July 2012 Archives -

10 Ways to Make Extra Money as a Tutor

July 30, 2012 By Kevin 2 Comments

Looking for extra ways to make money? Have you tried being a tutor? You might give it some thought. When most people think of tutors they immediately think about providing extra help to students for coursework or for high stakes test preparation. While there’s a great deal of work in that area, tutoring extends well beyond academia.

Just as school kids need help with their coursework, adults also need help. Life has gotten much more complicated than it used to be and people now need help with understanding and learning in a wide range of areas. Think about some of the following.

English (or any other language) as a second language

There are millions of people coming to the country who need help leaning English. As a native English speaker you can help, even if your not a formally trained language teacher. Some states have regulations as to teaching English as a second language, but they’re usually minimal. And what many people need is help with conversational English, not book English.

There are also many people who need help learning a language other than English, and once again, they need it for conversational purposes. What ever language you speak, there’s a potential market of people out there who want to learn it. Find a few who are willing to pay you to teach them, and you’ll have a nice side business.

Computer applications

There are hundreds of computer applications out there and many people who need help learning how to use them. Sure, most of them have tutorials, but no small number of people need more hands on help, and might be willing to pay you to provide it.

There are common computer applications, like Word, Excel, Power Point, Quickbooks, Photoshop—you name it—and if you’re proficient in them, you can teach what you know to others. Since new applications are coming out all the time, business will never slow up.

Selling

Do you know of any universities that have a degree program in sales? I don’t. Everyone is looking for sales people, but no one trains any. And with more people starting businesses than ever before, you might have a market for students if you are good at selling.

This doesn’t have to be limited to training for sales jobs either. Do you know how to sell profitably on Ebay, Amazon or Craigslist? People might be willing to pay you to teach them. Offering tutoring in sales could also be a step into a new career as a sales trainer—take it as far as you can!

Business writing

Some people need help with writing business letters, sales material and client proposals; if you’re good in this area, offer to teach others.

Cooking

Yes there are plenty of cooking shows and a range of cookbooks that could stretch around the world, but none of that squares with the fact that more people are eating more meals in restaurants than ever before. Personally, I think a lot of people are intimidated by cooking, and might welcome some side by side instruction. If you’re a good cook, and especially if you cook on the frugal side, there may be a willing market.

Basic car repair

Car repairs are expensive, and one of the best ways to minimize this cost is by preventative maintenance. Do you change your own belts, hoses, spark plugs, filters and oil? Do you rotate your own tires? Others may be willing to pay you to teach them what you know.

Typing

Typewriters may be gone, but only because they’ve been replaced by computer keyboards. Typing is more important now than ever, but a lot of people have never moved beyond advanced hunt-and-peck. If you’re a skilled typist, you might be able to teach them how to become better and faster at it, and in many job capacities that can be a real asset.

Musical instruments

There are music schools with formal lesson programs, but they’re expensive and time consuming. Many adults who have never played an instrument want to learn, but would do better with a private instructor who will provide close training at a more relaxed pace. If you play an instrument, this could be your niche.

Art

Much like playing an instrument, many adults are drawn to art often upon retirement. If you are a proficient painter, sculptor or any other type of artist, you may be able to sell your services as an art tutor.

Anything you can do better than most people

For the most part, being a tutor is possible for just about any skill you have that you can do better than most people. Identify what that skill (or skills) might be, and which you like best and think about how to market your skills. You could do this by word of mouth, advertising in a community or neighborhood newspaper, soliciting groups of interest (like senior citizens groups), setting up a simple website or any way you can think of that will offer an opportunity to get the word out.

Once you have a few clients, you can grow your business by referrals and you’ll be on your way to a new business—just because you knew a little more about a certain skill than most others.

Have you ever been a tutor before? Can you think of any other skills that would lend themselves well to tutoring?

photo by shanastine

Filed Under: General Finance

13 Part-time Jobs With Benefits

July 27, 2012 By Kevin 27 Comments

Do you want some good news on the employment front? Here it is: you can get employee benefits on many part-time jobs.

Most people assume that employee benefits mean full time employment only, but that assumption is proving increasingly false. Part-time employment is becoming more normal all the time as employers look to cut costs. But even as they look to reduce costs they still need to attract talented workers, and that often means providing benefits to their growing army of part-timers. In addition, many of the companies that pay benefits run largely—or even predominantly—on part-time staff. What better way to keep reliable people around (and reduce hiring and training costs) than by offering benefit packages?

In fact, according to the US Government’s Bureau of Labor Statistics, 39% of employers offer retirement benefits to part-timers, 24% provide health insurance, 15% provide life insurance and 37% provide paid vacation time. And those are the numbers for private sector employers—government jobs are generally far more likely to provide benefits.

Common employers who offer benefits to part-timers

There are a surprising number of popular employers who provide benefits to part-time employees. Here are 13 employers and a sample of the benefits each provides for part-timers—there’s an excellent chance that several are located where you live:

JP Morgan Chase

Benefits provided: medical, dental and vision insurance, life insurance and 401K (all after 90 days of employment). There are a host of other benefits that a part-timer may be entitled to, though the website doesn’t indicate specifically.

Starbucks

Benefits provided: 401K, health insurance, discounted stock purchase plan, tuition assistance and adoption assistance.

Whole Foods

Benefits provided: paid time off, 20% in store discounts for employee and immediate family members, profit sharing (“Gainsharing”), discount company stock purchase plan, and company stock option plan.

Barnes & Noble

Benefits provided: medical and dental insurance, 401K, 30% discount on their books (of course!) and paid time off.

REI

Benefits provided: medical, dental, accident and life insurance coverage even for temporary and seasonal employees, or those who work less than 20 hours per week. The company pays 60% of the cost of medical and the entire premiums for accidental and life coverage. There’s also a hint that part-timers may be eligible for discounts on company products (the product and service selection is wide) of up to 50%.

Home Depot

Benefits provided: medical, dental and vision insurance, short term disability and life insurance.

WalMart

Benefits provided: health insurance (extending to family members) and $4 co-pays on “more than 2,000 generic prescriptions”; a full range of benefits, including an employee stock purchase plan and 401K, but it isn’t clear if (and when) these benefits extend to part-time employees.

UPS

Benefits provided: the company website states “UPS is one of only a few companies offering its part-time employees full benefits, from medical/dental coverage to tuition assistance.”

Nordstrom

Benefits provided: The company website doesn’t specifically indicate benefits paid to part-timers but the retailer keeps coming up on lists of employers who do. Based on the website, those benefits are extensive, but which ones and to what degree they’re available to part-timers may vary from store to store (which isn’t unusual among retailers).

Aerotek (temporary agency)

Benefits provided: medical, dental and vision coverage for employee, spouse and children up to age 25. Eligible for contract employees working a minimum of 20 hours per week. Other benefits are available depending on the office location.

Walgreen

Benefits provided: paid vacation, 15% in-store discounts (20% on company brands), Flexible Spending Account for out of pocket medical and dependent care expenses, profit sharing and employee stock purchase program (10% discount on company stock).

Target

Benefits provided: “part-time or limited benefit (pays up to a flat amount for certain medical procedures) package based on average hours worked and position at Target” are available to part-timers. 10% employee discount that includes the pharmacy.

Municipal and county government jobs

Many county and local governments provide benefits to part-time employees. Henrico County, Virginia, for example, has a full menu of benefits, including paid holidays and sick time, deferred compensation, healthcare (minimum 20 hours per week) and dental coverage.

Never assume that an employer—especially a large one—doesn’t offer benefits to part-time employees. In fact, it’s a solid bet that the competitors of each of these companies are providing similar benefits as a way of completing for employee talent. In many cases the benefits won’t be as comprehensive as those offered to full time employees, but in general this will be a much more cost effective way of having benefits than having to get them on your own.

photo by krupp

Filed Under: Career, Insurance Tagged With: employee benefits, insurance, medical insurance, part-time jobs

Paying Caesar What’s Due Caesar—It Isn’t About Taxes

July 25, 2012 By Kevin 10 Comments

Let’s talk about an unpopular topic: taxes. I have no statistics to back this up, but I think many, maybe most, Christians fall somewhere in the anti-tax camp. Maybe it’s just human nature that we all feel as if we’re paying too much for taxes. Or maybe it’s the conflict we feel when we see our tax money being used to pay for what we consider to be unholy activities.

In some places I’ve even seen the question brought up of “should we even be participating in what government is doing?”

If we look to the Bible to support anti-tax positions, we won’t find much. In perhaps the most concise pronouncement on the subject, Jesus tells us this:

“So give back to Caesar what is Caesar’s, and to God what is God’s.”—Matthew 22:21 (NIV)

There’s not much “reading between the lines” in this verse. The topic was taxes, and Jesus was telling us to pay them. Even more, Caesar was representative of the hated, conquering Romans; it was anathema to a Jew in the first century to support taxes paid to the Romans, unless of course you were a tax collector. So not only is Jesus telling us to pay our taxes, but also that we should pay them even if the government we’re paying them to isn’t considered legitimate.

Paying taxes is about obeying authority

Paying any given tax, or any tax at all, isn’t really about paying taxes. It’s about obeying authority. We don’t have to like a tax, but we are commanded to obey authority, even authorities we disagree with.

“Let everyone be subject to the governing authorities, for there is no authority except that which God has established. The authorities that exist have been established by God.”—Romans 13:1 (NIV)

Obeying authority is honoring God. He establishes authority as a way to prevent us from living in chaos, which is a good bit worse than the worst governmental system we can ever concoct.

And there’s one other thing. All authority is a model for—and ultimately points toward—God Himself. When we disobey authority, we’re disobeying God. If that authority is corrupt, evil, or heading in the wrong direction, God will deal with it in His own time. By honoring that authority, we’re not only keeping ourselves in good standing with God, but we’re also demonstrating faith that He will provide for us no matter the intent of the authority.

”This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing. Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor.”—Romans 13:6-7 (NIV)

The democratic conflict and the Bible

For the most part, our opposition to paying taxes, or to a given level of taxes, is found not in faith, but in secularism. We live in a democratic society where we have rights as citizens, and where everyone has an opinion. We can challenge paying a tax based on our rights as free citizens, but we shouldn’t cite the Bible as justification for the challenge.

Does that mean that challenging a tax is unbiblical? Maybe so, maybe not. But our political system is democratic (actually it’s a representative democracy) which means we can challenge a tax or level of taxation and still be operating within the commands God gives us in the Bible. It’s actually a unique position in history and even today in much of the world. And it’s also confusing.

The point is, we should never take an anti-tax stand based on the notion that “God doesn’t want us to pay this or that tax” or that a tax might be “anti-God”. No, God wants us to obey the authorities, and that means we need to pay our taxes.

This is an uncomfortable subject for many, and that includes me. I’m solidly in the taxes-are-too-high camp, and I really wish God had some condemnation for taxes, but He doesn’t. Given that, we need to bend our own desires and actions to the Word of God, and not try to make Scripture work for our own personal benefit.

What do you think should be the Christian’s attitude toward taxes? Can you find anywhere in the Bible where God condones not paying taxes?

photo by 58308412@N00

Filed Under: Taxes

Lowering Energy Bills for All Companies

July 24, 2012 By Jon the Saver Leave a Comment

Energy is one of, if not the biggest overhead of many companies, irrespective of size or industry. As this is the case with a lot of businesses large and small, they often pay close attention to how much they spend on gas and electricity to see if their bills are too big. If they feel that they are spending too much on energy, then they’ll feel the need that something should be done to ensure it never happens again. Switching energy suppliers with the help of make it cheaper is one course of action that some businesses take.

It might not seem as obvious as cutting down on energy wastage, but changing energy supplier could mean the difference between your company’s finances being in the black and in the red. Research conducted by Make it Cheaper showed that, on average, businesses would save around 4p per kWh of electricity used, as well as 1.6p per kWh of gas, proving that it pays to switch. However, if you want to make the leap from one supplier to another, you have to time it right.

Every business signs a contract with an energy supplier, many of them on a reasonable-sounding fixed price tariff. Typically, these contracts last between a year and three years, and the only way in which they can be left is when a ‘renewal window’ is activated. It opens during the last few months of your contract, and lasts for 30 days. During the window, you can either choose to renew your contract or leave for another supplier.

While the renewal window provides a great opportunity for businesses to change energy suppliers, many companies aren’t aware that, in order to switch, they have to wait until the window opens. Of 750 companies surveyed by Make it Cheaper, only half said that they knew about the renewal window, whereas just one-fifth of those questioned said that they even remember receiving a letter from their existing energy supplier about the window being open.

If you’re dissatisfied with your current energy deal and are looking for a great way to save money on your gas and electricity bills, your best option is to wait until the renewal window opens. Once it’s open, you should make your move as quickly as possible. With the help of experts like Make it Cheaper, who saved their clients a whopping $88m over the course of 2011, lower energy bills could be within easy reach.

Filed Under: Investing

When is it Frugal – When is it Cheap?

July 23, 2012 By Kevin 2 Comments

Most of us will agree that being frugal is a good thing, but frugality has a rogue cousin named cheap, and while the two are closely related we never want to be known for being the second. It can sometimes be hard to know when we’re crossing the line from frugal to cheap.

Here’s an attempt at identifying the signs…

Giving

I’ve written about issues with tithing, but at the opposite end of the spectrum is a person who is in a position to give generously and doesn’t. Such a person might be able to give more than 10% of his income, but doesn’t manage 5%, or even 2%. High income is a blessing that we should share with the Church and with others who are in need; if you have it and don’t share it—well, that’s cheap.

And how about giving to people on the street? If a person who looks to be homeless approaches you and asks for money, do you really withhold it because you’re sure he’ll use it to buy drugs or alcohol, or do you just find it difficult to part with five or ten dollars? What the recipient does with the money is between him and God, but everything that happens up to that point can say a lot about how we view money.

Tips are another issue. Wait staff rely on them as their primary source of income; we may disagree with the tipping system, but that’s how the restaurant world works. If you can afford a restaurant meal, you should be able to add a decent tip. By not giving one, or by giving a poor one, you’re not hurting the restaurant, you’re hurting the person who is waiting on your table. Is that frugal, or is it cheap?.

Taking advantage of the generosity of others

If you’re of the frugal mindset, you get the bartering thing: you do something for me, I do something for you. If you’re cheap, I’ll do something for you…and that’s about where it will end. Some examples:

A neighbor drives her kids and your kids to the mall two or three times a month, you never or rarely drive them in
You have regular lunches with a friend who sometimes picks up the lunch tab for both of you, you never reciprocate
Friends or family members have you over for dinner several times a year, but you never invite them to your house, at least not for dinner
Rather than buying your own hedge clippers you borrow your neighbors when ever you need it; it’s been this way for years and you rely on the arrangement

These are classic examples of taking advantage of the generosity of others, which is the backdoor version of being cheap. Some people are generous by nature, but that should never mean we take advantage of them.

What causes people to be cheap?

There are different reasons why someone is cheap, and not all of them are bad.

Love of money.

The cheapskate often believes (maybe only subconsciously) that money is the highest virtue, and for that reason it is to be carefully guarded. The frugal person sees money as a tool; he keeps his spending low and his bank account full, but he doesn’t put it on an altar.

Love of self.

There’s no way to escape that being cheap has a selfish quality to it. Cheapskates often want to keep their money for themselves, often justifying it by considering it to be a form of survival. Many people who are cheap are very indulgent when it comes to what they want, but very reluctant that anyone else should benefit from their spending. By contrast, a frugal person will live on the cheap, but be very generous toward others.

A difficult past experience.

Any one who’s ever experienced a bout of poverty knows the feeling of doing without, and might have a reluctance to ever return to that status. An improvement in personal financial status may not be accompanied by a change of heart toward money. Unlike love of money and self, this is motivated by fear. Many people who experienced the Great Depression were frugal, but some were cheap as a result. Cold beds and empty stomachs had something to do that.

Frugality: the constructive use of being cheap

As I said in the beginning, it’s sometimes hard to know the difference between frugal and cheap, but I think it’s really in how we use them. Being cheap is a condition of the heart and mind—frugality is using being cheap as a tool. Simply put, a frugal person knows when and how to turn on and turn off cheap. The true cheapskate can’t because it’s part of who he is.

The constructive use of cheap is in keeping everyday living expenses to a minimum. A person making $5,000 a month might choose to live on $3,000, and bank the difference. Cheap is how he’s able to live on the lesser amount, but it affords him a life with plenty of savings and an absence of debt.

He may use the extra money being cheap has provided to be generous, to lower stress in his life, and even to provide himself and his family with some luxuries. But he can always control what he does. Cheap is his tool, his method toward financial independence, but it’s not who he is.

If it’s used right, cheap isn’t necessarily a bad thing. Being cheap, however, is very different.

What do you think is the difference between being frugal and being cheap?

photo by nrmadriversseat

Filed Under: Frugal Living

Three Reasons You May Not Want to Make Extra Mortgage Principal Payments

July 20, 2012 By Kevin 11 Comments

Paying off a mortgage is one of the most basic milestones of financial freedom. Life without a mortgage payment-does it get any better than that?

But a mortgage is a huge debt, so most financial advisors recommend paying it off gradually with additional monthly principal payments. That can chop years off the length of a mortgage loan term and save thousands in interest as it does.

Good deal? Not necessarily. Yes, it’s a good way to retire your mortgage early, but it’s not without consequences—three of them that I can come up with. If you are retiring in Australia and want some info on mortgages, check out the one of many mortgage brokers sydney.

Loss of liquidity

When you make extra principal payments, you effectively tie money up in your home. Once money is paid into a mortgage, the only way to get it out—should the need arise—is either by selling the home, or by taking a new loan on it. You probably don’t want to sell your house, and taking a new loan defeats the purpose, if paying it off is what you were trying to accomplish.

Houses aren’t particularly liquid, especially these days. Not only is it hard to sell a house, but there’s virtually no way that you can cut off a piece of it and sell it to raise cash the way you could with a mutual fund. Simply put, a house isn’t a liquid asset, and any money you pay into it will be effectively lost until the day the house is sold or a new mortgage is taken out.

Additional principal payments will actually reduce your liquidity, should you need money for emergencies, for investment, or for payoff of non-housing debt.

You won’t lower your monthly payment

If your mortgage is fixed rate, your payment will also remain fixed until the loan is paid in full. There will be no benefit in the form of a lower house payment as a result of additional principal payments. If you’re payment is $1,000 a month with a $100,000 mortgage balance, it will still be $1,000 when you pay the loan down to $20,000.

Additional principal payments will do nothing to lower your monthly expenses, and will even reduce your cash flow by the amount of the additional principal contribution. By making additional principal payments, you may reduce your loan term from 30 years to, say, 15 years, but you will still have the same monthly mortgage payment (plus extra principal) for each and every one of those 15 years.

The mortgage tax deduction benefit will go away quicker

This is a factor seldom included in the additional principal discussion: as you pay down your mortgage balance, the amount of interest you pay on the loan will decline faster and, as a result, you’ll have less mortgage interest to deduct on your income taxes.

For a lot of homeowners, the tax deductibility of mortgage interest is a major reason why they can afford their payment, and why owning a home is more affordable than renting, which has no income tax benefits. The $1,500 a month payment that was reduced to $1,000 by the mortgage interest deduction, will move closer to the actual $1,500 as each year passes. The bigger your house payment is, the more painful this will be.

Instead of making additional mortgage payments, try this…

There’s a way to payoff your mortgage early without having issues with liquidity, monthly house payment or loss of tax deductions. Instead of making additional monthly principal payments on your mortgage, put the extra payments into a mortgage sinking fund.

Before you get to thinking that a sinking fund is something exotic, understand that it’s just an accounting term that describes an account that’s set up to retire a debt. The idea is that you make periodic payments into the sinking fund that will enable the eventual payoff of the debt, without making payments to the debt itself. The sinking fund itself can be a bank account, money market fund or certificates of deposit that hold the money in a safe place until it’s sufficient to payoff the debt.

There are several advantages to using the sinking fund method to payoff your mortgage rather than the additional principal method:

Since the money is in an account under your control, you keep liquidity until the loan is paid in full—you’ll have money for emergencies and investing opportunities in the meantime
You can earn interest on money you’re salting away to payoff your mortgage
The sinking fund enables you to payoff the mortgage and eliminate the payment on the same day
Your mortgage income tax benefit will remain fully intact until the time of payoff
Should you decide that you don’t want to payoff the mortgage, you still have the money that would have paid it off—no need to sell the house or take a new loan
You’ll be in a forced savings routine, and once the mortgage is paid off, you can continue saving, but with the mortgage payment gone, you’ll have even more to save

There are so many reasons to payoff your mortgage using a sinking fund that it’s surprising it doesn’t get more attention. Maybe it’s because the idea of saving up a six figure savings balance is beyond comprehension to many people. But think of it this way: if you can payoff a six figure mortgage, you can just as easily build up a six figure sinking fund to make it happen.

Do you think you can do it?

photo by akzo

Filed Under: Housing

5 Money Saving Tips for Car Drivers

July 18, 2012 By Jon the Saver 3 Comments

No matter how much driving experience and knowledge of cars you have, one thing stands for every driver: by servicing your car regularly, you’ll avoid big, expensive repairs in the future. A lot of drivers know this and still end up shelling out for costly repair jobs.

Here are five things that can really help you with reducing your car expenses further down the line:

1. Drive your car in a fuel-efficient way

This means changing gears according to your driving speed. If you’re driving 40 mph in third instead of fourth gear, you’ll be considerably wasting your fuel. Other ways to save fuel include resisting the urge to fill up the tank all the way; checking whether the fuel cap is firmly closed, so no fuel evaporates; driving smoothly and avoiding making any sudden, jerky moves.

2. Get your car checked regularly

Find a reliable, trustworthy mechanic (yes, they do exist!) who won’t rip you off and won’t exploit your inexperience to offer you services you don’t need. Find out how often you need to have your oil and oil filters changed and make sure that they are changed when these ‘due dates’ are reached. If your car is not new anymore, you might be able to switch to a less-expensive type of oil; seek expert advice if you are in any doubt about this.

A good business directory, like Thomson Local, can help you locate mechanics offering car body repairs in your area.

3. Take good care of your tires

Change them every few years (depending on how much you drive) and check regularly to ensure that they are properly inflated. You have this service for free at almost every gas station. Make sure you use winter and summer tires when appropriate and you can maximize their efficiency and prolong their road use safely.

4. Go easy on the air-conditioning

Alternatives include opening your windows or using an air-vent.

5. Only drive when you have to

Avoid driving your car to places that are close by. Walk, ride a bike (it will be good for you) or let a bus or train take the strain. This sounds like a radical measure if you are one of those people who feel like they have been born inside a car, but calculating how much you can save this way might make you reconsider. Car-pool whenever you can, and you will save even more money on gas.

Stick to these money and car-saving ‘tactics’ and you’ll drive your car much longer than you expected.

photo by ilker

Filed Under: Frugal Living

Should You Pay Your Kids to do Chores?

July 16, 2012 By Kevin 13 Comments

Do you pay your children to do chores around the house (or did you when your kids were young)? I’m not referring to chores as part of an allowance (though that could be part of it) but rather to direct pay for certain jobs.

There are arguments in favor of doing so—as well as arguments against—so I’m not sure there’s a right or wrong here.

Let’s try to look at both sides.

The argument for paying them for chores

These are just some common points on the pro side—there may be more.

Paying them connects money and work. Since most kids will grow up to be working adults, the sooner the money/work connection is established the quicker and stronger it will take root. In a real way, you’re preparing kids for the adult economy when they get paid for the work they do. Once they make that connection, they can take it as far as they like.

They have their own money to manage. This isn’t to imply that a child can’t develop the ability to manage their money if it comes in the form of gifts or allowances, only that they may have a stronger desire to properly manage money that they have to earn through effort and time invested. Earned money has a way of feeling more real, and as such the desire to manage it well will almost certainly be stronger.

It gives them an opportunity to make money to pay for what they want. If a child can earn money, they can earn money to pay for what they want. They can connect X amount of money being earned through Y amount of effort. If they can do that, they may even decide that what it is they want to buy isn’t worth the effort to get it. At that point, a child is beginning to make adult-type money decisions, otherwise known as compromises! You can’t have all the candy in the store, so you need to begin making choices. Sometimes the choice will be NOT do buy something. If they have to earn the money they spend, the choices will be more acute.

It might even make them eager to do chores. Since chores will carry a reward, you probably won’t have to argue to get your children to do them. You may not even have to tell them what needs to be done, and eventually they may even start looking for work to do.

The argument against paying them for chores

The argument against paid chores might be just as strong.

As members of the family they have to contribute. There’s a line between getting paid to do chores and making necessary contributions to the family in the form of shared responsibility. If a child is paid for everything, they could come to a point of refusing to do anything unless they’re paid to do it.

Paying them might discourage just plain helping out. This is an even more extreme version of the last point. Sometimes they just need to help out—like helping to unload groceries, straightening up a room before company arrives or stepping up to pitch in when a family member is ill. All of those are part of the normal function in any household and not anything that should automatically require some form of payment.

It keeps them from attaching a monetary value to everything they do. In life there are jobs that need to be done that no one will be paid for. Anyone who runs a household can come up with a long list of such jobs. Some, like cleaning the house or mowing the lawn, might be paid chores. But routine family work—setting and clearing the dinner table, cleaning their own rooms and taking care of family pets are more like living requirements than paid jobs. A monetary value can’t be assigned to every type of chore a child might do, and they have to understand the difference.

It can prepare them for lean times. A child who is expected to do certain jobs around the home without being paid to do them might be better prepared for an adult life when money is tight. For example, if a child later faces unemployment in adult life he may be more prepared to do what needs to be done—simply because that’s what he’s always done—without expectation of monetary reward. As well, many employers are going through budget cuts in which employees are asked to do work that’s outside of the normal parameters for the job. Refusing to take on additional, uncompensated assignments could lead to the loss of a job.

A combination of both is probably the best course

As always, a balanced approach is probably the best course of action. A child should be expected to do certain chores without compensation, such as emptying the trash, cleaning their own rooms or helping out with dinner. Other chores—let’s say those you might pay an outsider to do—are the ones where payment enters the picture.

If you asked a stranger to cut your lawn, trim your hedges or clean your garage, you’d have to pay them to do it. The same is true of shampooing your carpets or cleaning the bathrooms. If a child performs these tasks, they’re either a) saving you money you’d have to pay an outsider, or b) preventing you from having to do the job yourself.

That’s just a rough division, and you can separate it any way you like. Either way, kids can be paid for some chores, but also made to understand that certain jobs just have to be done and you won’t get paid.

How do you handle this with your own children—or how did you when they were younger?

photo by comickitty

Filed Under: Family Finances

Questions to Ask Before you go to Graduate School

July 13, 2012 By Erika 1 Comment

These days, it seems a bachelor’s degree doesn’t promise you very much in terms of landing a job and creating a successful career. Many recent graduates are debating going back to school, and many people who have jobs are thinking that a higher degree may be what they need to stay competitive in their career field. But before you sign on to at least two more years’ of student loans, there are some questions to ask yourself before you go to graduate school.

Can you balance work and school?

For many, graduate school gives you that edge you need to stand out from the rest of the crowd. And many consider it an investment in their future.

While some may be able to work and go to school at the same time- all while keeping up with bills and paying school out of their own pockets-for many, going to graduate school will require a financial and emotional commitment.

It’s important when looking at a program to choose one that will fulfill your requirements but wont’ make you lose your mind, whether it be paying for school or being able to fit in all the requirements of a rigorous program. A lot of older adults aren’t single and have family that require some sort of time commitment. Graduate school will require a good amount of sacrifice, but you can also strive to achieve a good school-work-life balance by choosing a program that’s right for you.

Can you afford it?

I currently have $21,000 left in student loans from my bachelor’s. I wouldn’t even be considering going to graduate school at this time in my life if I had to pay for it all by myself out of my own pocket. Lucky for me, my company offers up to 75% reimbursement for a higher degree.

Many companies nowadays offer some type of tuition reimbursement or stipend. Check with your company’s human resources to see what options your company may offer.

With 75% reimbursement (reimbursed each semester), I could essentially take out a small loan to get off and running, but then pay for it myself as I go.

Will your degree help you work your way up the corporate ladder?

Many recent graduates end up going back to school because they don’t know what else to do. They still haven’t figured out what they want to do so they end up at graduate school, hoping to find an answer.

At my company, I know that a master’s will give me that push I need to be considered for a management position. I am expecting about three people in my department to retire within 3 to 7 years, meaning a lot of position shifts. I want to be competitive and considered for a management position-and I truly believe that a higher degree will give me that edge that I need.

Is it worth it?

Going to graduate school is a lot of work. It’s a lot of sacrifice, a lot of studying and a big old balancing job of career, school and family. Is it worth it to sacrifice a couple of years for a degree that may or may not help your job?

I wouldn’t put myself through graduate school unless I was at least 90% percent sure that my degree would help my career. Too many people these days go for a degree when they’re not really sure if it will help them or not. I think it’s too much of an investment, both financially and emotionally, to go “just because” (unless of course, you’re going simply for the sake of educational growth).

It’s important to ask yourself several questions before you jump on a whim to commit two years of your life to go back to school. Make sure graduate school is an investment worth making.

photo by herry

Filed Under: Career, Life Experience

Should You Invest with Less the $5,000?

July 11, 2012 By Kevin 4 Comments

There’s a line of thinking that you should begin investing as early in your life as possible, that way you can take full advantage of the compounding of investment income. But should you do that if you only have a few thousand dollars?

You’ll get different answers from different people, but I think the answer is a resounding maybe!

When we invest, we don’t do it in a vacuum. It’s actually part of our larger financial situations, and that’s what has to be closely examined before investing with relatively little money.

Creating a financial safety net before investing

Before tying up money in investments, you first need to have an emergency fund. That will not only provide ready cash in the event of a crisis, but it will also keep you from liquidating your investments to deal with the emergency. And it’s a not so funny thing with emergency investment liquidations—they always seem to come up when your investments are down in price, forcing you to sell at a loss.

How much should you have in an emergency fund? Some say $1,000, some say an amount equal to six months living expenses—it really varies depending on your own needs and temperament. My personal thought is that you should have an amount equal to 30 days living expenses, that way you’ll at least have enough money to cover the first month of a job loss. That will generally also be enough to cover an unexpected major car repair, or the deductible on a health insurance claim.

Once you have your emergency fund in place, you can begin looking at investing what you have left over.

What else is going on in your life?

Investing isn’t all about how much money you have to play the market. You also should look closely at what else you have happening in your life that may either enhance or restrict your investing activity. Here are some things to consider:

Job stability. If you’re in a stable job situation, investing is much easier. If however your job is uncertain, you might be better off keeping your cash handy rather than tying it up in investments that will require years to fully payoff.

Income level. Investing is a less risky affair if you have a high income. High incomes mean fresh money is available to cover losses and diversify into more investments. At the opposite end of the spectrum, if your income barely covers your living expenses, investing may be playing with money you can’t afford to lose.

Debt. If you have more credit card debt than you have money to invest, you don’t need to be investing. Credit card debt carries interest rates that are not only high, but also subject to change. Interest on credit cards offsets investment returns, much like a very high margin loan account. Get rid of your credit card debt before investing.

Self-employment opportunities. Think of this as an opportunity cost—what else could you invest your money in that might provide a higher return than the stock market? For many, that’s having your own business. If you plan to head in that direction, you might be better off keeping your money in savings so that you can start the business any time you’re ready. There’s no better investment than investing in yourself.

Diversification options

If you have less then $5,000 to invest, you probably should stay out of individual stocks. $5,000 just can’t achieve any reasonable level of diversification, and the transaction costs would eat up your capital if you tried.

Better to go with a mutual fund, and use either an index fund or some other fund that invests in the broad market. Though mutual funds work well for small investment amounts, you probably will want to avoid sector funds at least until you have a large enough portfolio that you can hold them along with broader market funds too. Sector funds may provide higher returns, but they can just as easily create larger losses.

Playing risk factors to your advantage

The conventional wisdom is that younger investors can afford to take on more risk because they have a longer time horizon to recover from losses. That may be true if you have a large amount of money to invest, but not if you only have a few thousand dollars.

Yes, you may have a need to grow your money as quickly as possible, but at the same time taking large losses to a small amount of money may leave you with insufficient capital to recover with.

It may be better to seek steady returns on lower risk stocks (through mutual funds) than to take chances on high return/high risk investments. Slow and steady wins the race, and when you’re young you have plenty of time to get that working in your favor.

Compounding of investment returns works so much better when you don’t take big losses early in the game.
As I said at the beginning, investing isn’t something we do in a vacuum. We have to consider what our resources are, what else we have going on in life, and maybe even what it is we want to do in life.

Have you been thinking about investing in the market, but only have a few thousand dollars to do it with?

photo by 44313045@N08