Personal Finance

Lets face it: cash isn’t going anywhere soon. Despite many attempts by the mobile payments industry to wean consumers off their trusted paper currency, cash hasn’t shown signs of surrendering. On the other hand, cash registers are more welcome to change as major companies give makeovers to these clunky machines.Square, known for its mobile card reader and mobile wallet, has released the Square Stand to complement its Square Register mobile application. Essentially, merchants can put their iPads in the Square Stand — featuring a design that is unmistakably inspired by Apple — to create a point of sale system that is “elegant, fast, affordable, and easy to use,” as Square co-founder and CEO Jack Dorsey puts it. The stand also has a built-in card reader and it can be connected to a cash drawer. PayPal joins Square in expediting the evolution of cash registers. To boost adoption of the company’s own point-of-sale system, called PayPal Here, it launched the Cash for Registers program, which waives transactions fees for the remainder of 2013 when merchants drop their old cash registers. PayPal doesn’t offer an equivalent of the Square Stand, but third-party products are capable of turning the PayPal Here app (on the iPad), paired with the PayPal mobile card reader, into a full-fledged checkout terminal. Although these new-age cash registers have slimmed down, consumers will not see a drastic change in the checkout experience. Cards will be swiped and cash will be accepted as usual. Meanwhile, the two companies are pushing cashless — and even cardless — transactions. Square has a mobile wallet that is linked to users’ debit and credit card. When users check in (with a mobile device) to a location that accepts Square Wallet, users simply say their name to make a payment. At participating locations, PayPal lets users pay for purchases by entering their account-linked phone number and PIN. No cash or cards are necessary. Related Stories: How Big Banks Are Overhauling the Branch Experience Spring 2013: The Top 5 Cash Back Credit Cards 8 Incredible Ways Technology Has Changed Banking Forever The Cash Registers of the Future

Question from our reader:“If I take out a reverse mortgage for $200,000 on a house valued at $380,000 and pay it back in full in six months and close the loan what will it cost me besides the initial fees of getting it in the first place? Also, I am having trouble getting insurance due to two previous claims. Can the lender provide insurance for me?”A Reverse Mortgage (Home Equity Conversion Mortgage) can be repaid at any time with no penalty. You would owe the balance on the loan at that time which would include all the money you borrowed, any fees that you rolled into the loan at the time you started the loan.The hecm Saver Loan would have much lower start-up costs due to the fact that the Up-Front Mortgage Insurance Premium would be just $38.00 instead of $7,600.Interest that has accrued on the balance for that time and mortgage insurance renewal premiums of 1.25% of the outstanding balance for the time that the funds remained outstanding.In all, with today’s low rates, not much interest would accrue in just 6 months but a Home Equity Line of Credit would probably be a better bet if you only planned to have the loan open for such a short period.Regards to Homeowners InsuranceThe reverse mortgage lender will require you to have acceptable insurance on the home as a condition of the loan. The lender will not supply the insurance and lenders will require a full explanation why a home was not covered previously.With claims issues, as long as you have the situations corrected that caused the insurance problems you should be OK, but lenders and HUD do not want to see borrowers who fail to pay their insurance or their taxes so they will require verification on the reasons for non-coverage as well as verification that the home is now covered.Resources: www.allrmc.com BlogCFPB

If you love the show Arrested Development as much as I do, you’ve already cleared your schedule on May 26 when the show returns on Netflix for a fourth season featuring 15 simultaneously released episodes. Frozen bananas? Check. Kidding aside, underneath the Bluth family’s wacky antics is a theme all-too-important to financial blogs that came [...]The post 10 Things Arrested Development Taught Us About Money appeared first on Money Under 30. If you are reading this on any other Website, that site stole Money Under 30's original, copyrighted content.

When Sarah and I were first married, we maintained the two separate checking accounts that we had when we were single. Mostly, we kept it this way out of convenience, as we both were in the routine of paying monthly bills. To keep things straightforward, we divided up the shared monthly bills. We were each responsible for our own bills – the loan on the car we individually drove to work, our own student loans, and so on. The rest were divided between us based on our income level. We stuck with this format through our years of overspending as well as through the first few years of our financial turnaround. In fact, we only merged our accounts in 2008, well after our financial situation had strongly rebounded. During the period where we overspent, it was good that we had separate accounts. If our accounts were combined, I am confident we would have overdrafted regularly, something we managed to avoid with separate accounts. Our mistakes were related to not having shared goals and spending for today. However, when we started to get our financial house in order, we combined our accounts. The reason is simple. It became really clear to both of us that we are both affected by every financial move either one of us makes. If Sarah spends $20, then that’s $20 less available to me over the long run. I might not see the impact of that $20 spent immediately, but I will see it eventually in some fashion, either in terms of having less in our shared savings or having to cover a bill or an expense. The reverse is true – if I spend $20, then that’s $20 less that Sarah has. In fact, this is the approach I would suggest for any couple trying to figure out their finances. If you’re in a position where you both overspend and you’re both individually struggling to keep the bills paid, a shared account can be a real problem. It just gives you both a tool with which to blame the other for the financial problems without taking them upon your own shoulders. If you can look at your account statement and see all of the withdrawals your partner made, it becomes very easy to just blame your partner for everything. It gives you a crutch with which you can avoid taking on personal responsibility for the situation. Keeping your accounts separate means that you have to take responsibility for your own mistakes. You can’t blame anyone else for not having enough money in your account. You made the choices. When you’ve reached the point where you can both admit that you have a problem and are working to correct it and you can begin to see those changes reflected in your checking account, merging accounts makes a great deal of sense. When accounts are merged, the responsibility is shared. Your spending decisions affect your partner more directly than ever, so you have to be more responsible than ever before. If you’re in a position where you’re spending more than you should out of your own individual account, you’re not ready yet. You’re still not responsible for your own decisions, let alone those of your partner. How will you know when that time comes? The best sign is when you’re taking care of your own business successfully. Is your balance growing each month, rather than persisting in a paycheck-to-paycheck state? If your partner’s money is tight, are you willing and able to help your partner out? What about individual spending freedom? Our method of doing this is to simply have an informal “allowance” of free spending for both of us each month. Sarah buys things and I don’t really question it because I know she keeps a cap on the spending. Sharing a checking account is a vital step in becoming more responsible for the financial well-being of your partner. If you’re not ready for that responsibility – and we weren’t when we were first married – then you shouldn’t have a merged account. It will end up

Sell too soon. Buy too early. Sound familiar? Welcome to the club. I am the King of making suboptimal trades due to fear and greed. Whenever I’m about to make a trade, I begin to have delusions thinking I’m smarter than the market. After all, I need to have conviction if I’m going to put tens or hundreds of thousands of dollars to work. When my bid gets lifted or my offer gets hit, I’ve already made a mistake. Why? Because there are two sides to every trade and in that brief transactional moment the other side is usually always getting the better deal. For example, let’s say you are sell a stock with a limit at $10 a share. As soon as you sell, the stock will probably move higher with momentum. You start cursing yourself for not holding out a little while longer. If you’re looking at buying a stock that’s been beaten up, chances are high that if your buy order gets filled the stock will continue to move lower due to an imbalance in sell orders. You then kick yourself for not being a little bit more patient to buyat a more favorable price. You can enter an order way below the existing share price, but nobody will be willing to sell. If you focus on getting the best price possible when you’re building a position, it’s very easy to get frustrated with the volatility of the markets. If the stock performs well after purchase over the long run, your purchase of the day doesn’t really matter. However, I’m focused on the short run and the long run. A lot of money is made or lost on the initial entry price. Despite the stock market enabling me to buy my first property by 26, I’m going to highlight why I actually dislike investing in the stock market even if I’m making money. STOCK MARKET INVESTORS / TRADERS BEWARE * Too in tune with the markets. I enjoy waking up an hour before the stock market open at 5:30am to digest every single piece of economic, political, and company specific news out there. My brain immediately comes up with a top down expectation of whether the market will go up or down and by how much. I then draw expectations for where my specific stock will trade. All of this dedication to knowledge becomes very defeating if the markets move against my expectations due to a scandal, an earnings miss, a flash crash, an impromptu Federal Reserve QE announcement, a terrorist attack, and so forth. The exogenous variables are endless and often times gut-wrenching. It’s often better to just be aloof. * The markets are irrational with deep pockets. There’s a great saying that the stock market can remain irrational longer than you can remain solvent. In other words, Apple stock might eventually go to $1,000 a share, but in the meantime the stock can also drop by 40% down to $385 a share from $705 and wipe you out, especially if you are on margin. The same thing goes for the stock market implosion in 2008-2009. So many people’s retirement savings that took decades to build were obliterated in a matter of months. Someone was foolish enough to sell when the Dow was below 7,000 and the S&P 500 was below 700, otherwise we never would have gotten to such depressed levels in the first place. * The markets are not a level playing field. If you are big and powerful, you get better access and better insights. There’s a reason why traders do so well at big investment banks and fail when they go start their own fund. When you are a Wall Street trader, you see both sides of the trade. If you know there’s a massive sell order worth $5 billion dollars of Google stock from Fidelity at $900 a share, you’re probably not going to be buying Google stock as aggressively for your prop desk or your client. In fact, you’d probably look to sell first before Fidelity’s order really depresses the stock. Asymmetric information is rampant in the stock markets. Retail investors get the short end of the stick. At the same time, active mone

Chances are you didn’t go to college in a big city. Many of us probably went to schools in either smaller towns or at least not bustling metropolises. But if after graduation you didn’t move to a major city to find a job, you probably considered it. Big cities have lots of job opportunities and so that’s perhaps the best place to look. But do the statistics agree with that assumption? First, let’s look at what the odds are you’ll actually find a job anywhere that requires a college degree, or perhaps even better, requires your major. Most of the time, whether you major in art or zoology, your choice of major probably indicates a desired career path. Take a look at the charts below that show a job match based on having a college degree or college major. That’s kind of depressing. Only 62% of college graduates are working in jobs that even need a degree. And only about 1/4 people are working in the field they majored in. Now let’s go back to the original question. Does moving to a big city increase your chances of getting a job matching degree or major? It certainly seems logical. Even from an economic standpoint. Think about how a labor market works. Let’s imagine two towns. One town, Risa, has about 200k people and a diverse and stable economy that at any given time has 2,500 job openings and 15,000 people looking for jobs (employed and unemployed). The other is Vertiform City, a massive center of commerce with 20 million people, 250k job openings, and 1.5 million looking for work. The ratios are the same. But Vertiform City has more job openings than Risa does people. This means there’s a greater diversity of jobs and applicants. If there’s any efficiency in the job market then Vertiform City has to be better at matching job applicants to their skills and education. So let’s see how they stack up. Okay we’re seeing something here. There is greater chance of finding a job requiring a college degree in a big city. The difference is similar in a match based on major. But the difference isn’t very wide in either scenario. You could move to Vertiform City and have a better chance of getting a job in your field, but when you consider other factors like cost of living the balance of whether it’s worth it may shift. One thing not accounted for here is the diversity of jobs available to larger populations. If you major in information technology you could easily find a job in Risa doing something related to your major. But it might not be exactly what you want. Vertiform City with its many diverse industries could offer a very specific area of focus related to your major. In the end, the differences aren’t as wide as you might expect. I would partially blame this on the inefficiency in which the labor market works today. Smaller towns like Risa don’t offer as much in diversity of skillset without searching outside the city limits. But a larger city could really improve things without having to import talent with an efficient labor market. As technology becomes a bigger part of the job search, I suspect smaller towns could better match degrees and skills since they don’t have the post the job in the local newspaper. Perhaps this gap was wider 20 years ago. It’s also possible the numbers were higher back then too. Be sure to read the study summary that produced this data. Included is a chart showing the distribution of jobs across many potential populations. You really have to go to the biggest cities to see much benefit at all. Read: Do Big Cities Help College Graduates Find Better Jobs? (NY Fed) Related posts: Time For A New Degree Weak Links: Job Loss Headlines A Look At How Our Job Situation Related posts brought to you by Yet Another Related Posts Plugin.

If you have looked at your 401(k) investment options recently, chances are you have noticed a list of funds that all have similar names with the exception of a year at the end of each. These “Target Date” funds were built as an all encompassing investment to help you plan for your retirement all in one product. These funds were allocated in a way where you would receive full diversification of both equities and fixed income, with maybe a hint of other diversifiers thrown in the mix. As you get closer to that “target date,” the fund gets more conservative. This sounds great in theory, but are you really getting the best option for your nest egg with this? All in the Family The way these mutual funds are built is by using the mutual funds in the fund family arsenal. For example, in a Fidelity Freedom Fund, you will find holdings such as Fidelity Series High Income or Fidelity Advisor Large Cap. Franklin Templeton investors will find items like Franklin Rising Dividends and Templeton Global Bond. You get the bad with the good with these “basket” funds. For every four and five-star fund you have access to, there is a dog that is limping along, dragging down your return. Apples to Apples? These funds can be very difficult to compare to each other. Investors in the 35-40 year range who are looking at a retirement age of 70, would look at a target date fund with a 2045. We looked at four different versions of these funds and have found glaring differences. First, in terms of allocation, there was a difference in equities in as much as 10%. The most aggressive was the American Funds version with 84%, of which 30% was international. Franklin Templeton and JP Morgan both came in at 78% with the first one having 28% international exposure and the second 31%. The least aggressive of the four was Fidelity at 74%. Of that, 31% was international. Looking at the fixed income side of the fund also showed a wide range of differences. While Fidelity had the least amount of equity, it pushed the envelope on the debt side with almost 70% having a credit rating of BBB or lower. Compare that to American Funds with just over 10%. The expenses of the funds varied as well. Using the A-shares, there was a difference in the Gross Expense Ratio of almost a full percent in these funds. These differences make it very difficult to compare them to each other. The Payoff? Ultimately, the big question is do these funds deliver? Take a look at the stats below (as of 4/30/2013): It may very well be that these target date funds are the only options in your retirement accounts. However, if they are not, you may be best served to look elsewhere for your investing needs. At the very least, look under the hood of these mutual funds and see how they are really doing. There are plenty of free resources out there for you to learn about these funds before you invest in them. What are your thoughts on target date funds? Leave a comment! The post Are Target Date Funds Worthy of Your Portfolio? appeared first on Money Smart Life.

Note: This is a post from Joan Otto, Man Vs. Debt community manager. Read more about Joan. Buy it now. Pay now. NOW NOW NOW NOW NOW. Sometimes, I feel like the internet is screaming at me like a particularly insistent 2-year-old. And like most insistent 2-year-olds, sometimes, it feels like the easiest thing to do is to give in to the screaming beast… even if it doesn’t have the best result in the long run. Yep, I’m talking about online shopping. Our Instant-Gratification Society Online shopping seems great. I can have anything in the world sent to my home – no matter how obscure! I don’t even have to pay for shipping, in a ton of cases! The prices are better than they are in retail stores! These are all true… except there’s a problem. Our instant-gratification society is taking the “buy it now” hype to an extreme. We’ve made consuming so easy that we do it without even thinking. You know the stories… people who’ve plunked down hundreds to keep playing their favorite Facebook or mobile games – but have done it 99 cents at a time. People who order 7 pairs of shoes from an online retailer that offers free returns, intending to send back six and keep one but not always following through. People who buy horses and other livestock in online auctions across the country - living things purchased site-unseen. And again, none of these things are evil, wicked, mean or nasty in and of themselves. But I worry about a culture in which it’s becoming commonplace to drop $700 in a click. Cash Vs. Debit Vs. Credit This is actually something we talk about in our You Vs. Debt classes, and it’s one of Baker’s key tips in his list of 24 Quick Actions You Can Do Today That Can Change Your Financial Life Forever: Spend cash whenever possible. There are any number of websites that will walk you through the ins and outs of budgeting, of envelope systems, and of the complex psychology of money. But I think we often overlook the simplest reasons this advice is so powerful. 1. Cash is harder to get. Even a debit card is easy – it’s (generally) in your wallet or purse, on your person. Credit cards tend to be much the same way. To go to the ATM and get cash, even if it’s literally next door, is harder! And, in terms of money, harder to get is a good thing! 2. Cash is harder to part with. We are a visually driven species. When I see a pile of money, I know that I have X dollars, whatever that may be. When I physically see that money dwindling, I know I have less of it. Big pile of money, little pile of money. And handing over $700 of my hard-earned cash, in bills, to someone in a store? YIKES. You can bet that’ll take some thought! But I could easily drop $700 online for an iPhone… in a click. Almost as an accident. And while I think that I think about my purchases, online or otherwise, the fact is, it is so much easier for me to spend online than it is in person because I don’t have to think very much at all. Retailers want it this way, of course! They love the idea that you’ll buy now and think later (if ever). Regrets? Well, you could return it. But they’re counting on the fact that most people don’t. Spending cash takes planning. It takes thought. And thought is a great thing to have where your finances are concerned. I’m curious what you think: Do you spend differently online than you would in a brick-and-mortar store? Why do you think so – or why not? We’d love to hear your comments!

There’s a lot to be said for paying off your debt and living debt free. But should you really work hard to pay off all of your debt right now? High Interest Consumer Debt vs. Other Debt Too often, we lump all debt together and call it “bad.” And while there is an argument that there’s no such thing as good debt, the truth is that some debt is worse than other debt. High interest consumer debt is the worst type of debt. This is money owed on things that we consume — things that don’t retain value and don’t provide the hope of income or some type of solid return later. Not only do you pay for something that won’t have the same value a year from now (or that might be totally gone a year from now), but you also pay a high rate of interest on it. Credit cards are a good example of this, since credit card debt often (but not always) results from purchases made for consumer items like clothes and electronics. High interest consumer debt doesn’t offer you the chance to build assets, and you almost definitely won’t receive any sort of return; you’ll just be paying high interest charges into someone else’s pocket. Other types of debt aren’t quite so terrible. While there’s a growing concern over student loans, and student loan debt can keep you down, it isn’t the worst thing out there. In fact, when used carefully and judiciously, student loans can help you get the education and skills you need to boost your earning power over time. Student loans often come with lower interest rates than consumer loans, which means you pay less for the privilege of borrowing. Depending on how you use low interest debt, you can see a return, whether it’s a mortgage or a business loan. But you have to be careful not to get carried away to the point that your low interest debt turns into a burden, rather than a benefit. Choosing to Put Off Paying a Debt Not too long ago, my mom asked me why I wasn’t putting as much as I possibly could toward my student loan debt. My answer was this: the fixed interest rate on my student loans is below 2% (I consolidated in 2005). I’ve been able to manage better returns than that on my investments. My annualized returns on my conservative retirement account have even beat that — recession and all. From my small P2P loan portfolio to my taxable account (used as my emergency fund) to my Roth IRA, my money is better used earning an annualized return of 5.5% to 7% (depending on the account) than it is paying down a debt that isn’t even costing me 2%. At least that’s my opinion. At some point, when my husband gets a full-time job as a professor, I might consider tackling the student loan debt a little more aggressively. But for now, it doesn’t make a lot of sense to me. Some debts are a little more urgent than others. You’re probably not going to earn 18.99% on your investments, so paying down credit card debt makes sense. But if you have low interest, non-consumer debt, you might think twice before retiring it. What do you think? Should all debt be paid off immediately? Or are some debts worth waiting on? This article originally appeared on MoneyNing.com. Let us know what you think (or read what others thought) here. Related posts: Is Debt Consolidation Right for You? Debt Snowball – Highest Interest vs Smallest Loans First Is There Such a Thing as Good Debt?

It’s time for another edition of Dollar and Cents. This is where I answer one of your questions. If you have a question, either use the contact form on the blog or use my Facebook Fanpage. This week question brings up something I’m semi-obsessed with – the Roth IRA! If you rollover a 401k into an IRA is this amount subtracted from what you are able to contribute that year? So if I rollover my 401k next year if I leave my current employer, will I still be able to contribute to my IRA as usual up to the limit or will the rollover affect this? Resources: With each Dollars and Cents video we want to provide some follow up links where you can get some additional information on the topic. If you are interested in learning about doing a 401k rollover into a Roth IRA, check out these reads: 7 Things You MUST Know About the Roth IRA for 2013 – There is a ton of great info in here for you. Before you open your Roth IRA you need to know if you even qualify. (Most people do, but still check!) Not sure how to rollover your 401k? Don’t worry, that’s in here, too. A must read on Roth IRAs. Best Places to Open a Roth IRA - With so many brokerage firms to choose from, how do you find the one that is right for you? This handy post breaks down costs for the major brokerages out there. Best Online Stock Broker Sign Up Bonuses – If you’re going to open up a Roth IRA with one of the brokerage firms you might as well get the biggest bonus that you can for opening the account! Can You Rollover Your 401k to a Roth IRA? – A complete breakdown of how to rollover your 401k into a Roth IRA. Start Saving For Retirement Today: Best IRA Online Brokers – Did you know you can open an IRA to do peer-to-peer lending?