Articles by Miranda Marquit

What Constitutes A Worthwhile Expenditure?

My husband is finishing up his Ph.D. this month. His defense is scheduled, and everything should be wrapped up by the beginning of May. This means, of course, that he will be looking for a job. He has already applied for a few jobs, and has been looking for openings, but many potential employers (mostly universities) want to see that he already has the Ph.D. Even though reports are that the job market is improving, things are still tough out there. Which is why we're looking for advantages. One of these advantages is going to conferences.

Projects my husband has been involved in have been accepted for presentation and exhibition at various conferences, although he doesn't always present it himself. Conferences add something to your CV, and they offer chances to network. One of these conferences is taking place in less than two months, in Madison, Wisconsin. My husband isn't sure he wants to go, since it will cost about $600. He's already been accepted to present, but he's thinking that if he doesn't go, he can use that money to buy an iPad. Here's how our conversation on the subject went:

Him: “I want to buy a nice laptop and iPad more than going to that stuff.” (His current laptop actually belongs to the school and he has to give it back at the end of the month. He can't use mine for personal reasons because it has already been deducted as a business expense.)

Me: “We've already budgeted in a laptop for you. We've been saving up for it.”

Him: “It would be nice to have an iPad. I doubt I'll get a job by going to the conference.”

Me: “Well, a presentation at ISSRM looks better on your resume than an iPad.”

Him: “True.”

Me: “If we're going to spend $600 on something, I'd rather have it be something that could potentially advance your career, rather than something we're pretty sure won't.”

Does Your Spending Help You Reach Your Goals?

When deciding whether an expenditure is worthwhile, I like to consider whether or not it will help our family reach a goal. It's true that one of our goals is to have a tablet computer with a low-end data plan so that we can access the Internet from anywhere, comparing prices while shopping, or looking for restaurants while traveling. However, this goal has a lower priority than helping my husband get a job.

At the conference, he will have the chance to meet other people and network. This could, potentially, help him find a job. On top of that, the date of the presentation shows that he was doing something after finishing his degree. In a world where you are practically unemployable if you have been out of school and jobless for more than six months, an international conference presentation can buy you a little time. In my mind, the chance that something will help my husband's career is more important than a fun gadget. After our conversation, my husband admitted that my argument had merit. So he's going to Wisconsin.

When you are making similar decisions, it's important to weigh the pros and cons. Consider what is more likely to help you in the long term. Consider your financial priorities and goals, and choose to use your money in a way that helps you move forward on the path to financial freedom.

What process do you go through when trying to make spending decisions? Tell us about it in the comments!

“Working” Retirement: Make Money Doing What You Love

By Miranda Marquit 15 Comments

One of the things about retirement that has always somewhat bothered me is the idea of doing nothing. To me, the idea of sitting around without working doesn't hold any sort of appeal. Which is why I plan a sort of “working” retirement. I plan to continue writing, even when I am retired. Retirement doesn't have to mean sitting on your front porch, waiting for the grandkids to show up (unless you want to mean that, of course). You can still do something you love — and possibly make money at it.

Why Income Is A Good Idea In Retirement

Planning some sort of income for retirement is a good idea for just about anyone. While you can withdraw money from a nest egg and count that as income, it isn't always best to rely on your retirement account — as many found out in late 2008 and early 2009. A market crash can take its toll on your nest egg, and you don't actually know what will happen with Social Security in the future. This means that it can be a good idea to find other sources of income that can help you in retirement.

If you have another source of income, you won't need to take the same distributions from your retirement account, and that will ultimately help it last longer. Plan a “working” retirement, and you will be more firmly in control of your financial destiny, rather than being at the mercy of the market, or a collapsing Social Security system.

What You Can Do To Enjoy A Working Retirement

As I mentioned already, I plan to continue writing, even in “retirement.” I probably won't write as much. Or I will write from some fabulous and exotic locale, enjoying myself when I'm not writing. There are other jobs conducive to a semi-retirement lifestyle. Some of these include:

Consulting
Marketing and public relations (including social media marketing)
Other freelance options, such as graphic design, programming, and editing
Teaching (especially adjunct teaching at a local college)
Investing (building up an income portfolio)
Monetizing a web empire

Not only can these options provide you with a steady stream of income, but they can also ensure that you have something engaging to do. You will keep yourself busy and engaged, and probably enjoy your time more. Semi-retirement is all about doing something you enjoy, while still earning a little bit of money. This creates a situation that allows you to be more financially secure during retirement, while at the same time remaining active.

Helping Others During Retirement

Of course, it is still possible to be busy during semi-retirement and not do something that brings in money. Many people choose to devote their retirement years to service. There are a number of volunteer opportunities in your community and around the world. If you have some sort of expertise, you can use it help others, giving of your time and talents to make the world a better place. This can be a great way to use your retirement funds to enjoy this part of your life — while making a real difference. What your retirement looks like should largely depend on your financial priorities.

What do you want to do during retirement?

Why Your Credit History Matters

By Miranda Marquit 3 Comments

You've probably heard a lot about the importance of a good credit score. However, many people point out that they don't use credit cards, and they already have a house, and they buy used cars with cash. For those folks, it seems as though there is no need to worry about a credit history. The truth, though, is that even if you live an all-cash lifestyle, your credit history might still matter.

You Are Judged By Your Credit History

Fair or not, service providers and others make assumptions about you based on your credit history. Your credit history is no longer only a peek into how you have handled borrowed money in the past; it is also used to measure your general level of responsibility in various aspects of your life. Auto insurers think that your fiscal responsibility translates directly into your responsibility on the road. A lower credit score = a higher insurance premium.

Employers might decide that if your credit history shows what might be considered questionable financial habits, your work habits might not be desirable. On top of that, if you apply for a job of sensitivity, you might be suspected of being vulnerable to bribe attempts. What if you are required to handle cash? A sketchy credit history might red flag you as a potential embezzler.

None of this may be true, or fair, but it is a judgment that is made when people look at your credit history. Landlords and cable TV providers might also check your credit history. They want to know if you will cause potential problems when it comes time to make payments. Even some banks check your credit history before allowing you to open an account. A poor credit history can cost you more than just higher interest rates.

Be Prepared: What If You Do End Up Needing a Loan?

Even if you are convinced that your job is stable, you can live with a slightly higher insurance premium, and you don't need cable TV, you never know when circumstances might mean that you will need a loan, or to get a credit card. Your car may be unexpectedly totaled, and you may need to buy something else on short notice, necessitating an auto loan while you wait for the insurance check to arrive. You might end up with an emergency medical procedure that results in the need to have good credit to qualify for a payment plan.

There are any number of unexpected problems that can force you into getting a loan, even if it is only for a short period of time. Keeping up with your credit history, and making sure that it reflects your solid financial habits is part of financial preparedness. The good news is that building a good credit history doesn't have to mean going into debt. You can get a credit card and use it occasionally, for planned purchases, paying off the balance without paying interest. Make all your payments on time, and encourage your utilities and others to report to alternative consumer reporting agencies like PRBC.

Hopefully, with interest in alternative consumer reporting picking up steam, there will be more focus on good financial habits in general, and less on borrowing behaviors. But, until then, it's wise to be prepared and make sure you have a good credit history.

Get your free credit score now with GoFreeCredit:

Are You Sacrificing Your Retirement?

By Miranda Marquit 6 Comments

Many of us don't realize that we're sacrificing retirement. Indeed, we are often unaware that some of the choices we make now can have far-reaching consequences that can put retirement at risk. Whether you are trying to create an income stream that can help you with your retirement expenses, or whether you have a target number for your nest egg, you need to watch out for behaviors that can sacrifice your long-term prosperity during your retirement years.

Raiding Your Retirement Account

One of the most obvious ways that you might be sacrificing your retirement is by raiding your fund. Tax-advantaged IRAs and 401ks sit there, beckoning, full of cash. You might tell yourself that you will replace the money, since you are only getting a loan, but many people don't actually put the money back.

If you don't put the money back, you end up paying penalties and taxes. Even if you do actually “pay yourself back,” the fact of the matter is that you have removed some of your capital from the account. You miss out on earnings that you could have had if your retirement account hadn't been missing funds for those months.

Saving Less Than You Should

Another way you might be sacrificing your retirement is by saving less than you should. Sure, it is important to enjoy yourself now. But without planning your spending, you might find that you have frittered away your tomorrow for things that you regret getting today. Do what you can to save as much as possible in retirement accounts. If you set aside $300 a month for 20 years, and earned 6% interest, the Money Chimp compound interest calculator says that you would have $141,335.96. Put $200 more in a month, you end up with $235,559.93. That's a pretty substantial difference.

Consider, too, what you could be missing out on if you aren't maxing out your tax-advantaged retirement accounts before you open a brokerage account. You will lose money to the government if you aren't fully using the savings resources available to you.

It is also possible to sacrifice your retirement when you don't think about what you could be doing to diversify your income. If you have maxed out your retirement accounts, it is possible to begin investing your money in a way that can build up other income streams. Invest in dividend paying stocks, consider investing in yourself by starting a business, or look for some other way to use your money to make more money.

Inflation: The Hidden Enemy

You might be sacrificing your retirement by not paying attention to inflation. Inflation erodes your purchasing power. $1 million in 20 years won't buy you as much as $1 million does today. Just think about what you could get with $1 even 10 years ago. You'd be hard-pressed to get that same value today. When planning for retirement, it is important to take into account the ravages of inflation.

Make sure that you factor inflation into your plans; you might end up meeting your target, but the money might not last as long since you will need more of it to meet your lifestyle requirements. Consider diversifying to include a mix of investments that can help you offset the effects of inflation.

What other ways might you be sacrificing your retirement?

How To Financially Prepare For A Disaster

By Miranda Marquit 9 Comments

There is no way to be completely prepared for a disaster. However, you can do your best to prepare yourself financially for an emergency that could cause you problems. If you haven't thought about it in the past, think about it now. Recent events, from large scale natural disasters (such as the earthquake in Japan) to man made problems (like last year's oil spill in the Gulf of Mexico) can impact your income, as well as prevent you from accessing your money. You need to be ready for these situations.

Build Up an Emergency Fund

An emergency fund is there for…emergencies. You should build one up so that you are prepared. Your emergency fund can help you pay for repairs not covered by insurance, and it can also help you offset other costs that might be related to a natural disaster. Another reason an emergency fund is important is that your income might be interrupted by a disaster. What happens if you can't get to work? Or if the disaster results in you being laid off altogether? If some sort of catastrophe knocked out the Internet in my locale, I'd experience a severe drop in income. An emergency fund can help you avoid complete financial disaster in such circumstances. Take some time to get your finances in order, and start an emergency fund.

Keep Emergency Cash at Home

As nice as an emergency fund is, you should realize that power outages and interruptions in the banking system can limit access to your money. An earthquake once made it impossible for me to get my money via ATM for two days. Realize, too, that a lack of power or downed phone lines can mean that using a credit card might be out. Have a stash of cash at home, kept in a safe place. Don't use it for every day expenses; instead, save it for when you really need it. Consider three days' worth of cash to complement your 72-hour kit.

Know Important Numbers, And Protect Your Financial Documents

In addition to making sure that you have access to liquid funds, you need to consider your financial documents, and your financial accounts. Keep a list of financial account numbers and contact information for insurance policies, retirement plans, bank accounts, loans and credit cards. This list should be kept someplace safe and secure, along with hard copies of documents, such as insurance policies, loan papers, car and home titles, passports and birth/marriage certificates. A waterproof fire safe is one of the best options for these papers. You can even keep some of your emergency cash stash in the safe. That way, your most important information is safe guarded.

What If You Have to Leave?

Your next concern should be whether or not you have to leave. Your emergency stash of cash should be easy to get to, so that you can take it with you. Account numbers and other information should also be taken with you, just in case you need to get in touch with representatives of different companies. Have a 72-hour kit prepared for each member of your family (or create a family kit), and keep it somewhere accessible. These are things you need to grab and take with you in addition to cash and financial account information. You also need identification (if you have a passport, bring it along) and insurance cards.

Make sure everything you need is in a central location so that you can just grab it and go.

Do you have any other tips for financially preparing for a disaster?

Do You Know What’s Important? Spending And Priorities

By Miranda Marquit 2 Comments

One of the most challenging aspects of personal finance is identifying what is important — and then keeping your spending in line with what you value. Because personal finances are, well, personal, each person has their own ideas of what is most important. They key is to decide what is important to you and then create a spending plan that reflects your priorities.

What's Important to You? Identifying Your Values

Different people value different things. Before you can create a financial plan that reflects your personal values, you need to reflect on what you value. If you value more time with your family, you might choose a career path that allows you to be at home more, or you might move closer to your work so that time isn't spent on the commute. If helping others is important to you, chances are that you donate money to charitable causes or volunteer your time. Those who enjoy travel might spend money on vacations or frequent mini-trips. Others prefer to stay home, and spend money on making their homes as comfortable as possible.

Deciding what is most important to you is not a matter of “right” or “wrong”. It's more of an issue of what you prefer. Write down the things that are most important to you, and then rank them. Be quite honest. If saving up for a family vacation is more important than giving money to the food bank, rank your list in such a manner. I don't care if I leave a pile of cash for my son to spend after I'm gone, so my financial priorities focus on a modest and adequate retirement fund, with a bigger budget for fun now (including family fun).

Bringing Your Spending in Line with Your Priorities

My husband and I have always believed that giving to our church is a must, so our spending has always including tithing. However, not all of our spending has always been in line with our priorities. We enjoy eating out and trying new foods. For a while, though, we had a premium cable package — even though we don't watch that much TV. We realized that by scaling back the cable package, we could eat out more. We barely miss the premium cable channels. Of course, the value my husband places on ESPN, NFL Network and MLB Extra Innings is the reason that we still have cable at all.

Look over your spending, and see if it matches with your priorities. If you have listed early retirement as a priority, it doesn't make much sense to spend money on a new car. Instead, put more money toward your retirement fund, and buy a less expensive used car. If your biggest priority is paying down debt, look at your spending. Are you buying lunch every day or getting the latest movie when it comes to DVD? This doesn't jive with your debt pay down priorities. Be honest about your spending, and how it matches up with what you actually want out of life. Then see what adjustments can be made so that your spending matches your values.

Does your spending match your values? What things could you cut to better meet your goals and priorities?

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