Long pause.

Friend, in a low voice: “Actually, they ended up letting that house go.”

Me: “Wait, what do you mean?”

Friend: “She, you know, let it go. It got foreclosed on.”

Me: “What? Why? Did she lose her job?”

Friend: “No, they just weren’t going to be able to sell it for what they paid for it, so they let it go.”

Me: “Then how did they buy another house?”

Friend: “It was kind of weird and I didn’t totally understand, but it’s something like the first house was in her name, but the new house is in her boyfriend’s name.”

Me: “But now her credit is trashed!”

Friend: “I don’t think she cares – they’re not going to move again.”

Me: “But she just screwed over her neighbors! Now the value of their houses will go down! This is practically fraud!”

Friend: *shrugs* “Oh well, her decision.”

Me: !#&*$(%#^&*@(#@$%%@

Before I proceed, let me put this disclaimer out there: the truth is, I don’t know for sure that this is what happened. I heard this whole story second-hand from a someone who also doesn’t know the subject very well. And even if it is true, it’s plausible that there are a lot of mitigating circumstances related to the subject’s finances that I also don’t know anything about. I accept that these are possibilities. I should also mention that I know that there are a lot of people who have no choice – due to dire financial circumstances – but to be foreclosed on and that it is a heartbreaking situation, so my intention here is not to be critical of the people who have no other options.

But let’s just assume, for the sake of argument, that the scenario outlined above is 100% true: someone I know had her home foreclosed on for no other reason than that she wanted to move to a bigger house in a better neighborhood. Let’s just say that this is the situation (I highly, highly suspect that it is, but again, I don’t know).

In my opinion, this is a truly fucked up thing to do. Sure, her credit is in the toilet, so I guess that’s a “punishment.” And yeah, what she did isn’t illegal. But you and I both know that just because it’s not illegal doesn’t mean it’s not wrong. She is potentially screwing over the people around her – her former neighbors – for no reason other than that she just doesn’t feel like living in that house anymore. A foreclosure in the neighborhood affects everyone’s home values, not to mention the overall housing market. It’s selfish and unethical to do stuff like this, no matter if it’s within her rights as a homeowner or not.

So this train of thought got me thinking about people who are selfish and unethical in other ways, such as in romantic relationships, and the comparison between cheating and unnecessarily getting foreclosed on came next in the stream of consciousness. Like the foreclosure situation, cheating isn’t illegal, and its damage can cause serious ripple effects in a person’s future relationships, just like the unnecessary foreclosure causes ripple effects in a neighborhood. In both scenarios the perpetrator is looking out for their own best interest without regard for others; in both scenarios, devastation (financial or emotional) is usually the result.

I thought about this for quite a while, and eventually came to the conclusion that cheating is still worse. It’s a personal betrayal, whereas an unjustified foreclosure is an impersonal bad act. But I will say that I think a person’s ethical standards aren’t usually compartmentalized; if you’re sketchy with your money, you’re probably a sketchy person, and a sketchy person won’t be an honest partner. In other words, I probably wouldn’t date someone who “let his house go” because I’d be worried he’d treat our relationship just as carelessly.

What do you think? Does a person’s ethical conduct vary from situation to situation? Do you think shady financial behaviors portend shady romantic behaviors? I can’t wait to hear your responses!

I just wanted to let you guys know that I’m not neglecting you and I have so many money thoughts, I just don’t have much to actually report on the financial front until a few things are finalized.

I’ll be back soon, hopefully with good news

At any rate, I’ve been thinking recently about how being busy impacts my finances. I used to think that being busy all the time was a boon to my finances. After all, when I’m really busy:

• I don’t give in to the temptation to go shopping because I’m bored, because I’m not bored. This saves me from countless impulse purchases. 
• I don’t have the energy to go out to dinner or bars with acquaintances just to fill the time. Sleep is free, and it feels so good when you’re exhausted from having a jam-packed schedule. 
• I don’t mindlessly shop online to entertain myself; again, this saves me from too many unnecessary purchases to calculate. 

Basically, when I’m really busy, I don’t have the time or energy to frivolously spend. But lately, as I’ve been working harder on some freelance projects and making headway on a super-secret personal goal (which may or may not be revealed here), I’ve been starting to see some financial downsides to being too busy, such as:

• I don’t have time to prepare meals, which leads to picking up take out food. This is both expensive and unhealthy.
• I’m exhausted, so I don’t put the same effort into shopping for deals and scrutinizing my spending. This has probably led to overpaying for things on more than one occasion. 
• I feel unmotivated to cut corners. I normally put a lot of effort into figuring out creative ways to avoid spending money, but when I’m constantly rushed, convenience and ease are the name of the game. This becomes a serious problem with lesson-planning. Normally, I get an idea for a lesson that requires me to shell out money on materials, but then I figure out a way around the spending. Lately, I’ve just been rolling up to Target and plunking down the money needed for the original idea, no questions asked. 

So, it seems like sort of a draw. In some ways, being busy saves me money, but in some ways it’s definitely expensive to be over-scheduled.

What do you think? Is being busy good or bad for your bottom line?

This quote from the beginning of the original of the article pretty much summarizes the author’s qualms with the 401(k) as America’s primary vehicle for saving for retirement:

Like pretty much everyone else I know, I’m overscheduled. Between teaching, working with staff, tutoring, and building a freelance career, I feel like I never have enough hours in the day. And not only does my sleep schedule suffer, apparently my finances do, too. Check out the infographic below and see if any of the information sounds familiar:

Honestly, a lot of this is basically common sense, but somehow when common sense is condensed into one space with a lot of nice pictures, it feels more powerful, you know?

Anyway, priority #1 for me this weekend – for the sake of my finances, of course –  will be to get more sleep! What about you?

Source: http://onlinephdprograms.com

Today I’m so excited to share the following guest post from the wonderful Amelia over at NerdWallet. I met Amelia at FinCon12 and let me tell you – this girl knows her stuff! Enjoy!

The simple fact is that it is never too early to start retirement planning. For young adults in their 20s, however, “am I saving enough?” is often the last thing on their mind.

It’s a shame, because saving early is one of the best gifts you can give to your future self—just ask the current generation anxiously looking toward retirement. The Great Recession, in addition to crashing our economy and wiping vast amounts of household wealth, also put many families’ secure retirement in doubt. The Center for Retirement Research recently estimated that more than half of American workers 30 and older will not have enough money saved away to maintain their standard of living by the time of their retirement.

You can avoid a lot of the stress and anxiety simply by starting to save earlier in life. Consider this: if you are 25 and contribute $50 a month to an account generating 7% interest, compounded yearly, by the time you were 65 you would have close to $120,000. Start when you’re 35 under the same conditions and you’ll end up with barely $56,000.

It’s not magic; it’s the beauty of compound interest. The interest gained from the principal in the first period is added to the original sum, and then used to calculate the interest for the following period. This achieves a much better yield than simple interest, which takes into consideration only the principal investment. In the case of retirement savings, compounding favors the young; the sooner you start saving, the faster your savings will grow.

There are a lot of options out there, but don’t let the lingo scare you off. Here’s a primer:

401(k)

401(k) refers to the section of the tax code under which this type of saving instrument is governed. These are generally plans sponsored by your employer that offer tax deferred savings toward your retirement. Under a company 401(k) plan, the money is automatically deducted from your paycheck before taxes, with the benefit of reducing your taxable income and your overall tax bill.

As a safeguard for the future, you can’t withdraw the money without facing steep penalties until you are 59 ½ . If your company offers one, you should look into it right way.  Often employers will match your contribution, with a benchmark being around 3% of your current salary and a maximum contribution limit of $17,500 in 2013.

If the company goes under or you decide to pursue other opportunities, your money is safe. You can either pay the penalties to cash out your plan early, or you can rollover your 401(k)into another retirement savings plan.

Individual retirement account (IRA)

If you aren’t at a company that offers a 401(k), the next best thing is investing in an IRA. You can—and should—also think about starting an IRA even if you already have a 401(k). Similar to a 401(k), the money you put into a traditional IRA is tax deductible, and is taxed at the time of withdrawal, allowing you to accrue interest tax-free until the age of 59 ½. At that point you can begin taking money out without incurring 10% early withdrawal penalty.

IRA can be easy to start, requiring as little as $50 if you commit to a regular contribution schedule. There are no income requirements as to who can start one, though the amount you can contribute is capped at $5,500 a year in 2013 until you are over 50 at which point the limit bumps up to $6,500.

Roth IRA

The major difference between a traditional and a Roth IRA is when you pay taxes on your money. With a Roth IRA, you pay the taxes at the time of your contribution, but you can withdraw the money anytime you want, although the same 59 ½ age limit applies for the imposition of fees.

The Roth IRA a prudent choice if you expect you will end up in a higher tax bracket at the end of your life—you’ll save a whole lot in taxes by paying the lower rates up front. For this reason, a Roth IRA is a great option for young people or those who are at the beginning of their earning potential.

As an additional benefit, you are not forced to withdraw money at a particular age—you can keep saving well into your old age. In contrast, with a traditional IRA you must start drawing on the money by the age of 70 ½.

There are some restrictions, however. Roth IRAs are open only to single-filers making up to $95,000 or married couples making a combined maximum of $150,000 annually. You can invest in both a 401(k) and an IRA (Roth or traditional) at the same time.

–

Whatever you decide, just remember, you don’t know what ups and downs the future may hold, and it’s never too early to start saving. That said, saving money is only one part of the personal finance equation. Head over to NerdWallet to learn more about the basics of retirement success.

Image credit: http://www.freedigitalphotos.net/

“I paid off $20,000 of credit card debt in a year!”

“Oh yeah? I paid off $20,000 of credit card debt in a year and I only make $30,000.”

“That’s nothing – my best friend paid off $20,000 in a year and she only makes $30,000 and she goes to school full time.”

I think you see where I’m going with this. Whenever someone in the personal finance community accomplishes something with their money, there is always, always someone out there trying to one-up her. Or, alternatively, there’s the other type of personal finance one-upmanship: the who-had-it-harder contest. Usually that goes something like this:

Annoying Competitive PFer #1: “I paid off my student loans!”

Annoying Competitive PFer #2:”Great! I’m still trying to pay mine off; you know, my parents didn’t pay for any of my schooling.”

Annoying Competitive PFer #1:”Well, me neither. At least you got a scholarship to help you.”

Annoying Competitive PFer #2: ”Yeah, but my tuition costs were so much higher than yours, and I didn’t qualify for work-study.”

Annoying Competitive PFer #1: “Yeah, well…”

….and so one and so on…

I don’t know about you, but I’m getting incredibly sick of reading this type of stuff in peoples’ posts and comments. Folks, these are the facts:

• Life isn’t fair. Some people are up against more than others. That doesn’t mean that the people who got some “lucky breaks” aren’t working hard and accomplishing things with their money.
• Everyone starts in a different place financially. There’s no sense in getting hung up on who had it easier, who got more from their parents, blah, blah, blah.
• There’s usually a lot more to peoples’ lives – financial and otherwise – than meets the eye. Don’t assume that what people present on the Internet is the whole story.

So I’m kindly requesting – nay, pleading with you, PF comrades – we need to make this pissing contest stop. Managing money well is hard. It requires a lot of discipline, patience, and tough decision making. The purpose of being a part of the personal finance blogging community is to help and support each other, not to rip into others for “having it easy” or competing over whose financial accomplishment is more valuable or impressive.

Guys, we’re better than this petty bullshit. So this week, for a change, let’s all be as supportive and encouraging as we can. Leave someone a comment that you know will brighten their day instead of make them fume. Send a PF blogger an email just to let her know that you’ve noticed all her hard work and think she’s great. Tweet a link to a new blogger’s post or send some positive feedback her way.

But whatever you do, don’t compete or snark, please. I think we’ve all had enough of that.

If someone had made a comment like that to me a year or two ago, I would have choked on my soup. Credit card debt not being a big deal? Are you kidding me? But in the past year or so I’ve definitely become more relaxed about other peoples’ finances. If other people have credit card debt or no savings or don’t know what a Roth IRA is, I’m no longer shocked and appalled. I accept that most people know nothing about money and don’t think less of them for it. That might sound enlightened, but mostly it was just exhausting me to be such a judge-y bitch, even if the bitchiness was contained in my own mind.

But anyway, back to the conversation with my friend. In response to her who-cares-about-carrying-a-credit-card-balance comment, I said something along the lines of, “yeah, credit cards can be a pain in the ass. I paid mine off a few years ago and it sucked!” To me this was a perfectly innocuous statement. Even though I’m way less of a judge-y bitch than I used to be, I’m not going to suggest to anyone (especially a friend) that being in credit card debt is ok or dismissible.

Apparently, though, this was not an innocuous response. Because she shot me The Look. You know The Look. It’s the I-can’t-believe-you-just-said-that! look. It passed across her face very briefly, but I saw it.

“So, you paid off your credit cards?” she asked.

“Yeah, a few years ago. It seriously sucked,” I said.

“So you have no credit card debt?” she retorted.

“No, not anymore,” I said.

[Insert long, awkward pause]

“Well, you’re not married. Just wait until you plan a wedding. You’ll be spending money left and right – it’ll add up fast. Those credit cards will come in handy then,” she finally responded, with a knowing nod that implied that my credit card debt freedom would be short-lived.

Now it was my turn to give The Look. Hopefully I wiped it off my face as quickly as she did, but I have to admit that I was stunned into silence for a beat. I understand that my friend was probably feeling a little bit bad, knowing that I’d been able to conquer a challenge that she was still struggling with. I get that. And looking back on it, maybe I should have just changed the subject immediately after she brought up the issue of credit card debt instead of telling her that my cards were paid off.

Still, though, I think that this response was incredibly rude. It actually stung a little; for one, she was trivializing my accomplishment. Paying off credit card debt is a pretty big deal, and I felt like she was qualifying it as “easy” for me because I’m single. Second, she had touched on a sensitive issue for me, my unmarried status. Even several months later, my break-up is still pretty raw. I try to hide it from my friends, so there’s no way she could have known this. But it was hurtful to be reminded that I’m no longer on the “marriage track,” regardless of how it came up.

I guess the moral of this story is that talking to this particular friend about money will have to be off-limits in the future. Everyone has friendships in which they need to steer clear of certain topics, but it makes me a little sad to have to watch my conversational step with a friend. I guess, as they say, people are funny about money. It’s a sensitive topic that dredges up lots of other issues (obviously). I’ll count this as a lesson learned.

Do you talk to your friends about money? Why or why not? Have you had any bad experiences when doing so? 

I’ve been teaching summer school every year since I began teaching. And frankly, it sucks. Don’t get me wrong: summer school definitely a cushy gig. The hours are less than those of a regular school day, the planning and grading are really light, classes are small, and there’s plenty of down time during which I can work on stuff for the “real” school year. But the students who attend summer school are difficult – academically and temperamentally. I’ve had some really, um, interesting experiences teaching summer school in the past. And in this case, ‘interesting’ is not a euphemism for fun. Also, I still have to keep up the basic schedule and tasks of the school year – getting up early, going to meetings, calling parents, etc. Even though the pace is slower, there are still significant demands on my time and energy.

Guys, I’m just a little sick of it.

Plus, I have an opportunity to take on a really important role in my school next year, a role that is pretty much made for me and that I feel very passionate and enthusiastic about. The only problem is that in order to take it on, I’d have to go to a three-day training over the summer, a training which I can’t attend if I teach summer school.

So I’m considering ditching summer school. Understandably, though, I’m torn. Well, the PF blogger in me is, anyway. Summer school yields me about $3,500 (after taxes). That’s a hell of a lot of money to leave on the table. And if I give it up, that also means I probably won’t achieve my 2013 financial goals. Actually, it almost definitely means I won’t achieve my 2013 financial goals. I’m not sure if I’m ok with that, especially since there are no guarantees with summer school. It’s available this year, but it might not be next year since I’d be giving up my “spot.” So I could potentially be passing on a financial opportunity that won’t come around again.

I should mention that if I decide not to teach summer school I won’t be completely out in the cold, financially speaking. I have the ability to earn about $1,000 in a different, week-long teaching program that supports the new role I’d be taking on. So it’s less of a time commitment, but also a lot less money in my pocket.

I have visions of using my time off to take a few short trips, work on my writing, do some professional development, and just generally unwind after a stressful year. But I also have visions of something serious happening financially – like having to move (a story for a different post), my car breaking down, my cat getting sick – and really wishing I hadn’t passed on that $3,500.

Readers: what would you do? 

First, there’s the hemming and hawing over whether or not to actually give up your current vehicle. If you’re anything like me, this is an almost paralyzing decision. Should you pour more of your hard-earned money into fixing whatever’s wrong with your current vehicle, or put your much-loved auto to bed and start looking for something new? It’s an agonizing mental tug-of-war, but eventually the time will come start shopping around.

With your old car resting in peace, the next question becomes whether to buy a new car or a used car. A new car might be more reliable, but a used car is so much more cost-effective. But the new car smell! But the depreciation! See, more agonizing!

Finally, there’s the searching. Traipsing around from dealership to dealership, coping with pushy salespeople, contacting sellers on Craigslist….what a hassle. All in all, the whole experience is enough to make you want to take the bus.

But if you’re like the many Americans who can’t get by without a car, I came across a great website that takes a lot of the pain out of car shopping: ISeeCars.com. Seriously, this site makes car shopping about a million times easier. You can search new and used vehicles, by price, make and/or model, zip code….there are tons of options. In addition, there’s information about shopping for insurance, financing (sorry Dave Ramsey!), and even a tool that allows to you compare cars based on fuel efficiency.

All-in-all, this is a really cool, easy-to-use site that makes shopping for a car based on the qualities that are important to you in a vehicle so much easier than it’s ever been. It’s so fun to use that I’m actually starting to look forward to buying my next car so that I can explore all of its cool functions!

Did you use any online tools to buy your last vehicle? If so, which one(s)? I’m going to be in the market pretty soon