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Money Stories, Pets and More @ The Carnivals 2008-04-13 02:16:25 The Carnival of Personal Finance #147: Q1 Financial Advice Edition was hosted @ Money
ning. I found the Following posts particularly interesting:The Cost Of A Bigger House @ Frugal BabeI bring you this story which demonstrates, quite successfully, what I always talk about. Firstly, You should buy a home which lasts you at least 10 years (if not more). Secondly, frugality only gets you so far. The real money is in the big ticket items. Although a frugal state of mind is always necessary.Four Ways I Upgraded Out Of My Raises @ Free From BrokeAnother story which discusses another painful issue I intend to deal with in one of my upcoming posts. The hedonistic fallacy or why more consumption won’t make us any happier.Hey, You Invest Like a Girl! @ Dividends4LifeThis short post uncovers a littl Read more:Stories
, Carnivals
The Little Savings That Could 2008-04-14 09:11:17 The heap paradox as a powerful metaphor with surprising results.Making the long and tedious process of saving small sums of money more rewarding and more tangible is a formidable effort. We all lose hope when we only manage to save 100$ each month, thinking desperately we will never get to see them amount to anything significant.Sure enough, becoming wealthy is easier when you’re able to save significant sums of money on a timely basis. However, we shouldn’t neglect the smaller sums saved as they also have a key role is creating wealth.I’ve recently re-read a very interesting paradox named the Sorites paradox (Greek for heap paradox). The paradox is attributed to Eubulides of Miletos who lived in 4th century BC and goes as follows: Consider a heap of sand of which grains are removed Read more:Savings
How to Make Saving More Rewarding and Tangible: 5 Practical Tips 2008-04-16 12:45:25 Increasing the tangibility of your savings and rewarding yourself for achievements is crucial for success in this long term effort. Saving
money consistently is hard. The temptations and needs are numerous. There will always be just one more thing to buy to make everything perfect. How do we resist the urge and how do we discipline ourselves to save?Having the required self-discipline is a good start but is by no means enough. Making the process of saving more rewarding and more tangible is a must in order to succeed in this long term effort.The sense of tangibility of money has been greatly decreased since the invention of credit cards and online bank accounts. Bills and coins have become number on a screen and these are easier to spend (in most cases we just hand out a credit card). We h Read more:Practical
How to Save Money by Analyzing Your Budget: 4 Basic Tools 2008-04-18 15:41:10 Can’t see the forest for the trees? Budgeting is an essential part of managing our personal finances. The story doesn’t end there though. We can and should learn to leverage our budget and the historical and future data it holds. By analyzing this data we can spot trends, problems and opportunities and increase our financial efficiency.Basic
budgeting will help you keep a positive or zero cash flow, as opposed to a negative cash flow which leads to never ending debt. The next step would be analyzing a budget using basic statistical and analytical tools and trying to identify which expenditures are problematic, abnormal and hold the greatest potential for increasing savings.#1 “I spend how much on eating out!?” or AverageThe most basic tool in budgeting is arithmetical average. Sinc Read more:Money
, Analyzing
, Tools
Excess Frugality, Practical Tips and Gas Prices @ The Round-Up 2008-04-20 10:48:32 The American Economics Blog Carnival hosted my article “Is Present Value - Value in the Present? The Economic sense behind Net Present Value" and featured some interesting posts. I especially liked:Fuels Costs, High Gas Prices
and the Real Estate Investor @ BiggerPocketsThis article discusses some interesting effects high gas prices might have on real estate investors. An interesting point made is that increased fuel costs will also affect the selection process of the average home buyer as longer commutes to work become more costly. I believe low gas prices have created an inherent inefficiency in real estate and urban planning. I find suburbs to be one of the main problems created by this inefficiency resulting in commuters jamming highways and roads, pollution and waste of resources an Read more:Excess
, Frugality
, Practical
Why Bulls and Bears? 2008-04-21 08:26:50 Stock market etymology for the curiosThe famous New York Stock Exchange Bull sculpture is a beautiful work of art. The bull, seemingly moving, is radiating raw, yet restrained power, with surprisingly gentle grace as it prepares to storm up Manhattan.The statue, created by artist Arturo Di Modica in 1989, was apparently placed illegally in front of the NYSE. It was created by Modica to symbolize the strength and power of the American people after the market crash “Black Monday” in October 1987. Public protest was strong enough to keep it in place after it was seized by police.For those of us who are less familiar with stock market lingo a Bull market is a market characterized by an uptrend in stock prices and increased investor confidence while a Bear market is characterized by pessimi Read more:Bears
Do you understand investment risk? 2008-04-22 06:42:59 Talk of investment
risk is abundant but what is investment risk really?Stock investments are risky; Investing in corporate bonds is less risky but still carries some risk; Investing in government bonds is risk free; we each have our own risk preferences and should invest accordingly, and so on and so forth.We all know and recite these market truths by heart. But do we understand investment risk for what it is?Investment risk is often defined as “The volatility of returns. Generally, the higher the potential return over time, the higher the level of risk involved” (BT financial group).Essentially, a riskier asset means the asset’s returns are more variable. The economic risks which are responsible for this volatility make good subjects for a series of different posts. Suffice to menti
Maybe Money Does Buy Happiness After All @ The New York Times 2008-04-24 11:21:22 New research points to high correlation between wealth and satisfactionWe like to think money doesn’t really make that much of a difference. The intuitive truth is that it does, but we must be careful not to jump to early conclusions.In an article by David Leonhardt for the NY times titled “MaybeMoney
Does Buy Happiness After All” a new research by two economists from the University of Pensilvenya is discussed. I urge you to take the time and read the complete article but for the ones of you who are more pressed here are the main points of the research:The contrast between wealth and low satisfaction (demonstrated in post war Japan) was research by Richard Easterlin in 1974 and became known as the Easterlin Paradox.Mr. Easterlin also claimed relative income mattered far more than ab Read more:Times
, York Times
Spontaneous Observations on Commodity Prices - Will Prices Remain so High? 2008-04-23 15:34:35 A multitude of reasons suggest commodity prices might not remain this high for long (oil just might)My post on “The financials of 2008 – What will we talk about” has proven itself so far (to my great surprise). True, I didn’t think the credit crisis would prove to be so deep but my thoughts on inflation, commodity prices and the Chinese market were pretty accurate. In this post I’ll be sharing my observations on commodity prices. Naturally, this is my personal opinion and should not be used to make investment decisions.Commodity
prices have continued their unprecedented rise. Corn, wheat, rice, oil and many other commodity prices have all skyrocketed. The rise in basic food products’ prices have caused riots to erupt in developing countries such as Egypt, Cameroon and Burkina F Read more:Prices
Investing in Your Pantry and Bargain Antiques @ CNN Money and Yahoo! Finance 2008-04-25 15:20:48 At a great timing Brett Arends wrote a great article for the Wall Street Journal which was featured on Yahoo
! Finance titled "Load Up the Pantry
".She argues that as flour, rice, milk, eggs and more basic food prices sore investing your money in a stocked pantry is wiser than just letting it rot in a bank account maxing at 4%.The article provides additional background and some future predictions (in continuance to my post on the commodity and food prices) and makes for a very interesting and recommended read in my opinion.Another article with real added value was published at CNNMoney
and reveals "The best kept secrets of antique shoppers". This is a great post on a tightly closed, less familiar market. Apparently there are real bargains out there.This weekend The Personal Financier will f Read more:Investing
, Bargain
, Antiques
Overspending, Sleeping, Eating (healthy) and Equal pay @ The Round Up 2008-04-26 08:12:24 It’s been a good week for me at The Personal Financier. I’ve had some spare time and I think I’ve put it to good use writing a few posts that I’ve planning on for some time now. I hope I’ll be able to keep up this pace in the future though I doubt it. My goal is to publish a new, quality, post at least every other day. If I can keep that up I’ll be glad.I’ve received a lot of visits from fellow bloggers hosting the better known personal finance carnivals lately and would like to return the favors by choosing my own picks, as customary.On another note the investment basics carnival I was planning on didn’t turn up as well as I’d expected with most content barely useable. I’ve decided on expanding this round-up instead with some better article from around the personal fin Read more:Sleeping
, healthy
, Equal
How to Break the Vicious Circle of Negative Cash Flow and Growing Debt 2008-04-28 10:13:48 Understanding the vicious circle is the first step out of itChronic overdraft and debt is a widely spread illness. Chances are many of the household who suffer from it are caught in a vicious circle of negative cash flow and debt. Even more likely is the fact that they are unaware of their situation and of the behavioral pattern responsible for it.The vicious circle A vicious circle is comprised of an interlinked series of events or behaviors which constantly reinforce themselves through feedback towards greater instability. In household finances the classic vicious circle would like this:The total negative cash flow of the household keeps getting bigger and bigger. The end is obviously and painfully clear.Getting caught in such a vicious circle is terribly easy. Express loans, credit and Read more:Break
, Vicious
, Circle
, Negative
, Growing
Credit Cards or Cash: A Costly Tradeoff 2008-04-29 15:24:55 Where do you stand in the tradeoff between cash and credit cards?There’s an ongoing debate on the preferred and recommended method of payment for routine, everyday expenses and purchases. Is paying cash better, and more financially sound, than paying with credit cards? Maybe it should be the other way around with credit cards being a more convenient method of payment?The trade off between cash and credit cards – It doesn’t end with convenienceMany people recommend handling a monthly expense budget on a cash-basis. This recommendation is sound as it essentially contains two important principles:1. Increasing the tangibility of money – Cash spending is the most tangible form of spending. When we pay cash we see the money literally leaving our wallet and hand and watch it slowly movin Read more:Cards
, Credit Cards
How to Fortify Your Job: 10 valuable (and challenging) Tips 2008-05-01 13:08:29 10 invaluable skills which are even more crucial todayWith each month bringing more news on additional job cuts it seems more focus should be placed on fortifying our careers and jobs in this economic slowdown, recession or whatever you'd like to call it.Fortifying our jobs, careers and place in an organization is necessary and just might make the difference between successfully navigating the current slowdown or struggling through it. Taking the right steps is a wise pre-emptive step which just might save us significant trouble and potential hardships in times to come.I believe there are some invaluable skills and characteristics every employee should adopt which will make him virtually indispensible. These are true for prosperity as well but play a more crucial role in a recession.I must
How to Save by Making Credit Card Payments More Real and Tangible: 5 Practical Tips 2008-05-03 06:46:22 A higher tangibly of credit card payments will ensure spending lessMaking credit card payments more tangible is very important as the tangibility of the payment determines how easy (or hard) it would be to make it.Credit card payments, which are easier and less tangible then cash payments, will often result in higher spending as they are simply easier to make. Paying cash will reduce expenses since parting with your bills and coins is harder.However, credit card payments are very convenient and as described in a previous post provide us with a lot of data for later analysis and for budget planning and review as discussed in this previous post about the tradeoff between cash and credit cards.Making credit card payments more tangible would allow us to benefit from both worlds: spending less Read more:Practical
Buying cars, Diet Foods, Down payments, Disability Insurance and More @ the Weekly RoundUp 2008-05-04 13:27:56 This RoundUp
includes what are, in my opinion, some of the best personal finance articles from the past week.The carnival of perosnal finance was hosted by Lazy Man Money. Here are my picks from the carnival:Prepare For A Recession Or Job Loss With 2 Budgets @ Harvesting DollarsOur Car Buying
Experience - Part Three: 5 Lessons Learned to Reduce Stress and Cost @ Chief Family OfficerVanguard Global Stock Index Fund And Why I Won’t Be Buying It @ Amateur Asset AllocatorLies We Tell Ourselves While Spending Money @ Think Your Way to WealthThe Festival of Frugality was hosted by Sound Money Matters. These are the articles I've found most valuable:The Problem with Diet Foods
@ Cheap Healthy GoodOne Great Potential Benefit Of Higher Gas Prices - Less Traffic @ Money Blue BookThe Money Hacks Ca Read more:Disability
, Weekly
Procrastinating Just Cost Me Money 2008-05-06 12:09:55 They're counting on us to be lazy I’m a very organized person. I keep my records in order, my desk is clean and everything is filed and sorted into place. I’ve even wrote a post about how it can save you money.Unfortunately, my orderly behavior is sometimes a mask and means of procrastination. I tend to postpone dealing with the things I find least interesting and they often find themselves sitting, very neatly, in the incoming mail tray waiting to be opened, reviewed, dealt with and scanned for posterity.I’m constantly fighting the urge to procrastinate. I know it’s costly. But every now and then I fail.This is exactly what happened to me a couple of week ago. I got an envelope from one of my insurance agencies. Now as every novice personal finance enthusiast knows you should alwa Read more:Money
The Problem of Accounting and Budgeting For Cash Expenses 2008-05-08 08:18:37 Where did all that cash go ?I’ve recently written two posts on payment methods or credit cards vs. cash. I argued that while cash payments help us avoid overspending credit card payments provide us with valuable and timely information for budget planning and review (Credit Cards or Cash: A Costly Tradeoff).I also provided my tips and insights on how we can make credit card payments more tangible and real to help save us money (How to Save by Making Credit Card Payments More Real and Tangible: 5 Practical Tips).There is, however, one remaining question which I’ve yet to find a successful solution to. How do we account, and budget in turn, for routine cash expenses?We can’t avoid paying cash as part of our daily routines. The problem arises at the end of the month when I take a look at Read more:Problem
, Budgeting
, Expenses
Home Maintenance, The Sucker Factor and more @ The Roundup 2008-05-11 15:46:20 It’s Sunday again and as customary I’ll bring my selection of some of the best personal finance articles of the past week.Starting with my picks from The Carnival of Personal Finance which was hosted by Alpha Consumer:How to Dress for an Interview @ Cash Money LifeFinancial Infidelity - The Leading Cause of Divorce? @ Million Dollar JourneyThe Festival of Frugality was hosted by Frugal for Life. I enjoyed:Saving Money Is In! The Recession Diet and The Shift To Frugal Living @ The Digerati LifeHome Maintenance
Tips @ Save and ConquerFrom The Carnival of Money Stories @ Free from Broke and the Money Hacks Carnival @ Save and Conquer I chose the following posts:Do I Really Need Long Term Care Insurance In My 30s? @ Can I Get Rich On a Salary?Free Time or More Money-Which is it? @ Greener
Israel Celebrates 60 Years of Independence – An Economic Review 2008-05-10 10:25:52 Israel at 60 is as prosperous as it has ever been, but not without challengesThis weekend Israel celebrates its 60th year of independence. Since 14.5.1948 this small country in the heart of the Middle East has turned from an agricultural based economy into a full blown economic wonder and success story.I chose to review Israel economic success through this list of little known facts and figures which, unfortunately, hardly ever make it to the news. The list will be divided in to Geography and Government, Economic
Review, High-Tech Industry, Education, the Stock Market and Challenges.Geography and Government1. Israel has a very small land area of approximately 8,500 sq. miles (vs. 3,794,100 sq. miles of the US).2. Israel is a representative democracy with a parliamentary system.3. Israel’ Read more:Israel
, Years
, Independence
Know your Portfolio - Three Simple Charts Can Make a World of Difference 2008-05-13 09:49:01 Portfolios change as investments change – make sure it still fits your goals and risk toleranceA friend of mine used to manage his own investments. He was a good investor and had enough experience to avoid the common mistakes novice investors often make (more on common mistakes). Time progressed and his investments grew nicely.After a long period of independently managing his portfolio he decide Read more:Portfolio
, Three
, Simple
, Charts
, World
Saving Hundreds of Dollars Easily with Well Placed Outlook Reminders 2008-05-15 12:02:06 Timely reminders can help save you a lot of money avoiding automatic renewals and getting better deals Ever since I started blogging I’ve adopted a positive outlook on the expensive and costly mistakes I make from time to time. I simply view them as tuition paid and a good story earned for The Personal Financier which just might save money for my readers.We got a really good packaged deal with a Read more:Saving
, Hundreds
, Easily
, Placed
, Outlook
Higher Gas Prices: A Blessing in Disguise or America's Wakeup Call 2008-05-17 12:39:04 Higher gas prices have got America
ns driving less and public transport has never been this busy - A blessing in disguise? Gas prices have been too low for too long. The American public demanded and received cheap gas and is slowly undergoing an adjustment process as the result of dramatically increasing gas prices which can no longer be held at bay by any means.With oil prices climbing to $130 a b Read more:Higher
, Prices
, Disguise
The Relation between Age and Portfolio Risk – Counter Intuitive Results 2008-05-19 08:37:07 Should young investors really hold riskier portfolios?There is a common financial thumb rule when it comes to an investor’s age and the risk level of his portfolio. Most financial planners recommend a higher level of portfolio risk to younger investor and a lower level of portfolio risk to older investors.This thumb rule is rooted in what seems to be common sense financial logic. A younger inves Read more:Portfolio
, Counter
, Intuitive
An oil bubble, Gas prices and a higher salary for the same work @ The Roundup 2008-05-18 14:21:04 I didn’t have enough time today to carefully review my favorite carnivals and recommend my picks so I settled for the editor’s picks instead. I’m sure they did a great job as usual.As always, my favorite posts from around the finance blogosphere are also listed. Without further a due I present this week’s roundup:The Carnival of Personal Finance #152 was hosted by Money Under 30. The follo
Is There an Oil Price Bubble Evolving? 2008-05-21 13:02:15 The fears (or hopes) of another bubble in oil and commodity prices is gathering followersWith oil prices easily crossing $130 a barrel and with no end in sight the fears, or hopes, of an oil price and commodity price bubbles are gathering a crowd.The case for the existence of an oil price bubbles and the case against the possibility of such a bubble are both convincing and interesting to observe.F Read more:Bubble
Budgeting for Unexpected Expenses 2008-05-23 09:23:59 Unexpected expenses are just an expense with uncertainty attachedUnexpected expenses can really hinder your saving or debt repayment efforts. You have your budget carefully planned and meticulously detailed and thought out. Then, out of the blue, pops an annoying significant and unexpected expense and re-shuffles everything.I’ll be arguing further along this post that all unexpected expenses are Read more:Budgeting
, Unexpected
, Expenses
Budgeting for Unexpected Expenses 2008-05-23 09:23:59 Unexpected expenses are just an expense with uncertainty attachedUnexpected expenses can really hinder your saving or debt repayment efforts. You have your budget carefully planned and meticulously detailed and thought out. Then, out of the blue, pops an annoying significant and unexpected expense and re-shuffles everything.I’ll be arguing further along this post that all unexpected expenses are Read more:Budgeting
, Unexpected
, Expenses
Is There an Oil Price Bubble Evolving? 2008-05-21 13:02:15 The fears (or hopes) of another bubble in oil and commodity prices is gathering followersWith oil prices easily crossing $130 a barrel and with no end in sight the fears, or hopes, of an oil price and commodity price bubbles are gathering a crowd.The case for the existence of an oil price bubbles and the case against the possibility of such a bubble are both convincing and interesting to observe.F Read more:Bubble
The Relation between Age and Portfolio Risk – Counter Intuitive Results 2008-05-19 08:37:07 Should young investors really hold riskier portfolios?There is a common financial thumb rule when it comes to an investor’s age and the risk level of his portfolio. Most financial planners recommend a higher level of portfolio risk to younger investor and a lower level of portfolio risk to older investors.This thumb rule is rooted in what seems to be common sense financial logic. A younger inves Read more:Portfolio
, Counter
, Intuitive
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