Money Questions and Answers

The Top 5 Reason Why You Are Unable To Save Money

by Jeremy

There are many reason that you have been unable to save money. Saving can feel like an impossible task that many Americans struggle with. A study revealed that half the population—47%—had zero or negative savings accounts.

In the same year, the Federal Reserve found that the average saving rate was 4.8% of disposable income—not nearly enough to handle expenses should an illness or job loss become your reality.

Having a savings account should be a non-negotiable in your financial planning, and if you’ve found putting money away to be an insurmountable challenge, you may be struggling with one of the following reasons. Read on to find out how you can change your financial situation and start putting money away for a rainy day.

Why You Haven’t Been Unable To Save Money

1. Forgetting to Budget

If you don’t budget out each month, you’re doing yourself a disservice. Taking an hour or less to draw up your financial plans for the month allows you to visualize where your money goes, and highlights any inconsistencies or overspending that you might have otherwise missed.

Using a budget allows you to control every last cent in your wallet, helping you avoid unnecessary expenses and cutting down on the excess spending that comes along with lack of planning. If you find it difficult to do on your own with pen and paper, use one of the many electronic budgeting apps like PocketGuard that will allow you to monitor exactly where you’re spending your money and take steps to cut out unnecessary spending.

2. Paying Off Debt

Paying off your debt is important, especially because high interest rates can rack up, making your savings account moot point. In fact, the interest you pay on a lingering debt is, nine out of 10 times, way more than the interest you’ll make off of your savings account.

The sooner you pay off your debt, the more money you’ll have to put into savings (and the psychological relief isn’t too shabby either). Tackle your debt through the avalanche method, focusing your payment efforts on the accounts that charge the highest interest first. Be sure you always keep enough to dedicate to minimum payments on your other accounts and ensure you don’t rack up numerous late fees.

Top 7 Easy Fixes to Reduce Your Monthly Expenses

by Hank Coleman

The slumping economy has households looking for ways to cut back on monthly expenses. Lowering your monthly costs can also be a great way to put more money aside into savings. There are a number of things that you can do to minimize your spending without changing your current lifestyle.

Easy Fixes to Reduce Your Monthly Expenses

Brown Bag Lunch

If you or your partner spends money on costly meals for lunch, you can brown bag it instead. Cutting back on eating out can help save a significant amount of money weekly. You can also curb your spending by limiting lunches out to once a week.

The money that you save on packing your own goodies can go into a savings jar. As you fill the container up, have a family meeting to decide how you want to spend the money.

Home Costs

Spending money on rent can be wasteful. Interest rates are currently at record lows. If you’re looking for a home, there are a number of financing options available to help you with your purchase.

If you’re looking to make repairs on a current dwelling, go with a home renovation loan. Before you secure your financing, consult with a real estate agent. They’ll be able to determine which improvements can boost the value of your home.

Look Over Your Current Bills

Take a look at your current bills. Decide on the items that seem to be unnecessary and which ones are important. If you see luxury items such as movie rentals, cosmetics, and smartphone apps, cancel your services.

Are You Running In The Right Direction?

by Guest Contributor

The following is a guest post on Money Q&A. Would you like to write the next one? If you would like to write an article for Money Q&A, please visit our Guest Posting Guidelines page. Mark Aardsma is an entrepreneur, investor, and the author of Investing With Purpose: Capitalize on the Time and Money You Have to Create the Tomorrow You Desire.

Investing With Purpose by Mark Aardsma

Life and work, they ask a lot of you. There’s a lot to be done, and some of it is really hard. Projects stretch your skills, packed days stretch your energy, and difficult people stretch your sanity. Some weeks (most weeks?) feel like marathons with a series of embedded sprints. You get tired, and you have to stop to catch your breath sometimes.

Not to worry though, you are no stranger to hard work. You’re driven, even when it gets tough. You focus your smarts on each problem, and most of the time you work out a solution.

You do your best to manage your money, save for the future, and invest well to grow it. The enthusiasm and perseverance you bring to life and work is admirable, it really is. You have your ups and downs, of course, but you put your heart into it, and engage each day in an earnest pursuit of… well, hmm.

It’s for success right? Financial security, that is important. Maybe it’s about earning respect, and a sense of accomplishment? Being able to go to bed at night feeling like things are going ok, people see you and treat you well, and life is just kinda, working?

Ok, so life gets a little murky, even for us driven types. It’s hard to discover and remember why we are doing all of this in the first place.

What’s more, life changes and unfolds in surprising ways. We find out we have interests, strengths, potential we didn’t know about before. Windows of opportunity close (sometimes slam quite rudely) and others crack open. What we want changes. A clear sense of direction doesn’t come easily in the first place, let alone update itself automatically.

You can navigate life with direction and purpose. It’s possible, and it’s essential. A crystal ball of insight into the future is not required.

Courage, that is the thing. Courage to open up big questions and let them bother you with their annoying tendency to hover around unanswered. Courage to spend time in the part of you where you keep your dreams.

I Can’t Pay My Taxes: What Should I Do?

by Jeremy

We’re in the thick of tax season, and if you’re having anxiety about handling what you owe whether personally or for your business, you’re not alone. You’re not alone if you think, “I can’t pay my taxes”. If you’re expecting to owe a large sum to the IRS by the April 15^th deadline, and know you’re not going to be able to pay off your debt, there are various ways to approach your situation.

Filing Issues

Even if you can’t pay what the IRS expects of you, you absolutely need to make filing a priority. While the date usually falls on April 15^th, this year is a bit of an anomaly, with a filing deadline of Monday, April 18^th. With this deadline only a month away, time is of the essence, and the penalties for missing this filing date can be pretty severe, at least from a financial standpoint.

The maximum penalty can add up to a massive 25% fee on the total cost of your debt if you don’t file within the five months following the deadline, in addition to the interest, the initial amount will gradually accrue as long as it takes you to pay back. By filing prior to the deadline, you can avoid this steep penalty fee, and the IRS will be more willing to work with you.

Can I Use Credit to Pay?

While not always the most viable option, there is something to be said about using your credit card to handle a debt to the IRS that would go unpaid. You’ll need to determine whether the interest on your card is higher, or whether the interest charged by the government would be more desirable.

In most cases, a credit card has lower rates than what the IRS enforces in efforts to get their money. If you can’t put the entire debt on your card, you can make a partial payment and avoid penalty fees and lessen the amount of interest you’ll pay over time. The IRS interest rate comes in a half of 1% each month, and continues rising until it hits the maximum of 25% during the following 50 months.

The IRS does accept credit cards, but be aware there’s a fee for using one of the approved processors, which depends on the processor chosen. Right now it looks like Pay1040.com is the cheapest processor, charging a 1.87 percent fee on your transaction.

A Look At The Difference Between Investment And Gambling

by Guest Contributor

Investing in the stock market and gambling at a casino are often compared and deemed to be very similar ventures. Both the difference between investment and gambling involve risk and choice in hopes of future profit. Investors and gamblers have to decide how much they are wanting to risk.

Some traders typically risk between 2% and 5% of their capital base. Long-term investors often spread their money across different investments in order to try and minimize potential losses as a form of risk-management.

Risk-management in gambling is also proficiently sought after by professional gamblers. They look at whether odds are in their favor before they make a bet. A key comparable principle in both gambling and financial investing is to minimize risk while maximizing profits.

Difference Between Investment and Gambling

However, there is a huge difference between investing and gambling when it comes to stopping losses. In gambling, particularly in sports gambling, there are no loss-mitigation strategies due to the activity being so speculative.

Stock investors however can set up stop losses on a stock investment which is the simplest way to avoid unnecessary risk. If stock drops 10% below its purchase price there is an opportunity to sell that stock to someone else and still retain 90% of the risk capital.

However, if you put a bet on that states that Tottenham Hotspur Football Club will come first in the Premier League, you cannot get any money back if they come second. You will lose everything you’ve put on, which isn’t the case when it comes to stock investment. Gambling is mainly to do with pure chance, and there are a lot more loss-mitigation strategies when it comes to financial investments.

How Important is Basic Liability Auto Insurance?

by Hank Coleman

In a world where people can be quick to seek out unfair compensation and sue for almost any small incident, it’s important that you keep yourself financially secure with liability auto insurance for your vehicle. You see, you can’t always control when, where, or how an accident will occur, but you can control and potentially limit how much an accident will cost you with the right amount of liability auto insurance.

In order to understand whether liability car insurance is a necessary investment, it pays to take a closer look at some of the leading benefits liability auto insurance offers.

How Important is Basic Liability Auto Insurance?

Be Sure to Meet the Minimum Requirement

In every state except New Hampshire, liability auto insurance is required so that drivers are protected from mistakes or accidents that are not their fault. People who drive without this kind of insurance can expect to pay a hefty fine or worse.

However, the finer details of the law are different from state to state. So, make sure your liability insurance safety meets the required standards where you live.

The minimum requirements for liability auto insurance will vary in regards to both areas that liability insurance covers – property damage and bodily harm. This is to ensure that drivers who are not at fault in minor accidents can be completely covered.