learned gentleman called an investment broker. If he had been feeling particularly adventurous he might have tried using an experimental technology called a telephone to make his investments.

Note: the telephone at the time was a newly discovered technology that used pulses of electrical current to transmit information through wires around the world. Exact figures around usage are difficult to find, being lost in the ravages of time.)

Anyway, once our adventurous investor was talking to the wise man gate-keeper of the stock market, the investment broker, he would open his wallet and either: a) pay an arm or a leg for advice;  or be taken advantage of through a ridiculously high commission on whatever he bought.

But it was worth it, for our lone explorer of the markets was now an investor!

Oh joy!

 So our hero is now a fully fledged investor

But if he wanted to keep track of his investments he would need to wait until the paperboy delivered another piece of bleached paper to him in the form of a ‘newspaper’. On its pages would be printed the valuation of popular shares. Whizzy.

 

BUT NOW WE HAVE THE INTERNET.

The internet allows us to learn about investing and actually invest, all from our laptops. And we don’t need to use rip-off brokers or wait for the paperboy to tell us how much our investments are worth over time.

 

What is standing in your way?

What will it take before you start investing in things that, over time appreciate in value rather than decline?

The internet has taken away excuses for access.

But there are still problems:

  1. Finding the money.
  2. Overcoming overwhelm.
The solutions:
  1. Magical Penny archives show you how to find money
  2. Future Magical Penny articles will overcome information overwhelm by giving you more information….bear with me.
I’m going to help you overcome the overwhelm:

 

In summary, you should be saving what you can, and invest the money you won’t need in the next 5+ years largely in index funds that track key markets across the globe for as low a cost as possible using a low cost investment broker/online fund supermarket.

Future Magical Penny articles will break this key concept down but I didn’t want to keep you waiting anymore.

 

Wherever you are in your investing journey, don’t be afraid.

 

Be like the hero investor of years passed…and step out into the cold stay safely in your house glued to your computer and (thanks to the internet) secure your financial future.

Update

Monevator has written a brilliant post about how you don’t need a lot of money to start investing. £50 is very doable for almost every working person and getting started is more important than waiting for the perfect time:

When money is rarer than rocking horse dung, DIY investing can seem like the sport of kings – as beyond the reach of the average punter as international polo, yacht racing, and panda wrestling.

So if you’re wondering how to invest on a budget, what is the minimum amount of money you need to invest while remaining true to the principles of passive investing?

I think saving and investing about £50 a month should do it.

Highly recommended.

 

 

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