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Feedback

Someecards.com I'd like to run something past you and stick with my decision regardless of your opinion.

AJ: Over the course of my life I have become increasingly aware of the amount of feedback people have about other people’s lives. We’re all guilty of inserting our opinions where they might not have been requested, but what happens when other people’s feedback begins to impact your financial decisions? Learning from the experiences of others can be incredibly helpful, but sometimes it’s important to take feedback with a grain of salt especially if it impacts your financial well-being.

We got married.
AJ: Kirby and I were an “us” for many years before becoming engaged and as soon as we became engaged we were bombarded with opinions of why we should/shouldn’t (mostly shouldn’t, honestly) get married at all – from other married people, no less! It seems that things always go south according to these feedback-givers: bills pile up, you begin to resent each other, you get tired of seeing the other person’s face. All very fair concerns (maybe). But in those pre-wedded months it became abundantly clear to us that we needed to remain a united force which is a great lesson for not just your marriage but for your financial success as a couple. The most positive piece of feedback we receive is one we hear often: Kirby and I make a great team. And we DO make a great team because when we receive feedback from the world, we already know where we stand financially and are able to make the best choices for us based on actual math, not wants and wishes.

We bought a house.
AJ: Buying your first home is an invitation for feedback. A little of my own feedback – if you decide to buy a home, don’t tell people, just do it! Everyone has a list of must-haves when looking for a home but before you let anyone else tell you what you absolutely must have in your first home know what you absolutely can afford based on the guidance of an advisor. That’s your end-all, be-all, thank-you-for-the-feedback resting place. It’s lovely that your best friend loves carrera marble and pendant lights, but your best friend isn’t financially responsible for your house, you are, so go on and be responsible.

KJ: Studies show that it’s best to not spend more than 2.5 times your annual household income on a home. So, if your family’s income is $50,000, then consider looking at the $100,000 – $125,000 range for a home. If you make $100,000, then stick to the $175,000 – $250,000 range. For those families that are really serious about keeping their expenses low, look instead to buy a house that’s 1.5 times your yearly income.

We bought a second house.
AJ: The problem with the second house we bought, based on feedback, is that it had incredible bones, but it needed updating. Person after person came through our new home with thoughts of ways they would personalize and update our new home and we suddenly found ourselves considering a myriad of changes (most of them costly, mind you) that we hadn’t previously considered. People have opinions, you have a budget. Stick to the budget at the expense of the door pulls, carpet on the stairs and lack of color on the walls!

KJ: Learn to separate the wants from the nice-to-haves. Sure, it may be nice to make every single update and completely personalize your house, but chances are that your budget isn’t limitless – and if it is, then it shouldn’t be! Figure out what it is that is most meaningful to you and your family for those personal touches and put pen to paper to see how realistic it is for you to accomplish them. For some, it may be immediate, but for others, it may take a couple years to really get there!

People have kids.
AJ: We don’t, but some of you do, so I hear. I’ve also heard that you’re not crazy about people telling you how to raise YOUR kids. That seems perfectly reasonable to me. However, when they start going to school and all your friends are trying to convince you that there’s only ONE school for your little dude/-ette that’s WAY out of your price range, remember where you came from. You’re a reasonable, financially-savvy person who can balance the necessity of education with the long-term goal of providing a well-rounded life for your entire family.

Focus on what is right for you and your family
KJ: In today’s world of instant access to everyone and lots of data on a limitless amount of goods and services, there’s definitely not a shortage of other’s feedback! Learn to sift through the noise to find what information you need to make sound decisions for you and your family. Be conservative in your estimates, and don’t just assume tomorrow’s income can subsidize today’s lifestyle!

AJ: Professionally group think suits me beautifully. It helps me achieve things much more quickly. Personally, however, group think is a recipe for financial disaster. Keep in mind that outsiders don’t necessarily have all of the information necessary to make appropriate recommendations for your financial well-being. Stay strong, people. Listen to the feedback, acknowledge the feedback, make your own choices outside of the feedback.

    What do you do to filter through the feedback?
    Have you been swayed into making financial decisions for your family that you wouldn’t have if you had the chance to do over?

Feedback is copyrighted by TheSimpleMoneyBlog.com without consent to republish. Card courtesy of www.someecards.com.

Some of the links in the post above may be affiliate links. This means if you click on the link and purchase the item, we will receive an affiliate commission. We feel strongly about only recommending products or services we use personally and/or believe will add value to you, our readers. Read more about our commitment to providing quality product recommendations.

15 year versus 30 year mortgage: knowing how to choose

Battle of the Mortgages 15 year versus 30 yearKJ: So you need a mortgage (like most of us out there). If you’ve ever been through the process, then you know that getting a mortgage will subject you to decision after decision after decision. One decision we hope to help you with is understanding if you should consider a 15 year or 30 year mortgage. Here are some key considerations when it comes time for you to make the decision:

You can pay less in interest over the loan’s life
With a mortgage that is an amortizing asset, you pay much more of your payment toward interest in the early years and much more to principal in the later years. And, with a shorter time period offered by a 15 year mortgage, much more of your payment goes toward principal each month. Also, with the shorter-term, you have significantly less interest you pay over the life of the loan. For example, assuming a 4% interest rate and a loan of $150,000, a 30 year mortgage would have you paying a total of $107,000 in interest while a 15 year mortgage would have you paying a total of $49,000. That’s $58,000 in interest savings!

Your payment is not double
The first reaction that most people have is that they cannot afford a 15 year mortgage because it MUST be double what a 30 year mortgage is. I mean, it’s half the time after all! In fact, that’s not the case at all. If you take our previous example of a 4% interest rate, the 15 year mortgage payment is actually 55% more ($1110 per month compared to $716 for the 30 year). Still a bit higher of a payment, but not anywhere near double.

You get a lower interest rate
While the previous examples suggested the interest rate on a 30 year and 15 year mortgage were the same, they often aren’t. It’s not infrequent that you’ll save anywhere from 0.5% to 1% per year on your interest rate to go with the 15 year mortgage. As such, if we continue our example of a 4% 30 year, but instead use a 3.25% rate for a 15 year mortgage, your payments could look like:

    30 year at 4%: $716
    15 year at 3.25%: $1,054
    Difference: $338 or 47% higher

So then why not get a 15 year mortgage?
The key answer: you lose budget flexbility. As many learned in the 2008-2009 crisis and the Tech bubble burst, your income is all but certain. So, if you get a 15 year mortgage, you are locking yourself into the higher monthly payment for the remainder of the loan, and when times get tough, the last thing you want is a high fixed expense.

But wait, maybe there’s a happy medium?
An alternative that may be the best of both worlds is to get a 30 year mortgage, but pay it as if it’s a 15 year mortgage. That way, you lock in a lower monthly payment, but you reduce the amount of interest you will pay over the life of the loan because the extra monthly payment will go directly to pay down your principal and thus allow you to shave years off the life of the loan.

If something happens to your job (voluntarily or involuntarily), you aren’t locked into the higher payment, and you can make sure your emergency fund can last even longer to help cover your other essentials that crop up.

    Do you have a 15 or 30 year mortgage?
    How did you decide which to pursue?
    When comparing a 15 yr versus a 30 yr, would you add anything to this list?

15 year versus 30 year mortgage: knowing how to choose is copyrighted by TheSimpleMoneyBlog.com without consent to republish.

Some of the links in the post above may be affiliate links. This means if you click on the link and purchase the item, we will receive an affiliate commission. We feel strongly about only recommending products or services we use personally and/or believe will add value to you, our readers. Read more about our commitment to providing quality product recommendations.

Save money on your energy bill

KJ: So this post is not about doing things like shutting your TV off when it’s not in use, unplugging your coffee pot when not in use, turning off lights unless you need them on, charging your phone at Starbucks instead of at home, or cutting the power supply to your AC so it doesn’t run unnecessarily…Oh sorry, I got side-tracked there a moment. This post is more about a great website that my father-in-law told me about when I moved into my first home with my wife. Sorry folks if you’re not in Texas, but the power[ful] site (no pun intended?) we use is PowerToChoose.Org.

Why it’s a life-saver
For no cost at all, you can peruse the website looking for deals on how to cut your energy costs. The site allows you to compare energy contracts across the providers in Texas, so you can choose the best plan that’s right for you, your family, and your goals. Plus, it’s an unbiased way to search for low-cost contracts. No longer do you have to hear TXU, Reliant, or any other ad on TV and wonder, “Is this really the deal they say it is?”

So many options!
Whether you are looking for a long-term contract, short-term contract, no-term contract, or somewhere in between, they have the plans outlined in detail right in front of you. Even if your goals aren’t about what’s right for your wallet, but are more about what’s right for the environment and your energy footprint, then they’ve got a plan for you.

What to consider
Look at the cost per kilowatt hour, minimum energy usage requirements (and if you’re traditionally above or below that), monthly fee, termination fee, whether the cost is variable or fixed, and any other potential charges.

Think ahead
Maybe you’re an energy buff, a super analyst, or a real-life Ms. Cleo, but if you’ve got an idea on where energy costs are headed then consider locking-in your rate today. Researcher beware: those pesky early termination fees can eat up the benefit of a lower cost you thought you were getting throughout the year…

AJ: Energy used to be a somewhat fixed expense, however, it is now a competitive industry that allows customers who are willing to invest a small amount of time and research into finding the most reasonable plan for their needs. Many summer-loving Texan friends of ours opt for the plans that take their highest monthly bills and subsidize them across the entire year in order to avoid bills in the summer that are five times higher than bills in other months. Researching your options allows you to spend more in areas that you enjoy than on boring expenses like energy.

    Have you used PowerToChoose.Org before?
    What sites or resources have you found in your area?
    What tips do you have to save money on electricity?

Save money on your energy bill is copyrighted by TheSimpleMoneyBlog.com without consent to republish.

Some of the links in the post above may be affiliate links. This means if you click on the link and purchase the item, we will receive an affiliate commission. We feel strongly about only recommending products or services we use personally and/or believe will add value to you, our readers. Read more about our commitment to providing quality product recommendations.

Canceling your tv

KJ: What’s that you say? Cancel your television service? That’s unheard of!…at least in our family. Even with how busy we are with friends, family, and work, we always find time to wind down at the end of our day with some nice recordings, so we’ve never really thought that canceling our TV could be a viable, money saving option…until recently.

So, we’ve got a lot going on right now with work, planning an incredible trip, and planning our next move, that we’ve decided to cut out TV from our lives for about a month. It’s less about saving the $70+ per month – so hard to determine what the true cost is per month when you have it bundled with internet and get a discount for getting them both at the same time – than it is about being practical. With a lot of things we’ll need to take care of in the new home and a well-timed vacation thereafter, it just doesn’t make sense for us to fork out some unnecessary cash when we don’t need to. As such, starting in a couple weeks, we’ll be canceling our TV for a month!

AJ: For whatever reason I have always loved TV. In addition to the 20+ shows we record at any given point, we watch Wheel of Fortune together almost every night, and I end my evenings with HGTV, Food Network, or Snooki and JWOWW (don’t judge me!). The thought of going without TV even for one night takes me to a dark place, but practically speaking, I think I’ll survive. I realize this is neither food nor water, but there’s a certain level of comfort that comes from winding down a grueling work day with Pat Sajak that I’ll have to fill with my own thoughts.

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The alternatives
More and more these days, I’ve run into people who have taken the plunge and canceled their tv service. Here are a few ways they’ve managed to make it work:
Netflix – in the market for a movie and want to stream it instantly to your phone, iPad, Xbox, PS3, or Nintendo Wii? There’s really not much of an easier way to do this. We used to have a subscription, but we found when they were increasing the cost on the service we were already hardly taking enough advantage of, we decided to cut ties. We’ve missed it here and there, but we certainly haven’t been any worse off without it. Now might be time for us to pick this old habit back up. At only $7.99 per month for their instant streaming service, it’s a much cheaper alternative than renting movies regularly or getting Pay-Per-View on TV. Plus, they have TONS of tv series available online too…sounds like it’s time for another “Friends” marathon!
Hulu – Hulu is another online media streaming service that focuses mostly on television shows. They have quite a wide variety of shows and options…you just have to learn the nuances of how to find the shows you want to watch. For $7.99 per month, you can watch unlimited shows. Depending on their agreement with the networks, you may have access to a limited number of episodes each season, and you may have a delay after it airs before you can watch it. The latter is less of an issue for us since we almost never watch live tv and are always just watching what we had recorded. Still, at $16 per month for both Netflix and Hulu, it’s a way cheaper option than cable!
Roku – The Roku box is a system that basically aggregates a mix of free resources (a lot out there) and paid subscription services all in one location. It allows you to access your Hulu account, Netflix, Pandora, and Amazon Instant Video accounts, but it also has access to over 700+ other channels of content ranging from sports to movies. I haven’t personally used one before, so please share your experiences if you’ve had the chance to use one!
Apple TV – Apple TV is a similar setup as the Roku box, but you can also access iTunes movies and television shows. We’ve thought about this with its ability to sync to our portable devices, but I’ve tended to steer away from movies and TV on iTunes since the costs are usually much higher than I would want to pay. The main downside is for those of us that want to avoid a per show cost and instead watch mindless television marathons on Food Network, The Cooking Channel, HGTV, the History Channel, USA…

    Do you have the willpower to cancel your television?
    How about trying it out for a month..how bad could it be?
    Tell us about your experiences with Netflix, Hulu, Roku, or Apple TV

Canceling your tv is copyrighted by TheSimpleMoneyBlog.com without consent to republish.

Some of the links in the post above may be affiliate links. This means if you click on the link and purchase the item, we will receive an affiliate commission. We feel strongly about only recommending products or services we use personally and/or believe will add value to you, our readers. Read more about our commitment to providing quality product recommendations.

9 ways to organize your financial life

KJ: Organizing your financial life can sometimes feel daunting, but here are nine ways to help you get organized and STAY organized.

Utilize Electronic Records
Keep copies of account statements. When you get those “pesky” e-mails saying you have a statement available, go and download it. If you want to save the environment and storage space, save it to a secure USB drive. If your USB or storage device isn’t password protected, then consider getting software that can encrypt your documents. “My Passport” 1TB External Hard Drive is my personal favorite, but more budget friendly products with much smaller storage like SanDisk 32 GB USB Flash Drive will also do the trick. There are few things worse than leaving yourself exposed to virtual identity theft that you may not even be aware is happening! Given the litany of statements that come my way, I make it a priority to set aside time after the 5th of the month to download the prior month’s files. Sure banks often keep statements online for YEARS, but what happens if you change banks and your login expires? You no longer have access to your statements: that’s what. Electronic storage can allow you to keep data far longer without having to waste a bunch of space. Who likes maneuvering around those cardboard boxes and carrying them up the stairs to the attic anyways?

Invest in Accordion Folders
These are great for storing receipts as well as storing coupons. Sort by expiration date, store or whatever method of controlled chaos you prefer. Check out Smead Expanding Folders, they’ve got a lot of different options. So does your local Dollar Store or WalMart, so if you’re really looking for a bargain, stop by on your next errand trip.

Communicate, Communicate, Communicate
Kind of ironic that I’m the one saying this, as I’m by far the lesser of the two communicators, but hey, when it comes to finances, the last thing you and your spouse (or significant other) should do is close the communication doors. You can’t stay organized with things you have going on if one person doesn’t keep you in the loop when purchases or updates are made.

AJ: Kirby and I are each responsible for separate aspects of our finances. Kirby pays the bills, decides which accounts receive savings monthly, and strategically keeps us on track for the long haul. I track our variable expenses: gas, food and groceries, miscellaneous expenses (gifts, pet food, hair cuts), so if we aren’t in lock step on communication, we could potentially go very far awry. See our post on creating a budget together. Kirby’s all spread sheets and I’m all old school: pen and a Moleskine Ruled Journal. Whatever method works for you, just ensure that you are regularly communicating and are working from the same numbers.

Take Inventory of Your Accounts and Assets
KJ:This would include accounts like: checking, savings, CDs, money market, brokerage/investment, and retirement. Periodically update the records to include information about login credentials, account numbers, values, etc. Due to the sensitivity of the information, this should be stored in a highly secure place that only your spouse (or a very close loved one) would have access to.

Take Inventory of Your Loans
Similar to #1 above, make a list of any liabilities you have whether it’s a student loan, home loan, auto loan, credit card, or line of credit.

Get a Will and Update Your Estate Plan
When was the last time you looked at your estate plan? Months, years, DECADES? If it’s been a while since you have updated your estate plan, it might be time to revisit. In particular, have you had any new additions to your family, are any family members now of legal age (I suppose you don’t need to specify a legal guardian for your 24 year-old son still living at home…), or have any family members passed away? It can be a good time to sit down and talk with your significant other if your goals may have changed too. Cousin Bobby isn’t getting any of my money anymore…but Bill & Melinda Gates will!

Update Your Beneficiary Designations
IRAs, 401(k)s, many other types of retirement plans, and certain types of bank accounts can pass to a survivor without going through your will. Therefore, check to see that you have the appropriate designations for a primary and contingent/secondary beneficiaries.

Meet with Your Financial Advisor
If you work with a financial advisor, then gather that list of questions you’ve been meaning to call about but haven’t had the time. Call him/her up and discuss any recent changes.

Secure Your Data
Don’t forget the most important advice: KEEP IT IN A VERY SECURE PLACE! I cannot emphasize this point enough. The last thing you need to deal with just after you’ve organized your finances is for someone to take the information and turn it back into a financial mess!

    What methods of organizing your finances work best for you?
    Do you have anything to add to this list?
    Is there anything you would remove from the list?

9 ways to organize your financial life is copyrighted by TheSimpleMoneyBlog.com without consent to republish.

Some of the links in the post above may be affiliate links. This means if you click on the link and purchase the item, we will receive an affiliate commission. We feel strongly about only recommending products or services we use personally and/or believe will add value to you, our readers. Read more about our commitment to providing quality product recommendations.

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