Friday Faves: Taking the Train Home


Happy Friday Loves.  It’s Friday and as you read this I’m on my way home from a business trip – and I’m taking the train.  Last time I took this exact same trip I flew and trust me when I say I was less than impressed.  So earlier this week I headed off on a 4.5 hour train trip and now I’m doing the same.

Taking the train is not that much of a difference in time than flying and it’s a lot cheaper.  I like the hop on/hop off convenience of the train and I absolutely despise waiting in line at airports.  So there you have it, I’m on a nice relaxing train trip – actually I’m probably asleep.

I hope you have a great weekend.  Enjoy these good reads from our friends.

Afford Anything – How to Hack Your Credit Score

Give Me Back My Five Bucks – Would You Tip Your Starbucks Barista?

Shop My Closet Project – One Year After My No Shopping Challenge

Couple Money – What You Need to Know About Mortgages

Mo Money Mo Houses – How Can She Afford That? She Can’t, That’s How

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How to Prepare for Rainy Days

1b48510073c9494aa260bed235293796When everything seems right in life, it is hard to imagine a situation where something suddenly goes wrong. If you lost your job, broke up with your partner, got into an accident or fell ill, would you be able to survive financially?
It is important to put some thought into possible scenarios which might cause you financial strife; doing so enables you to prepare for them. While planning for a rainy day might not seem like an enjoyable activity, the end result is actually a positive feeling – you get peace of mind from knowing you have the capacity to cope with any unfortunate event that might come your way. Here are some tips on how to prepare for rainy days.

Respect Your Savings Account

Do you dip into your savings fund whenever you come across a tempting new product online? Does your savings account suffer from spontaneous shopping sprees? If a rainy day occurs in the future, your savings account will be on the front line, so it’s crucial not to jeopardise this with frivolous spending. If you have a genuine emergency or unexpected necessary purchase you can’t cover with your everyday funds, then go ahead. But be strict with yourself when it comes to withdrawing from your saved funds. Your savings account is the safety blanket if something bad happens financially down the track; the thicker it is, the more support it will be able to provide if/when you fall onto it.

Don’t Let the Past Keep Biting You

If you stumble into times of financial trouble, any existing debts you have will only serve to compound your problems. Whether you have the skills and patience to do this yourself or need the assistance of debt professionals from a company like Debt Rescue, reducing, consolidating or even eliminating your debts is a great way to prevent future issues from turning into catastrophes. The fewer interest fees you have to deal with on a rainy day, the more attention you’ll be able to give to averting a real crisis.

Budget for the Future

While the future may be vastly unknown, this doesn’t mean you can’t attempt to budget for it. When analysing, creating, or rethinking your household budget, look beyond managing your week-to-week expenses. Factor in any future circumstances you know or suspect could arise to complicate your finances. Also, ensure that a decent portion of your income is consistently directed into your savings account. Even if you don’t have anything to save up for right now, there’s no telling what situations or needs might come up unexpectedly in the future, so putting away some extra safe cash is never a bad idea.

Every rainy day has the potential to dry up if you have the proper safety net set in place and have prepared for as many possible scenarios as you can. Have you had some tumultuous times recently that have taught you the value of preparation? If you’d like to share your story or advice in the comments below, it might just be what another person needs to read to inspire them to get their act together.

5 Common Car Loan Terms Explained

0f7d4e833bf744e78f6769e30faba48bFinance companies use a lot of big words. For the typical person, these terms can be quite confusing, but it is often helpful to know what they mean. Below are five common car loan terms explained for your benefit – in plain English.

1. Residual Value

Residual Value is also sometimes referred to as a ‘Balloon Payment’. This is the amount remaining on the borrowed money at the end of the loan term (see below for a definition of ‘loan term’). For example, if you purchase a $30,000 vehicle over five years, and pay off only $20,000 in that time, then your residual value at the expiry of the loan contract will be $10,000 and you will need to come up with that amount in order to own your car outright. Some borrowers prefer to pay less over the loan term and more at the end – especially younger car buyers, as the chances of their earnings having increased during the five years or so is quite good. Not all car loans include a residual value and not all car loan contracts offer them as an option. You can find out more about the specifics of car loan contracts from financing companies like DreamLoans.

2. Loan Term

The term of the loan is simply the length of the period for which the money has been borrowed. Most car loans are typically for around five years, though three- and seven-year terms are also quite common. Finance companies usually refer to this term by the number of months, so you may hear a five-year loan term referred to as a 60-month contract.

3. Secured Car Loan

A secured car loan is a finance deal where an asset of yours (most commonly the vehicle itself) is the security for your loan. This means that, should you miss a repayment or be otherwise unable to meet your loan commitments, the finance company can – and will – repossess your car. Secured car loans are usually offered at a lower interest rate than unsecured car loans, as the finance company can recoup some losses through onselling your vehicle.

4. Unsecured Car Loan

This type of loan is not tied to any security whatsoever, so if you choose to use the money to buy a bike instead, you can do so. However, you should be aware that, as unsecured loans do not offer any failsafe to the finance company, they tend to come with high interest rates and large repayments.

5. Fixed or Variable Rate

These terms refer to the interest rate you will pay on your loan. A fixed rate has the advantage of certainty; you know what your repayments will be every month. However, if rates fall, you will not be able to take advantage of the lower rates as your loan contract locks you in to paying the agreed interest rate. A variable rate means that the amount you pay will fluctuate with market interest rates; when they go down, your repayments will be lower. But beware – when the rates rise, so will your repayments.

Many people often feel as though they have to learn a new language when they apply for a car loan. While buying a new car can be fun and exciting, take the time to make sure you understand all the terms and conditions involved. There are no silly questions when it comes to money – just expensive mistakes.

How I Increased My Net Worth by $30,000


OK I know this is going to sound like I’m bragging, but that’s not the intention.  I spent a lot of my years, actually the majority of my adult life in debt.  This is the first year I will actually have a positive net worth in my entire life.

In my teens I had money, but no savings.  I lived at home, worked two jobs and spent absolutely every cent I made.  In my 20s when I moved out of my parent’s house I had no idea how to budget so I started applying for credit cards.  My financial life just spiraled downhill from there.  My little $1000 credit card from when I was 18 years old turned into over $50,000 of debt by the time I was 28.  YIKES! Yes I know.

I’ve spent the last few years paying off my debt and now for the very first time I have a positive net worth!

Pay Off Debt

After I made the final payment on my last credit card my net worth suddenly jumped into a positive position.  That’s the thing about your net worth, it doesn’t equal your savings.  Your net worth is calculated by subtracting your debts from your  assets.  If you have $10k in savings but $40k in debt you still have a  negative net worth.  This used to be my situation.

When clients ask me (I’m a financial planner) whether they should pay off debt or save I always tell them to pay off debt.  First of all debt costs so much more than just what you borrow, monthly interest payments can sometimes be more than your capital payments. I know mine were.  Secondly saving money doesn’t help increase your net worth if you aren’t paying off your debt.

Don’t Touch Your Bonus and Tax Refund

This gave my net worth a nice big boost this year.  When I found out the amount of my yearly performance bonus I was so tempted to take it in cash, until I realized I would lose over half in taxes. I decided to put it into my retirement account, invest it and watch my net worth grow.

In past years I would always take my bonus in cash because I needed it to pay off debt, but losing half in tax is just not worth it.  This is the first year I have the freedom to choose what I want to do with my windfall of cash (both my bonus and tax refund) and I’ve decided to save them both.  Hello Net Worth!

Save Regularly

This is where I have the most difficulty when it comes to growing my net worth.  I hate commitment of any kind so even though I advise people to set up regular savings I don’t actually do it myself.  Yep that’s right,  I don’t have an automatic transfer from my checking account to my savings with every pay. Can you believe it?!

I try to manually transfer money every month, but that also rarely happens.  I save regularly by allocating a particular income towards savings.  I have a 9 to 5 job plus several gigs on the side and when that extra money comes in at the end of the month I don’t touch it.  I don’t actually save any money from my regular job.  I used to use my freelance income to pay off debt, now I allocate half of it towards savings and the other half towards travelling. That’s how I roll.

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