October 2013

Here is October’s review of blog posts. We hope you find something you enjoy!

  • U.S. News MoneyWhy 65 Is Too Young to Retire – There is no rule that says you have to be retired by 65, and in fact, for many, 65 may be too young to retire.

Please let us know if you have a favorite financial blog that you think we should be reading.


  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.

Often times, renting before buying isn’t an option. You don’t always have the ability to do so. Many times you have to rely on your own best judgment, or the reviews others have given on a product.

Although people may not necessarily think of it, renting before buying a house may be an option. Not renting the house you will likely end up buying of course, but you may be able to test the waters first, especially if you are making a big change.

What do we mean by this? A big change can be a move to another city or state, extreme downsizing or scaling up, etc. Purchasing a house is a big commitment. If you are making a big change from what you’re used to, jumping right in may not be the best idea. If you buy and decide you’re unhappy with the change, it’s difficult, time-consuming, and often financially infeasible to move again.

However, you may want to look into testing the waters first. If you are moving to a new city or state that you are unfamiliar with, rent for a while, either an apartment or a house, to get to know the area. You may find there are neighborhoods you prefer, or others you decide you never would want to live in. If you buy right away, you may end up in one of those unwanted areas before you give yourself a chance to find out.

For extreme downsizing or scaling up in size, you will probably have more limited renting options. Holly Johnson over at Get Rich Slowly tells about her own experience in downsizing, and why she and her family decided to rent a house before buying in the post “The Small House Experiment – Part 1.”

Johnson discusses selling her home too quickly, and after searching for an equivalent sized home closer to her husband’s new job, they decided maybe it was time for a change. Maybe they didn’t need so much space for their family. Since they had run out of time to get out of their current home, they began renting a home more than 1,000 square feet smaller than their previous home. This “experiment” will tell them how they handle living in a smaller space and will allow them to decide if it’s what they really want to buy.

Obviously, this may not be as easy of an option as renting a temporary apartment in a new city. There may not be a rental home with the size or features available where you are looking to move. Or maybe the place you are looking to rent wants too long-term a commitment for your plan. But it may make sense to look, especially if you are having any doubts about what kind of house you are looking to buy.

Renting before buying a home isn’t necessary for everyone. And sometimes it doesn’t make financial sense or isn’t an available option. But if you find that it is something you might want to do, make sure to do your homework about your rental and not get involved in something too rigid (like signing a one year, hard to break lease when you plan on buying your home in three to four months).


  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.

This week, over at U.S. News – Money, there was a post by Sabah Karimi that we’d like to talk about today: “6 Worst Money Mistakes You Can Make In Your 20s.”

Your twenties are a very important time in your life. It’s the time where many people are finishing up their schooling and starting their careers. Some may be settling down, getting married, and starting a family.

Unfortunately, we often see people in their twenties neglecting their finances, to the detriment of both their current account balances, and their future retirement. Maybe it’s because they were never taught how to handle money responsibly. Maybe they just have the “I’ll deal with it later” mentality. Whatever the reason, there are plenty of mistakes people in the twenties make with their money.

Karimi gives her list of top mistakes:

  • “Fueling an overspending habit. Breaking an overspending habit during your 20s can prevent serious money problems later in life. Become a mindful spender and keep track of all your purchases.” – Overspending can be a dangerous habit at any age, and a habit you’ll likely carry over into your later years unless you break yourself of it when you are young.
  • “Living without a budget. Knowing how much it costs to live your lifestyle and what expenses you are responsible for every month can help you make better financial decisions throughout your 20s. Update your budget at least once a month, and track your weekly expenditures within the budget so you have a clear picture of where your money is going every month. Review your budget regularly to cut out extra expenses and contribute more toward your savings account when possible.” – If you have been following us for any length of time, you know we are firm believers in budgeting. Not only is it helpful for expense tracking, it can help you spot areas you may be able to save money in that you never would have seen before.
  • “Neglecting student loan repayment and forgiveness programs. About 1.6 million people are eligible to cap their monthly student loan payment at 10 percent of their income by enrolling in appropriate income-based repayment programs. In addition to income-based programs, there are several loan deferment and forgiveness programs designed to make your student loan payments as manageable as possible.” – It’s unfortunate that so many young adults have to start their careers (often with lower than ideal wages) saddled with so much debt. Making those student loan payments when you’re just starting out and not even sure where the money to pay for your rent is going to come from can be daunting. Be sure to look into what your options may be.
  • “Relying on credit cards to fill income gaps. If you’re counting on credit cards to pay for bills or take care of expenses you forgot to budget for, you will be setting yourself up for huge debt problems. Learn to live within your means by taking a close look at your finances with a realistic budget.” – Accurate budgeting can become important for this very reason. There will likely be times when using a credit card is unavoidable (i.e. for emergencies while you work on building up an emergency fund), but relying on them every month for your regular expenses (or to fuel an overspending habit), can cost you thousands of extra dollars in interest and years to repay. It’s just not worth the hassle.
  • “Living without health insurance. Medical bills are one of the biggest causes of bankruptcy in America. No matter how healthy you are, you must be prepared financially for a medical emergency.” – Obviously, health insurance is a major hot topic in the U.S. right now. Regardless of the upheaval, if you are lucky enough to find a job where health insurance is offered as part of your benefits, consider taking advantage. Not everyone has the opportunity, and even if it’s expensive, it can be a good opportunity.
  • “Trying to keep up with the Joneses. […] It’s easy to feel financially insecure in today’s social media landscape, where every major purchase is announced on Facebook and photos from expensive vacations are shared on Instagram. Don’t get lured into that spending frenzy. Your real friends will not care about what kind of cars you drive or whether you have the latest gadget. Figure out your priorities, and don’t let other people dictate your financial future.” – This is another problem that affects people of all ages. Feeling inadequate can cause people to make mistakes that don’t seem like such at the time. It can often fuel an overspending habit, and can cause you to make purchases that you could regret later.

Your twenties can be a time of new beginnings. It can be exciting and stressful at the same time. Don’t compound your stress by making these financial mistakes that could affect the rest of your life.


  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.

Last week, over at U.S. News – Money, there was a post by David Ning that we’d like to talk about today: “Habits That Can Ruin Your Retirement.”

Everyone has bad habits. Often we know what our bad habits are, but sometimes we are unaware that we’re even doing them. Ning’s list may be some habits you have picked up without even being aware of it. Or if you’re aware, you may not realize your habit may have a negative effect on your retirement.

  • “Treating retirement as the destination rather than the beginning of another part of life.” For many people, retirement can last for decades. If you think of retirement as being the finish line, what about those thirty years that are going to come after? What do you consider that time of your life if retirement was the destination? If you don’t view your retirement as another stage of life to be planned and lived to the fullest, you more than likely are going to struggle greatly once you reach your so called finish line and realize there is much more to it.
  • “Believing retirement will solve all your problems.”If you have a job you hate, then it’s easy to think that if you could just retire, everything would be better. But this is most often not the case. While your job is an important part of your life, you also have many other aspects that will affect your retirement: your spouse, family, lifestyle, health, hobbies, etc. What’s going on with those aspects? How is your relationship with your spouse? Do you have hobbies you enjoy? Do you take time to take care of your health? Retiring from that despised job is not going to affect these other areas. If you have problems elsewhere, retirement won’t fix them, it actually might make them worse.
  • “Anchoring a spending number against your previous salary.” ­– Planning your retirement based on a percentage of your salary (often 70% – 80%) is a common practice. This number is often used as a benchmark for how much retirement income you will need (therefore how big your portfolio needs to be). It can be very useful in helping you decide how much you need to save while you are working to get to that income. But it will do no good for you to plan your income this way and ignore your expenses. Reviewing your expenses and building a retirement budget that will take into account your drop in income is imperative to a successful retirement. If you plan on living on 70% of your former salary, but wait until you retire to discover you were spending 80% of your former salary, you’re in for a major headache.
  • “Avoiding investment risks.” – We don’t often talk about investments here, and we won’t today, other than to say we’ve seen people approaching and entering retirement that are so averse to potentially losing money, they hoard their portfolio in cash. If you consider your money needs to stretch over decades, this is likely not the best way to handle your investments (just because your balance is not eroding through investment loss doesn’t mean your portfolio will be worth as much in 10 years as it is now).
  • “Stop being active.” Relaxation is one of the things many retirees probably look forward to. But be careful not to go too far. If you allow yourself to become too inactive, you’ll likely face a decrease in your health and enjoyment of your retirement years.

Retirement should be one of your main goals. It lasts too long and can cause too much stress if unplanned for.


  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.