FinancialDominance.com

Just a quick note to look for my guest post 9 Ways to Save Big on Prescription Drugs over at Finance Is Personal.

Have a great Labor Day weekend, everyone!

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So, your little girl or boy has finally grown up and is about to graduate. They are about to face the scary “real world” without the constant guidance from mom and dad. You wonder, “What can I do for them before they leave for college that will have a lasting impact on the rest of their life?” Money Magazine has a great idea: give them a session or two with a financial planner.

What better to preempt those inevitable credit card offers and student loans? The financial planner can explain, probably much better than you or I can, the downward spiral that can occur when a person spends more than they earn. And, in college, what you earn isn’t much, so you have to be even more conservative in your spending. The planner can explain the long lasting financial effects of just one extra night of partying a week.

Aside from explaining what the student shouldn’t do with their money, they can also explain what they should do with their money. Right away the student can begin putting 10%+ of their income into a savings vehicle to jumpstart their road to financial independence. They can tell them about such wonderful things as compound interest and give them examples on why it pays to start early. Take for instance someone who starts investing $1,000 per year their first year of college versus someone who starts five years later. Assuming 40 years of investing at 8% interest, the one who started saving earlier will have nearly $94,000 more than the one who started later. Only five years earlier!

The glue that will hold the financial plan together will be the fact that the advice is coming from a 3rd party expert in the field of personal finance. (i.e. not mom and dad) This freedom from mom and dad allows the soon-to-be adult a chance to be independent and develop a confidence in their ability to handle their finances on their own. It will also allow them to be more forthcoming and honest about their concerns, fears, and hopes.

My recommendation is to find a fee-only planner as you don’t want someone trying to sell your child something when they are just supposed to be teaching them. The $500-$1000 you will spend will be a bargain compared to the alternative of a financially inept child calling you every few months for “just another loan until I get back on my feet.”

If you haven’t already, take a look at my article on 6 ways to increase your kids’ financial intelligence. It has a few tips on what to do BEFORE graduation, so your child will hopefully be interested in their finances when you give them perhaps the greatest graduation gift ever.

Photo: PublicRadio.org

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When I started this blog, I began by picking a template that was aesthetically pleasing and threw in a few widgets for good measure. As time went on, I began to realize that I really didn’t like some aspects of its design. Now, with a few of my friends (BeingFrugal.net, Plonkee.com, and PaidTwice.com) taking the bold step of totally redesigning their site and getting great results, I want to tweak my site a bit as well.

Over the next two or three weeks I will be gradually introducing a new site layout. During this process, there will likely be many bugs and issues with the site. If you find a bug, please use the Contact Me link at the top of the page or email me using brian at this domain.

If you have any comments or suggestions on what you would like to see implemented with the new layout, please leave a comment to this post or contact me through the methods I specified previously.

If you don’t want to watch the madness that is likely to occur, just subscribe to my RSS feed or subscribe to my posts by email. This will ensure you can continue to read my posts without the pain of watching as I demolish my site and build again from the ground up.

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How many of you have multiple credit, debit, and loyalty cards sitting in your wallet? Do you dislike digging through your wallet or purse to find that one card that gives 1% cash back on whatever you are purchasing? If you answered yes to either of these questions, Jonathan Ramaci, the founder of iCache may have the answer for you.

The iCache will be relatively inexpensive device (less than $100) that will allow you to upload your credit card information into a website and upload the information into an iCache device. Once there, the removable card can be programmed (and reprogrammed) to be any credit, debit, or swipable loyalty card you own. After a single use, the information on the card is erased.

But wait, what happens if your iCache is stolen? The iCache uses a biometric strip where the owner uses their thumbprint to gain access to the device. Combine that with the previously mentioned fact that the data on the card is erased after a single use, and it seems to be a fairly secure system. Time will tell, though, if some genius hacker can still get into the device.

Although I am a minimalist when it comes to carrying cards, this may be a device I have to get. I would consider the one time $99 payment as insurance against a theft of my wallet. If a theif were to steal my wallet now, I would have to call each of my credit card vendors to cancel my cards. With the iCache, it sounds like I would be safe to continue using my cards since the device is protected by fingerprint scanning technology. Of course, I’m never an early adopter of technology, so I’ll wait a year or so after its release to see how it fares in the “real world.”

Source: iCache.com

Photo: SlipperyBrick.com

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According to a recent article in the Wall Street Journal, the average cost of a wedding, which is the cost you hear on the news and in magazines all the time, may be a lot different than the typical cost. The numbers that are typically reported take the sum of all survey respondents’ wedding costs divided by the total number of respondents. While this sounds like a sensible way to determine the average wedding cost, what happens when one respondent has a $1 million wedding? The overall average is skewed since the lowest the cost could possibly be is $0. As an example:

One $1 million wedding put into the mix with 54 weddings costing $10,000 each would boost the mean to $28,000, although among the 55 couples, $10,000 would seem a much better representation of the typical cost.

This type of fuzzy math has also been used to overstate the average person’s credit card debt. Since some consumers have an abnormally high amount of credit card debt, the overall arithmetic average, or mean, is skewed.

One other bias in these wedding surveys is that the surveys are typically done by the traditionally expensive matrimonial industry. They are less likely to find those that had small, intimate weddings with tiny price tags.

So, if the typical wedding doesn’t cost $25,000+ as some surveys suggest, then what DO they cost? According to Shane McMurray from CostOfWedding.com:

…the median figure [was]…$15,100

From Condé Nast Bridal Media who publishes Brides.com:

The median cost was $14,182.

If you are in the market for a wedding and are dreading the huge price tag, this could be a huge relief. Just make sure you only have to do it once!

Photo: HappyNews.com

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This week will likely be remembered for being the week where two personal finance blogging heavyweights collided over The Simple Dollar’s advice about investing in a down market. (hint: read the comments on the first link)

I don’t want to fan the flames anymore, but Plonkee added her two cents. Anyways, on to my favorite posts of the week!

From the M-Network:

• Paid Twice tries to find the balance between living for today and saving for tomorrow
• Plonkee tells us why he chose a less lucrative career
• Gather Little by Little says there is no such thing as good debt
• Being Frugal explains how she is going to celebrate the start of the school year
• Moolanomy asks if you are guilty of these top 10 money wasters

From other great bloggers:

• Finance is Personal has a very timely post on 7 ways to avoid foreclosure
• The Digerati Life wants you to know the cost of having kids
• No Credit Needed shows you how to video tutorial on using the envelope system to manage your cash - Very cool. Easier to visualize by seeing rather than reading.

My most popular post this week was What Do I Need to Retire?

Have a great weekend, everyone!

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I didn’t get to participate in as many carnivals as I wanted to this week, but I am happy I could submit to a couple.

Carnival of Personal Finance

The Carnival of Personal Finance was hosted at The Simple Dollar this week. A few of my favorites from the carnival:

• Mortgage Blog talks about keeping the right balance between work and leisure
• Baglady says it’s not all about the money when evaluating job opportunities
• Advanced Personal Finance shows you how real returns get in the way of a good plan

Carnival of Financial Planning

The Carnival of Financial Planning was hosted at The Skilled Investor this week. A few of my favorites from the carnival:

• Confessions of a Housewife gives the scoop on the budgeting secret that saved her marriage
• Opportunities a Plenty gives a few tips to boost your retirement savings
• The Tao of Making Money explains what gap insurance is and when you may need it

My contribution to both carnivals was What Do I Need to Retire.

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Today I started looking through the new set of funds for my daughter’s Illinois Bright Start Savings 529 plan. The new funds came about with a change to the plan’s Program Manager from Legg Mason to OFI Private Investments (a subsidiary of OppenheimerFunds). I must say I’m very impressed with the radical change not only in fund selection but also the dramatic reduction of fees. I guess I can thank my new state treasurer, Alexi Giannoulias.

Here are the highlights of the plan:

Maximum account balance is $235,000

This is PER BENEFICIARY. So if you have two children, you can have the maximum for each. Let’s be honest, though, $235,000 is a lot of money. The cost of a year at Harvard is currently $50,950. Assuming four years with the same tuition rate (bare with me - I know it won’t happen), the total cost of tuition, room, and board would be $203,800. That leaves $31,200 to purchase books and other necessities of college life. As long as the maximum increases proportionately to the costs of attending college, the maximum shouldn’t be a factor for most people.

Minimum initial investment is $25

This lets nearly anyone, even those that have low incomes, save for college in a tax efficient way. After the initial investment, the minimum contribution is $15. A minimum contribution this low encourages “snowflake” investing. (which I had never heard of until Paid Twice wrote about it)

Contributions are deductible from state taxes

This may not be as big of a deal as it is in other states as Illinois has a flat 3% tax on individuals. It does, however, make for a nice bonus at the end of the year. The maximum amount you can deduct each year is $10,000 (or $20,000 if filing jointly). So, assuming you contribute the maximum as a married couple, you could be looking at $600 in tax savings.

Qualified withdrawals are federal tax free

This is the same with all other 529 plans, but is a major reason the plans are so attractive. Combine this with the state tax deductibility of contributions and tax-deferred growth and you have a great investment vehicle to help you save for college. Be careful with your withdrawals, though. If you withdraw funds from the plan for non-qualified expenses, you will owe federal taxes, applicable state taxes, and an additional 10% federal tax on the withdrawal.

Great fund selection

With the new program manager, the Bright Start Savings Plan added a host of great new investment alternatives. They now have not only a host of actively managed funds but also a few index-based alternatives as well. The most exciting part about the index funds is that they are managed by Vanguard. They are definitely a market leader in quality, low fee index funds.

(Relatively) Low Fees

The best part of the new deal, to me, is that the fees have dramatically decreased. Here is the fee table:

All of these features make Illinois Bright Start Savings 529 plan one of the most competitive 529 plans in the U.S. - especially if you live in Illinois. If you don’t live in Illinois, there are a couple of other states that have great plans. Check out Five Cent Nickel’s take on the three best 529 plans.

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According to CNN Money, auto sales may be the latest casualty in the subprime fallout. Between lenders tightening their lending standards and the general uncertainty about where the market is going, consumers just aren’t looking at throwing money at a depreciable asset. According to CNN Money:

CNW Research, which specializes in surveys of car buyers, found in its latest reading that 13.6 percent of the potential market’s customers were canceling or postponing plans to make a new-vehicle acquisition any time soon, up from 10.1 percent last year.

I’m not sure how much more automakers can take - especially US automakers. It’s not enough that they are already behind the eight ball because of the high cost of unions. But now they are dealing with record gas prices, tightening lending standards, and an uneasiness from some consumers as they watch their home equity drop and their payments go up.

Of course, bad news for automakers often means good news for consumers. Automakers fearing a sales slump will be throwing out a lot of incentives to get you to buy.

Automakers, led by GM, are upping cash-back offers and other inducements to try to breathe life into sales in the face of headlines about home foreclosures and market meltdowns.

So if you’re in the market anyway, you might as well explore your local dealerships to see what deals they have for you. If you aren’t looking to spend a lot, check out Cars.com’s top 10 cars under $10,000. Remember to be tough and negotiate - they need you more than you need them.

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Pinyo over at Moolanomy tagged me in his My One Money Advice Meme. He was inspired by Blog Action Day. On Blog Action Day, all bloggers are encourage to write about something important in order to affect real change. For this Blog Action Day, bloggers will be writing about the environment from the perspective of their blog’s topic.

The question from Pinyo: If you can give one advice, tip, or story related to money, what would you share?

My answer: Understand that your situation is different from everybody else’s

Although I often write in my articles that YOU should do this and YOU should do that, my recommendations are not meant to be followed blindly. In some cases, it may be okay to have debt. Dare I say even credit card debt if used correctly. If you don’t feel my advice applies to you, take it with a grain of salt and move on.

The same goes for any advisor that tries to take a cookie-cutter approach to your finances. There are rarely absolutes when it comes to personal finance.

I would like to know what Matthew and mnc have to say. I’ll add their responses to the results below if they respond.

Here is what others have said:

• Pinyo said, “save 10% of your income and make it automatic“
• Paidtwice said, “ignorance does not help you…knowledge is power, and with power you can institute change“
• Being Frugal said, “practice contentment…realize that money and things aren’t going to make you happy“
• Plonkee Money said, “know yourself“
• Hin’s Tech Corner said, “not to compare yourself to others and think about money all the time“
• Loonies And Sense said, “take control, and do it now“
• Adventures In Debt said, “have patience“
• Give Me Back My Five Bucks said, “when you think you can’t…you can“
• The Diary of a Reformed Spendaholic said,

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