I had a nice feeling this morning when I logged onto my finance aggregation tool and took a look at my net worth box. For the first time, it has six digits… before the decimal!

How I Got Here

If you look at my most recent net worth update, you can see that I was a long way off from this point just a couple of years ago.

Around December, 2010, I was nearing a net worth of zero. While I did not have credit card debt, I was mid-way through graduate school, my student loans were growing and my bank accounts were shrinking. I had more debt than cash for the first time in my life and I knew I had to keep working hard to get out.

Fast forward to January 2011. In the eleven months since my last MBA tuition payment, I paid off my car, paid off one of the two remaining student loans, dramatically increased my savings rate, and had good trajectory.

I was in a good place with my career and my cash flow, so I decided it was time to look into buying a home. I took control of my “secret down payment fund” that I had kept separate from my other financial accounts. I only used about $5,000 from that account during grad school. When I took the cash and deposited it into my savings, my net worth took a big jump, but it was sort of artificial because I knew the money was there the entire time.

The Double Jump

I was good about pressing forward in my savings and generally good about my spending over the next nine months. I saw my total net worth fall some from equity investments, but I was still on track to buy a home. My expenses rose when my lease expired and I went month to month, so I knew it was time to make a change.

I found the condo I knew would be home around that time, and I started the process of buying my first home. I negotiated a fair deal on the condo and, according to Zillow, had an instant $40,000 home equity gain.

Cash Flow

After I bought the condo, I had lower monthly cash expenses. My costs were about $300 lower per month. It was just a matter of weeks from there for my net worth to make the extra jump to $100,000.

I don’t have any plans to change my spending habits. I will put that extra $300 per month into savings first, student loans second, and my mortgage payments third. That will keep me on track to add another zero to my net worth.

Who know, maybe the million dollar club is not that far off?

Image by financialfellow1.

The $100k Club is a post from: Narrow Bridge

Related posts:

1. Update on Lending Club
2. Lending Club Update: Get $25 For Free
3. August 2011 Net Worth Update

Praire Eco-Thrifter hosted our 10th ever Yakezie blog swap, and it was a good one as always. Along with my fellow bloggers in the Yakezie, I wrote about how going green can both help the environment and your financial situation. Be sure to check out all of the great posts (mine is linked below too) from this edition.

Nickel by Nickel tells us how they read green using ebooks over at Beating Broke.

Everything Finance shares with us his success in growing his own veggies at Retire by 40.

Narrow Bridge Finance tells us how going green has saved him some green at Mom’s plans.

The 60K Project shares 8 ways she has made her kitchen green at Stock Market Basics.

One Cent at a Time shares 23 ways reusing household items can save you money at Sustainable Life Blog.

Prairie Eco-Thrifter shares numerous recipes for making your own cleaning products at Financial Success for Young Adults.

Debt Eye tells us how to eliminate the paper trail at Little House in the Valley.

Sustainable Personal Finance tells us why air sealing your home is a good idea at Financially Consumed.

Stock Market Basics shares 5 ways to go green and save natural resources at Free Money Wisdom.

Financially Consumed tells how you can go green at home incrementally at Sustainable Personal Finance.

Little House in the Valley shares how going car-lite can save money at Debt Eye.

Financial Success for Young Adults shares how you can go green on a budget at Prairie Eco-Thrifter.

Sustainable Life Blog tells us to watch out for a leaky window at One Cent at a Time.

Free Money Wisdom shares why we should avoid country funds at 60K Project.

Mom’s Plans tells how we can eat green at Narrow Bridge Finance.

Retire by 40 shares how living in smaller home is green at Everything Finance.

Beating Broke tells how cycling makes you green at Nickel by Nickel.

I hope you have enjoyed the different posts and have learned some new things you can try in your effort to live a greener life.

Yakezie Blog Swap #10 Roundup is a post from: Narrow Bridge

Related posts:

1. Yakezie Blog Swap #7 Roundup
2. Yakezie Blog Swap #3 Roundup
3. Yakezie Blog Swap #1 Roundup

This post is by Melissa at Mom’s Plans and is part of a Yakezie blog swap based on the topic, “What is your best go green method to save money?” You can read my post on the same topic at Melissa’s blog.

When I graduated from graduate school, I was $20,000 in student loan debt and newly married.  My job paid less than double the balance on my student loans, so money was very tight.  My husband and I read The Tightwad Gazette and implemented many strategies to save money, most of which also turned out to be good for the environment.  Yet, in a few years, we both became busy with work and school and children, and many of these frugal, green ways of living evaporated from our lives.

However, within the last year, I have discovered that I am both dairy and soy intolerant, and two of my three children are also dairy intolerant.  There is very little processed food that I can now eat, and many restaurants are off limits because of their copious use of soy additives.

As a result, I have been spending quite a bit of time in the kitchen, resurrecting lost arts such as bread making.  I have been unable to find ANY store bought bread that is free of both dairy and soy and doesn’t cost more than $3 a loaf.  (I know I can buy specialty bread for $5 plus a loaf, but I really can’t justify the expense!)  The more we continue to try to cut corners and prepare healthy foods, the more I realize how “green” it is to cooking the majority of our meals at home.

Take our two loaves of bread that we make weekly:

Because I make it so often, I bulk buy the flour in 25 pound bags and yeast in a 2 pound container at Costco.  I do not know exactly how many loaves of bread we can make from those ingredients.  Perhaps 40 loaves or more?  The only waste we have is two wrappers, one for the flour and one for the yeast.  If we bought 40 loaves of bread, that would be 40 bread wrappers that end up in a landfill.

However, the real difference comes in avoiding processed food.  Our use of items that come in cans has decreased dramatically.  Frozen meals with their cardboard packages and plastic trays and plastic covers are off limits because all of them contain soy.

I don’t know that I would have chosen this lifestyle just to avoid waste and become more frugal, but now that I have to eat this way, I am glad that we have made the change.  Not only are we more environmentally friendly, we are also eating healthier, which, in the long run should also save us money on health bills and insurance.  True, it does take a great deal of time to make the majority of my family’s food from scratch, but I consider it a hobby, and the taste of the food is infinitely better than frozen meals.

Photo from D’Arcy Norman.

Yakezie Blog Swap #10: Eating to Green Savings is a post from: Narrow Bridge

Related posts:

1. Yakezie Blog Swap #10 Roundup
2. Yakezie Blog Swap #2: Daily Money Saving Tip
3. Yakezie Blog Swap: Getting Value From Spending

Welcome to the newest installment of the Yakezie interview series. Today, we have questions answered by Jason at Live Real Now. Jason has been making major strides cutting his debt and has chronicled the journey at his site.

How did you get started in personal finance blogging? What was your inspiration?

In April 2009, my wife and I were on the verge of bankruptcy.  We weren’t behind on anything, but we were in over our heads.  While researching bankruptcy attorneys, I discovered Dave Ramsey and decided to give that a shot, first.   For the next 6 months, I wouldn’t shut up about money and decided I should share my journey with the world and stop annoying my friends and family with it.

What changed in your financial life after you were married and had kids that was a surprise? If you could instill one financial value in your children, what would it be and why?

I was shocked by how much nickel and dime crap there was to pay for with our house.   Everything from getting the sewer main snaked to replacing the screen in the window to buying gas for the snowblower to having to own a snowblower.  It all costs money and adds up, but nobody ever thinks about that before they get a house.    The one financial value I am trying to drill into my kids is a pure loathing for debt, specifically interest payments.    Kids, don’t carry debt.  If you can’t control yourself, don’t get credit cards!

On your site, you mentioned that you are trying to change your lifestyle. You are trying to get in shape and downsize your stuff. Have those efforts made a financial impact in your life? If you could start those efforts again today, what would you do differently?

I managed to cut my finances down pretty severely before I picked up my other projects, so I don’t think weight loss or downsizing has had much of an impact financially.    The one thing I would do differently is to remind myself not to cheat.  I can’t cheat just a little.   Guaranteed, if I eat one cookie, there will be 3 more following it.   I need to follow a strict set of rules, or I will definitely fail.

What is the biggest personal finance lesson you learned the hard way?

This one’s tough.  I’ve always had a compulsion to learn every possible lesson the hard way.   The biggest?  Get your husband/wife/partner/lover/leprechaun on board before you dive headfirst into any life-changing project, be it debt repayment, massive weight loss, or self-employment.   Life is so much easier when you’ve got their support to fall back on and so much happier when you aren’t fighting over who bought what.

Outside of blogging, what has been the biggest change you made to your financial life that made a difference? (i.e. making more money, frugal changes, budgeting, investing)

Credit.  Rather the shunning of.   Over the past 27 months, we’ve paid down $40,000 of debt.   We couldn’t have done that if we were still charging our lives away.   This spring, we got surprise with a $4000 bill for my son’s vision therapy and managed to pay it off without paying a cent of interest on it.   That would have been impossible with our old spending habits.   Our money is doing what we want it to do now, instead of demanding it be spent on garbage like a new TV we didn’t need and couldn’t afford 3 years ago.

Interview: Jason at Live Real Now is a post from: Narrow Bridge

Related posts:

1. Interview: Free From Broke
2. Interview: Jacob at My Personal Finance Journey
3. The Real Secret Rich People Use To Be Rich

Welcome to the 321st edition of the Carnival of Personal finance. I had a lot of fun reading everyone’s submissions and added a few new folks to my reading list. I am excited to host this carnival for my first time. If you are new to Narrow Bridge Finance, be sure to check out some of my best posts and read about why you should listen to me.

This month I dealt with the single most bizarre experience of my life. I became friends with someone, started a company with him, and found out he was not who he claimed to be. It made me think about the millions of people who have been in similar situations. From Bernie Madoff to  Frank Abagnale, this week we are going to highlight some people who used finance for a very different purpose than the bloggers of today.

Image from Dreamworks film Catch Me if You Can

To begin, the con artist that makes fraud sound sexy. Frank Abangale Jr. was the subject of the popular film ‘Catch Me If You Can.” Based on the life of Abangle, Leonardo DiCaprio makes fraud look fun as he travels the world as an airline pilot, saves lives as a doctor, and eludes an FBI agent hot on his trail as he cashes fake checks and finds beautiful women.

Editor’s Picks:

Sustainable PF examines ways to make money online over four decades. Starting in the 1980s, SPF used innovative methods to create income streams. Some of them have died off and others are still applicable today.

The Financial Blogger thinks that debt is a good thing. How timely can an article be? As Fannie and Freddie are posting losses, the US Government is struggling with its own debt, and I am looking at buying a home, TFB takes a look at things from the other angle.

Mike, aka Oblivious Investor, reminds us that owning a bunch of mutual funds is not the same as diverse investing. Many mutual funds own the same stocks and some even own other mutual funds. Mike helps you dissect your portfolio to balance your investments.

Lindy at Minting Nickels made a few mistakes when she had her first baby. She shares her non-frugal moments in her post How We Didn’t Save Money with Our Babies.

Squirrelers has five easy steps to increase your savings. Sometimes it is good to get back to basics with personal finance.

Budgeting:

My blogging buddy Well Heeled has seven tips for buying an engagement ring at Costco. These are great tips when you are making such a big and important purchase.

Career:

Adam at Rabbit Funds continues a series on starting a home business. This post focuses on important accounting and marketing tasks that most bloggers and entrepreneurs can learn from.

Clint at Accumulating Money put together a list of different types of jobs for finance professionals. As a finance guy myself, I can attest to how important having a direction can be to your finance career.

Mike at Green Panda Tree House wants to help you make a plan to quit your job.

Control Your Cash reminds you that your time is worth something and you should give it a value. Do not give it away for free.

Bret at Hope to Prosper has the secret to success for working stiffs.

Your Life Their Life looks at George Costanza as a case study for how you can succeed at work.

Image via Wikipedia

Don’t forget the infamous Charles Ponzi. Yes, he is the guy Ponzi schemes are named after. Charles pioneered the genius pyramid marketing scheme that has cost so many people so much money. The Italian immigrant swindled people and governments by engaging in mail fraud and investment fraud.

Credit:

Jake at NerdWallet examines the different benefits of American Express cards. From Clear to Centurion, AmEx has a lot to offer, if you are willing to pay the fee.

Jeff from Good Financial Cents reminds you to avoid store credit cards. It is not worth it.

Janet at Credit, Eh thinks you should use income diversity as a insurance for your credit card payments.

Glen at Free From Broke found the best credit cards for college students.

Philip shares ten tips to stay out of credit card debt at Deliver Away Debt.

Debt:

Jeff at Sustainable Life Blog takes a look at what happened so far this year in his finances.

Cathy at Money Health Central has ideas for what to do after your debts are paid off.

Image from US Department of Justice

Bernie Madoff is a new edition to the list of fraudsters. Madoff admitted to operating the largest Ponzi Scheme in history. It is estimated that he cost investors $18 billion when his Manhattan investment firm went bust. He is currently serving a 150 year prison sentence. Sadly, many non-profits were dramatically impacted when Madoff’s house of cards collapsed.

Economy:

My University Money explains the implications of the rising Loonie compared to the US dollar and gives a brief FOREX lesson discussing why exchange rates vary.

Darwin from Darwin’s Money shares what the media did not regarding the debt ceiling vote.

Money Thinker has his own ideas for fixing the national debt.

Finance:

Money Beagle thinks having health insurance can be hazardous to your health. If you are considering a new addition to your family, this post has great insights.

Crystal shares her retirement checklist at Stupid Cents.

Image from US Department of Justice

Kenneth Lay is responsible for the largest corporate collapse from fraud in history. Lay lied to investors and cooked the books at Enron while being paid over $42 million per year to manage the company. The company with a $60 billion market cap with $100 billion annual revenue was exposed in October 2001 and now does not exist.

Frugality:

Kim at Blogging for Change noticed that her child’s school supplies were far more expensive than they needed to be, but most people just pay for convenience.

Free Money Finance takes a look at extreme couponing and wants to know your take.

Britney at TotallyMoney wonders if cost and expectation go hand in hand.

Hunter at Financially Consumed writes about caffeine addiction and how it impacts you, and your finances.

Glen at Parenting Family Money has 9 inexpensive ways to keep your kids entertained over summer vacation.

Jacob from My Personal Finance Journey has five great ways to reduce your car insurance.

Investing:

The Dividend Growth Investor looks at master limited partnerships and the implications of owning these investments.

The Div-Net takes a deep dive analysis into the high dividend yield of Kinder Morgan.

Intelligent Speculator things that Google might have a chance at social media after all. It is not going to happen automatically, but Google is taking steps in the right direction.

The Dividend Growth Stocks blog is on the never ending quest for the perfect dividend stock.

Matt the Dividend Monk will help you build a $150,000 portfolio by the time you are 30.

John at Stock Market Basics helps you discern the many gold ETFs you can purchase.

Ricky at Qwoter can help you decide on the best company for an IRA depending on your needs.

Growing Money has comments on CNBC’s recent list of 20 stocks about to pop.

Jim at the Retire Happy Blog has found the science of building a diversified investment plan.

John from Wallet Blog discusses the difference between money market funds and money market accounts.

Outlaw Finance gives tips on where to invest your money.

Image from ABC's Lost via Wikipedia

Okay, so this one was not a real guy, but I could not make a list of con artists without including James Ford, more commonly known as Sawyer. Sawyer taught the world about the “long con” on ABC’s series Lost. Sawyer also lived under the alias Jim LaFleur. Of course, Sawyer would not have been such a great con man if he had not learned from the man who stole his parent’s life savings.

Money Management:

Ricky at Qwoter discusses financial priorities. Learn about ideas ranging from the popular emergency fund to less known tips for building your own value.

Jen at Master the Art of Saving is taking an extreme couponing reality check. It is important to remember that behind the trendy “glamour” of feeding your family for twenty cents for four weeks that there are big costs. She also notes that guys (such as myself) may not appreciate your fifty boxes of tampons in the garage.

Anabelle at The Year of Shopping Detox wonders why so many financial experts and mean and yell-y. My personal opinion of Suze Orman is not so good, by the way.

Eric (good name!) at DollarVersity reminds us that bank account bonus offers are not always as good as advertised.

RJ at Gen Y Wealth thinks you do have enough willpower to make a difference in spending decisions. He also has strategies to make it easier on you.

MD at Studeneconomics explains why online banking is more popular than ever.

Canadian Finance Blog thinks it is time to start thinking like a wealthy person.

Jason from One Money Design asks the readers if they can live well on less than $40,000 per year.

Elizabeth reminds us to remain calm despite our volatile economic situation at Modern Gal.

Real Estate:

Nicole at Grumpy Rumblings shares her August mortgage update and the broken window hypothesis.

Sarah helps you find out how much your home is really worth at Money Under 30.

Saving:

Chris at Stumble Forward helps you set up a savings account for your child. This is an important step in your child’s financial education and future, so be sure to get them started young.

Mike at Cards Canada examines loyalty programs worth joining.

Ben at Money Smart Life has the best rental car deals for road trips.

Phil at PT Money, our great organizer for the upcoming financial bloggers conference, tells us how to save like a madman.

Other:

Boomer from Boomer & Echo is learning about caring for elderly parents and shares stories from difficult moments.

Junior at Consumer Boomer helps you decide whether funeral insurance is right for you.

Briana at Personal Dividends never travels without travel insurance. She lists of the major benefits of having your trip insured.

No Debt MBA helps you decide if admissions consulting is worth the cost.

Asking About Money interviewed No Debt MBA and had some interesting answers.

Next Week:

Next week the Carnival of Personal Finance will be hosted by Financial Uproar. You can submit your posts by visiting the Carnival of Personal Finance homepage.

Carnival of Personal Finance #321 – The Fraud Edition is a post from: Narrow Bridge

Related posts:

1. Carnival of Personal Finance – Oktoberfest Edition
2. Carnival of Personal Finance #270
3. This Week’s Carnival of Personal Finance

Result: -1,524 or -2.27%

I spent entirely too much money over the last month, but I spent it on really good stuff. Paid for my new Alienware laptop, bought a plane ticket to New York, and had a ton of fun. However, time to tighten things up a bit.

The stock market bombed over the last couple of weeks, thanks to the Republicans in the House of Representatives, and I have lost about $1,000 from my peak portfolio value. That is about 10%.

This month I plan to spend far less outside of $600 toward a plane ticket to LONDON, PARIS, and AMSTERDAM!

August 2011 Net Worth Update is a post from: Narrow Bridge

Related posts:

1. February 2011 Net Worth Update
2. December 2011 Net Worth Update
3. September 2011 Net Worth Update

From the age of 18, I have always been fascinated with the idea of starting and growing new businesses. Through my undergraduate college days, I started and successfully operated 1) an eBay selling business and 2) a pet waste removal service. I also attempted several network marketing gigs, but failed miserably in all of them. I most likely won’t be trying those again anytime soon!

At the same time that I was starting these different ventures, I also began reading any personal finance book that I could get my hands on. Several of the books that inspired me in my early days to learn more were David Bach’s “Automatic Millionaire” and Jeremy Siegel’s “Stocks for the Long Run.” I used the knowledge I gained from these books to begin investing my own money that I received from internships throughout college. By the time I finished school, I had been fully funding my Roth IRA for 2 years.

On a cold January day in 2010, I was reading a book about different businesses that could be started with little or no capital investment. Among the listing of businesses was the idea of starting your own blog. I knew the second that I read this page that writing a personal finance blog would be a perfect fit for me . Not only could I tie together two of my passions in life (personal finance and starting businesses), but it would also be contained in an omnipresent, searchable internet location that could make the information accessible to anyone in the world. Shortly after that day in January, I had my first several posts generated, and My Personal Finance Journey was born.

The biggest myth that I’ve encountered since I started blogging is that people think/are told that active management (individual stock selection by “experts”) in the investing world will produce superior long-term returns. I consistently hear of investors throwing money at individual stocks touted by stock newsletters, bought through “hot” actively managed mutual funds, or simply by the financial advisor at their local Merrill Lynch or Edward Jones office. However, the truth is that these “experts” are often little more than salespeople trying to make money. The majority of investing books and research studies I have read have found that 70-80% of actively managed money (so money invested in individual stocks) fails to beat the return of the overall market.

Because of all of this misinformation, I attempt to unravel this myth by researching and posting about the benefits of low-cost, passively managed index mutual funds. Examples of the posts I’ve written can be found at the link below.

Why I Sold Out of My Actively Managed Mutual Fund

Vanguard vs. Fidelity – Which Funds Are Better?

Index ETFs vs. Index Mutual Funds – Which Are Better?

This one is easy! The one tip I wish I knew was to open a Roth IRA investing account at an early age. You can open a Roth IRA as soon as you have earned income, even if it is for side-jobs you have during the summer.

By opening up a Roth IRA at age 18 with $2000 and assuming you earn the long term market return of 10% until retirement at age 65, the $2000 alone would be worth ~$176,000 at retirement. It’s brilliant how powerful compounding interest is!

The biggest personal finance lesson that I learned the hard way was to be cautious about how I issue payments to parties I do business with on the Internet. While this may seem obvious, it sure cost me some money!

Several years ago (prior to my blogging days), I was very involved with running an eBay wholesale selling business. One day back in 2005-2006, I received an unsolicited email from a seemingly nice man representing a supplier that sold Canon CCD cameras to people with wholesale licenses (state sales tax IDs). His back-story, company description, and website all seemed to check out as being legit, so I began working through the details of a potential deal for him to sell me several CCD cameras that I would resell on eBay.

My contact was very responsive to any and all questions I had during the negotiations of price, delivery, etc, and we finally decided on the price of $1500 per camera. The only suspicion that I had during the negotiation was that he insisted on payment being made through Western Union, instead of using PayPal or a credit card like I would have preferred. He mentioned some technicality about how their company receives payment that I believed at the time (but looking back on it, I obviously shouldn’t have gone for it). Anyhow, I agreed to send him the money for one camera via Western Union in advance of receiving the product. I went to the grocery store that afternoon to make the transfer, and it went through with no problems. I then rushed home to tell my contact to confirm receipt of the money.

Well, he received it all right! So much so that he felt that he never had to talk to me again! He disconnected the phone number I was using to reach him, didn’t answer any emails, and I never heard from him again. Now, granted that I was a little less Internet savvy back then than I am now, but I really didn’t do much to try to track him down. I remember thinking that I didn’t believe there was anything I could do. I looked around at Western Union’s website, and couldn’t see any refund policies like the ones that credit cards or PayPal has. And, ultimately, I never saw that money (or the camera) again.

Outside of blogging, there have been two changes I have made to my financial life that I believe had the most significant impact on my net worth and ability to manage money.

The first change is that whenever I move to  a new location, I track my spending for one month to determine how my expenses have changed compared to where I lived previously. Doing this allows me to 1) put together a budget for the various categories of spending (entertainment, transportation, housing, etc) and more importantly, 2) know how much money should be left over at the end of the month that I can set aside for cash reserves or retirement account savings.

The second change that I’ve made is that I now track my net worth and asset allocation percentages once per month. This tracking exercise forces me to be objective in maintaining my asset allocation percentage targets (within a +/- 5% band) through rebalancing, regardless of what movements the markets has made. For example, if the world equity markets have gone up significantly, rebalancing forces me to sell some of my holdings and buy fixed income shares to maintain alignment with my targets.

Interview: Jacob at My Personal Finance Journey is a post from: Narrow Bridge

Related posts:

1. Finance Blogger Interview – Evan at My Journey to Millions
2. Carnival of Personal Finance #321 – The Fraud Edition
3. Interview: Jason at Live Real Now

Today I had the opportunity to ask Glen at Free From Broke a few questions about his personal finance goals and history. Free From Broke is a top quality personal finance site. It chronicles a journey from credit card debt to being, as the name implies, a lifestyle free from debts and worries.

Like many, I was neck-deep in credit card debt.  On top of that I was living paycheck-to-paycheck with just about no savings and nothing saved for retirement.  I know something had to change so I slowly started to educate myself and make changes to my finances and debt.  I was able, with the help of moving back with my folks, to eliminate my credit card debt and start on the track to savings and retirement.

In reading up on personal finances I found Get Rich Slowly.  Loved it!  What J.D. was writing there rung true to my life.  After a bit, I thought I might be able to contribute my experiences and help people out so I started up Free From Broke.

Hmm, does having kids count?  It was a surprise to actually see how much those little rugrats actually cost (I love each of our three dearly).  Maybe another surprise, a good one, was how well my wife and I integrate our finances.  Not that I was worried we wouldn’t mesh, it’s just pleasant to know that we trust each other fully and have each other’s backs.  We’ve been able to save such that we were able to buy a house last year with close to 25% down.  Though money is tight, it hasn’t been as bad as we thought it would be.  We’re making it happen!

As for financial advice to the kids, don’t be a slave to money.  Use, and save, money well and it will be a great liberating tool.  But if you become a slave to it, buying things to live up to some imagined expectation and/or building up a lot of debt, your life decisions will be ruled by how you can pay things back, not by financial freedom.  Hope that makes sense.

Yeah, that was a BIG decision moving back with the ‘rents.  I didn’t really use any tools such as budgeting tools, but what I did utilize was making automatic savings into my online savings account and my 401(k).  Making payments automatic meant they were put away before I could use the money.  I loved seeing my account grow, even slowly.

For someone starting on a financial overhaul I have this to say – Anything is possible!  If your goal is to get out of debt it CAN be done.  It may take some time and you might take a couple of steps back occasionally, but stick to it and you will meet your goals.  Personal finance is a process that isn’t complete overnight.  It takes time and your financial plans will change over time.

Wow, good question.  Maybe it’s that, just like small savings add up over time, so does small spending.  When I was in debt, there were a couple of big things I spent on, but most of it was small like a CD bought here and there.  Over time, that spending adds up.  And when that spending is done on a credit card that you aren’t paying off every month, you are adding interest as well.  It’s easy to find yourself drowning in debt from consistent, small drops.

Consciousness.  Knowing where my money was going and realizing how much I could actually spend.  I think most personal finance issues aren’t simply a case of not having enough money.  People with six-figure salaries goes broke, even millionaires.  I think it’s when we aren’t conscious of our money and what we spend on and why that we get into financial trouble.  You need to respect your money and be accountable for your financial actions.  I see so many people pretend that things will just turn out ok but they aren’t willing to be responsible and realize what their financial situation is.

When I started making changes to my finances, it’s because I told myself things had to change.  No one was going to make that change for me.

Interview: Free From Broke is a post from: Narrow Bridge

Related posts:

1. Check Out My Guest Post at Free From Broke
2. Interview: Jason at Live Real Now
3. Interview: Jacob at My Personal Finance Journey

This guest post was written by Jason, the proprietor of Live Real, Now, a blog focused on spending–and saving–in the real world. It was written for a blog swap run by the Yakezie personal finance blog network to answer the question “What motivates you to be financially responsible?” You can read my post over at his blog: Living The High Life.

This may not be the most original motivation, but I am financially motivated by my family.  Before I had kids, I didn’t care much about money or stuff.   My goal was to sell everything I owned and backpack Europe.   Yeah, it’s a bit cliché, but that’s the way it is.  I  was also considering trying to live out of saddlebags while touring the country 1000 cc’s at a time.

Now, I’ve got so many other considerations.  Four, to be exact.   A wife and three kids certainly change your perspective.   If it doesn’t, you’ve got flaws I can’t help you with.

When my family started, it was a huge wake-up call.   Suddenly, I had responsibilities (cue scary music).  Overnight, I had things to care about that didn’t involve a party, or instant gratification, or, well, me.   Merlin the Stork floated down, waved a wand and Poof! I was a grown-up.   This may not sound like much of a shock, but my wife and I had baby #1 when we were 20.   Adulthood was still pretty new to us, and suddenly we’re parents?

As a grown-up, with three precious little monsters dependent on me for absolutely everything, I had to start worrying about their security.  This was more than just keeping them physically safe.   I’ve had to manage their emotional health, their physical needs, and their entertainment.   They rely on me (and my wife!) for everything.    How could I live with myself if I couldn’t put food on the table and a roof over their heads?  Winter boots?  Clothes without holes?   Visits to the doctor?   Have you ever noticed how much kids cost, even without considering the Japanese fad games and Barbie dreamhouses?  Having a kid is like cutting a hole in your wallet and holding it over a blender nestled comfortably in a roaring fire fueled by napalm.

Then, after I’ve got them clothed, fed, sheltered, and entertained, I have to teach them how to be real people.   I’m of the opinion that children in their natural state are little more than wild animals.  Generally cuter, but that’s about it.  It’s a parent’s job to train that ravenous little beast into an acceptable, successful person.  Part of that consists of teaching the little brats how to start paying for their own clothes, food, shelter, and entertainment, and how to manage that without becoming a drain on society.   Productivity and success can be defined a thousand different ways, but none of them include letting other people pay your way or borrowing money you have no intention or means of repaying.  Ultimately, being an adult–being a successful part of society–involves recognizing your responsibilities and living up to them.

Caring for, providing for, and teaching my children the things I know provides me with an irreplaceable opportunity to watch them grow and learn, while giving me a chance to steer that growth.   It is, without a doubt, the best, most satisfying, and most difficult thing I have ever done.  The pleasure I get from raising my kids reinforces my desire to become the best person I can be.

Really, I just want to be the guy my kids think I am.

Please take a moment to visit Jason’s site, Live Real, Now.

Monsters is a post from: Narrow Bridge

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photo © 2011 Justin Houk | more info (via: Wylio)Have you ever wondered why you walk into a store and no products have an even dollar cost? Candy costs .99 cents. A shirt costs 9.99. A TV costs 379.99. Have you ever wondered why Target puts “low price” markers on items that are not for sale? How about the signs that tell you how much you are “saving” when you spend money on a product?

Most of you are aware of these marketing techniques. Some savvy shoppers are astute and look past them. However, the typical consumer falls prey to these techniques regularly. It is important to understand how, and why, marketers use the strategies to increase sales.

Anchoring

Anchoring is a technique where marketers compare the price of their product to a similar, but more expensive, product. You can see this in print, television, and in store advertising.

The example that comes to mind when I think of anchoring is the loud “as seen on TV” type ads. A guy is yelling at you and says, “Similar products sell for thirty, forty, or even fifty dollars! But if you order now, you can get this cheap piece of crap for only $19.99!”

The human mind has an interesting interaction with that information. Simply put, you subconsciously believe that the product is worth upwards of $30, but you can “get a good deal” by purchasing it for less than $20. That is price anchoring.

Rebates, Sales, and Discounts

If you have ever opened an ad for a computer store, you have probably noticed that you can buy a computer for $499.99, but you have to spend $599.99 and mail in for a $100 rebate. So what is the product worth? I would say $499.99. However, they make it feel like you are “saving” $100 if you buy it.

Unless you really, really needed a new computer, you didn’t save a penny. In fact, you are leaving the store $500 poorer. But you feel really good because you “saved” $100.

This is another prominent marketing technique. No company would sell a product for a loss (there are a few exceptions), so if you buy it for $500, they are still making a profit. If you buy it for $600, they are making an extra $100. So did you save anything by buying it for $100 less? No, you just spent less. However, you still spent. The only way to save is not to buy at all.

Deceptive Sale Prices

I once saw a comedian who told us a story about going to the local drug store. He found quite a bargain; buy one for 50 cents or two for a dollar!

I have seen that one used at grocery stores and big box retailers to deceive you into buying more of a product than you really need. Just last week I walked into the local grocery store and saw that Cadburry Cream Eggs were on sale. You can get 3 for $2.79. In small text underneath, it said you could buy one for .93 cents. No deal there. However, without thinking or doing the math you might be tempted to take three.

At Target, the shelf advertising is notorious for saying “low price.” What does low price mean? Even though the marker looks the same as the sale tags, it means nothing at all. They are just making it look like it is on sale so it will stick out and you will buy one without thinking.

The .99 Fallacy

I couldn’t write a post about marketing psychology and not mention this one. Why does a product cost $4.99 instead of $5? Because $5 sounds like $5, and $4.99 sounds like $4. A TV for $389.99 sounds like $380 and a TV for $400 sounds like a hell of a lot more.

Like anchoring, marketers use this technique to bring the price down in your mind. Just be aware that the penny price difference brings in a lot of sales. Sure, some people are too smart to fall for it, but a lot of people are not. Even I have been guilty of justifying a purchase by rounding down generously.

Be Aware and Alert When Spending Money

At the end of the day, the job of a marketer is to drive sales. I do not believe that marketing is evil. It has its place in society and allows for businesses to grow, create jobs, fuel the economy, and bring great products to consumers. However, you have to be aware of marketing strategies and know how to react when presented with a deal that sounds too good to be true.

Have you ever been caught up in a marketing technique and later regretted it? Please share in the comments.

Anchoring and other Marketing Techniques Designed to Screw You is a post from: Narrow Bridge

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