Quicken – Losing its Luster?
Having used Quicken for longer than I’ve been married, it’s a shame to see my long-term relationship with the program start to deteriorate.
Before the advent of online platforms like Mint.com (now owned by the makers of Quicken), personal finance management software was limited to a handful of options: Excel, Money, or Quicken. Even after more choices emerged, the capabilities of these new program were mediocre compared to those offered by Quicken.
Since I’d established a history with Quicken and was dubious of entrusting ALL of my financial information to any one online service, I stuck with what I knew.
Aggregation & Automation make money management easy and effective. Using Quicken’s “One-Step Update”, a single click downloads your financial transactions from all your institutions.
Because Quicken did all of the grunt work, more time could be dedicated to: scrutinizing inflows and outflows, creating budgeting plans or savings goals, reviewing investment performance, and so on.
But… it seems once flaws are noticed, more begin to emerge. Continue reading “Quicken – Losing its Luster?” »
The Costs of Pet Ownership
Do you have a furry friend at home? And know how much it’s costing you?
… starting to sound like a bad daytime show theme: “Did your ex-boyfriend ditch you and his puppy-gift, leaving you with the costs? Coming up next!”
Unfortunately, that’s often how pet ownership begins – on a whim. But after reading an article on Forbes titled, My Dog’s Life Cost $36,846.24, it got me thinking how the decision to become a pet owner is like any other investment and should not be taken lightly.
The ASPCA compiled a chart outlining the costs of pet care. These costs represent the minimum for “humane care” and clearly note you should expect to pay more than what is detailed.
Using the basic information, a medium dog will cost you a minimum of $695/year not including the initial $565 start-up costs. So at a bare minimum you will spend no less than $7,500 over the course of 10 years. Upgrading to a large dog will increase that bottom line by $1,800.
Remember the ASPCA only captures the minimum for humane care. The Forbes’ author spent almost 5x those projections so it wouldn’t be unreasonable to use a 2.5x multiplier as a truer average cost. If you add this new premium, those baseline costs soar from $7,500 to $18,750.
Bank Fee Fiasco
Following the financial markets meltdown, banks are under increasing pressure to act more responsibly whilst rebuilding confidence in the financial systems and rebuilding their financial strength.
However, with many of the apparently easier ways to make money now gone, banks are resorting to ever more clever ways of earning fees.
Savings rates (linked to Reserve Rates) are at record lows. Real savings rates are negative, as inflation runs at much higher rates. Careful savers are being penalised by seeing the purchasing power of their money reduced over time.
Banks respond by using term savings products that encourage savers to fix savings into one, two or up to five year terms, meaning that they lose ready access to their money and have to take a risk on where future money cost rates will go.
Banks have increased both the frequency and amount of fees being charged. Now it is common place to have administration fees for services that were once free. Application fees, for example, are also being charged for loans or mortgages.
Obtaining a credit card has also become much harder. Even the number of balance transfers deals that were once common have reduced. But for the customer with a good credit history, this can be an excellent way of reducing the very high charges levied by banks on debt balances. Continue reading “Bank Fee Fiasco” »
How to bank cleverly
The development of the financial markets over the past twenty years has led to a wide range of products and services that can help us handle all our money matters.
Sometimes the choices are bewildering and sorting out the essential from the desirable and the best value from the expensive can be devilishly hard.
Furthermore, many of the offers that look attractive on the surface can turn out to be expensive in the long run once the introductory offers have expired, so making sure that the product chosen suits the need you have is important.
Comparison websites that cover all the financial services products can play an extremely valuable role in saving time and comparing products on a like for like basis.
Banking services, for many, mean a mortgage, insurance, current account, loans and credit cards. Added to that may be the need for a savings account where a rainy day fund can be managed.
As you can see, that is already a bewilderingly large number of services, so any expert help and advice to sift through the many offers has to be advantageous.
Financial service providers depend on consumer inertia to make money and, generally speaking, people do not move bank accounts or apply for new credit cards once they already have them.
That means that banks and other providers are able to charge high prices for borrowing and low rates for saving for those accounts that have been open for some time.
To get hard earned money working best, the consumer has to be prepared to shop around and take advantage of the many offers as they arise.
There is a balance, however, as constantly applying for new accounts, cards or savings accounts can adversely affect the credit record and the providers will determine that you are a savvy shopper and may decline your business.
So the art is to be clever. It is not possible to take advantage of all the offers, so make sure to optimize what works best.
Take credit cards, for example. There are many interest free transfer deals available on comparison sites such as Moneysupermarket, but ensure you are getting the best free period linked to the lowest fee charged and, if you plan to use the card for forward purchases, the lowest interest rate.
No balance transfer card comes truly free, so carefully calculating the cost of the fee versus the length of the free period is important. Ideally, a balance transfer card can give an interest free period in which to pay off the balance without incurring new spend at their high rates of interest.
As a rule of thumb most online accounts offer better deals, so online banking is usually the way to go.
Savings and insurance are other complex areas where care is needed to make sure that the best combination of either rates or cover are achieved. With inflation exceeding most savings rates, getting every last penny of interest can make a big difference over time.
As with all shopping, it pays to browse the market before choosing which products to buy but, unfortunately, that takes time, even though much of the hard graft has been done by experts to make the task easier.
Timing can also be important as offers come to the market and can expire quickly, so keeping an eye to the market by regularly checking the options can improve the chances of getting the best deals.
Writing a successful budget
The key to writing a successful budget lies in the detail as a budget relies on making sure that all income and expenditure items are accurately assessed and included so as to ensure that nothing is missed.
Perhaps the most straightforward place to start is by listing all sources of income, be it is salary, bonus or interest from savings or from a pension it is important to know what you have to spend before you get to spending it!
As with any budget, looking at too short a period can mislead as the timeframe may not include all payments, for example, some income may come as annual bonus or in quarterly interest therefore look at the whole year where possible to determine an average month.
This will give you an idea of what needs to be saved in months where there is a bumper income and help understand why you may run out of cash at other times.
Next is to get to grips with the outgoings. This is usually harder since not everyone keeps a handle on what they spend and where. Start by taking the big costs like mortgage or rent payments. These will be followed by utility bills for electricity, council tax, gas and telephone.
Looking over a year will also help to remember items like household and car insurance bills. Remember that as part of the budget process you can use a comparison website such as Moneysupermarket to check if you are getting the best deal.
The next layer of cost is usually more difficult to assess since it covers items such as food, clothing and entertainment. Analyse credit card and bank statements over a long period to get an accurate feel for real expenditure rather than guessing.
Remember that any budget will never be 100% accurate – that is not really the purpose. It is to provide you with a guide to where your money is spent and what you have left over to save or spend on luxuries. Using comparison websites as a reference guide can also show ways you may be able to spend less and earn more.
Armed with a good all-rounder comparison website, your salary slips, credit card and bank statements it should be a straightforward task to create a family budget that optimises income and expenditure. These days, that can be the difference between a comfortable lifestyle and struggling to make ends meet.
Watch Your Savings
With so many savings accounts available it’s often difficult to know which one to choose to get the best return on your investment. And as they all offer varying degrees of flexibility, as well as varying degrees of interest, it’s important to know what to look out for when choosing where to invest your money.
Below is a list of what to watch out for when looking for a savings account.
INSTANT ACCESS OR NOTICE ACCOUNTS
Before choosing a savings account you should have a clear idea your savings goal, that is, what are you saving for and a rough idea of how long will it take you to meet that savings goal. And with this you will need to decide whether you will require regular access to your funds or whether you can afford to have the money ‘locked in’ over a period of time.
If you are saving for an emergency fund or simply feel that you may need to have access to your funds at any given time then you will most likely be better off saving in an easy or instant access account. With such an account you have constant access to your money and can draw on it at any time without incurring a penalty fee. The downside is that this convenience is usually offset by a less attractive interest rate.
If you have a longer term savings goal and are confident that you will not have to break into your funds early then you may be better off putting your money into what is known as a notice account.
These are simply savings accounts that require you to give the bank notice of your intentions to withdraw money. For example, if you have a 90-day notice account then you would have to notify the bank 90 days in advance before you could withdraw money without being charged a penalty fee.
Although this is inconvenient, notice accounts traditionally have a better interest rate than instant access accounts.
INTRODUCTORY RATES
Some banks will offer an introductory rate that will give you a preferable rate for a set period of time as an incentive to save with them. Since base rates have dropped to all time low levels these types of introductory offer are now more attractive than in the past as guarantee a minimum rate of return on your investment.
It is important to take note of how long the introductory offer is and whether you can easily move your cash without a penalty charge being imposed once the special rate has ended as you may lose out in the long run if this is not the case.
WITHDRAWAL RESTRICTIONS
Some banks will limit the amount of withdrawals you can make in one year and impose penalties for going above this limit.
Other accounts may have restrictions that will limit any interest paid during a month that a withdrawal is made. For instance, the terms may state that if you withdraw money from your savings account then no interest will be paid on money that remains in the account.
This can prove costly if you lose out on interest on thousands of dollars for the sake of a withdrawal of a couple of hundred dollars.
TAXES
When there is money to be made then the tax man is never far away and so it’s important to check what the after tax interest rates are on a savings account, particularly as rates are usually quoted without tax to make them appear more preferable.
And unless you are putting your money into one of the range of ISAs available then your savings will fall foul of the tax man.
The general rule of thumb is that basic rate taxpayers will pay 20 per cent on any interest earned, higher rate taxpayers pay 40 per cent and top rate tax payers lose 50 per cent of their interest.
So, as you can see, saving money is not quite as straightforward as you might think and it always makes sense to check the terms of an account to make sure you receive the best return on your investment.
