Finance Lessons Olympians Can Teach You
Finance Lessons Olympians Can Teach You
By Jeffrey Strain | MainStreet.com
With the Olympics now upon us and plenty of athletic drama ready to unfold over the next two weeks, you may completely forget about personal finance. But you can actually learn a lot about personal finance from top athletes.
Even better, it takes a lot less effort to successfully build your finances using the same principles as these athletes use to be successful.
Here are a few lessons to keep in mind:
You see the prize, not the training.
When top athletes qualify for big events, we get to see the result of a lot of hard work, but we are often unaware of all the dedication and hard work that went into the training that made getting there possible. We didn’t see the discipline that it took to get up every morning to practice even on the days that the athlete didn’t feel like practicing. We missed the injuries along the way (financial setbacks) and how they chose to fight through them and not give up, while working that much harder to make their goal a reality.
In the same way, others will look at your good financial situation and not realize all the time and effort that you put into creating it including the discipline and setbacks that you had to overcome to be financially secure.
Coaches help, but the individual has to perform.
Athletes have coaches who help them, give them advice and watch over their training, but it is the athletes who have to do the work to get there and perform along the way.
Your finances are similar. There are plenty of financial experts out there who can be your “coach,” and you should seek out advice from these experts. By taking the advice that applies to your financial situation, the coach can help you define the financial exercises you need to practice, but in the end, you have to put this information to use to achieve the goals.
It takes sacrifice.
In order for a person to become a top athlete, they have to be willing to give up other things that they might want do. It’s impossible for an athlete to do everything due to the amount of time that must be invested into training. They choose to give up time doing what other people their age are doing so that they can achieve their longer-term goals.
The same can be said with building financial stability. You can’t buy everything you want and still save money, so you will have to make decisions that will require you to sacrifice some short-term wants in order to achieve long-term financial stability.
It takes a plan.
Top athletes don’t get up each day and just decide to do whatever they feel like doing that day. They have a training schedule that they follow to peak for the major events athletic events such as the Olympics.
Your finances are the same. It takes a plan and executed schedule to achieve your financial goals that also should be based on life events such as sending kids to college and retiring.
If you have taken the time to create a short-, medium- and long-term plan on how you are going to reach each of your financial goals, you have a great opportunity to achieve them, just as does an athlete with a good training program.
It takes discipline
No matter what the sport, people rarely wake up one day to find that they are a top athlete. The same can be said that few people wake up one day to find that all their financial worries have been taken care of, and that finances are in perfect order.
In both cases, it takes discipline to achieve the goal. Athletes must have the discipline to work out, avoid getting lazy and improve their athletic ability to achieve their goal. You must have the discipline to save, avoid making financial mistakes and improve your earning power to achieve your financial goals.
It takes consistency.
Athletes make it to the top of their sport by consistently working toward their goal over a long period of time. If they made excuses or found reasons not to train before their races or events, they would not be heading to the Olympics.
People who made excuses or found reasons not to save on a consistent basis for their long-term savings would find they were not able to retire when they had planned. It’s consistent training, week after week and month after month, that helps athletes succeed.
In order to retire with financial freedom, you have to take the same approach.
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How to Pay Extra on Your Mortgage, Save Money
How to Pay Extra on Your Mortgage, Save Money
Peter McDougall | MainStreet.com
The total interest you pay on a 30-year fixed rate mortgage (FRM) is typically greater than the actual amount of the loan. If you follow the payment schedule laid out by your lender, you could end up paying $256,035 in interest on a $200,000 30-year mortgage with a rate of 6.52%.
The faster you pay down the principal, the less interest you’ll have to pay over the duration of the loan.
One way to accomplish this is to arrange to pay an amount equal to half of your monthly mortgage payment every two weeks. That makes for 26 half-mortgage payments a year, or the equivalent of paying 13 monthly mortgage payments instead of 12. That thirteenth payment acts as a double payment and goes towards paying down your principal.
The savings can really add up.
Take a look at the biweekly mortgage calculator at BankingMyWay.com to see how much quicker you can pay off your mortgage with biweekly payments, and how much interest you end up saving over the life of your loan. Just enter in the amount, interest rate and term of your loan, and the calculator crunches the number for you.
Based on the above $200,000 30-year FRM at 6.52%, making the biweekly payments could save you $59,138 in interest payments over the life of the loan. You’ll also pay off the loan almost six years early.
Most lenders offer a biweekly option, but it will likely cost you. The one-time fee to set up the arrangement can cost upwards of a few hundred dollars, with additional smaller fees per year or per month totaling $50 to $60 per year. That could add up to nearly $1,500 in fees for a $59,138 interest savings.
That’s not a bad return, except that you can basically achieve the same savings without incurring any of the fees.
The typical biweekly payment plan deposits the money into an account every two weeks, and at the end of the month, your mortgage lender withdraws an amount equal to one full monthly mortgage payment. The leftover money accumulates each month, and is put towards the principal at the end of the year — an amount equivalent to a single monthly mortgage payment.
Your interest savings are based on that extra end-of-year payment, not on a biweekly recalculation of your compounding interest. (There are some biweekly plans that recalculate the interest based on each half-mortgage payment, but those require much more work on the part of the lender, and so the fees are much higher.)
If you want to avoid the fees, but achieve the same amount of savings, just add on one-twelfth of your mortgage payment to each month’s payment, and you will accomplish the same end of year prepayment. Most lenders even have a line included in your mortgage payment voucher for additional payments that are put toward paying down your principal — these are often labeled “principal curtailment.”
The trouble is, not all consumers have the discipline to add on that extra amount each month.
If you want the savings but have difficulty taking the necessary steps yourself, you should contact your lender about a biweekly payment plan. Be sure to look closely at the fees they charge, and discuss options for automatic withdrawals from your bank account.
Photo: photojock
How to Give Yourself a Second Stimulus Check
How to Give Yourself a Second Stimulus Check
By Mellissa Seecharan | MainStreet.com
OK, who is up for more government gravy in the form a second stimulus check? We thought so. Of course the Yea’s that really matter might not get the deal done in timely manner, if ever.
In an attempt to bring the country out of its economic rut, Senate Majority Leader Harry Reid (D - Nev.) recently proposed a second stimulus check package. (Even candidate Barack Obama is in favor of cutting more government checks: He’s been detailing a $50 billion plan.) The trouble? Congress begins their recess August 8, and there are a stack of other issues that need to be dealt with first, leaving the potential stimulus check in limbo.
So instead of waiting around for Congress to pass another stimulus package, why not create your own stimulus check? Now is the perfect time to start saving and Consumer Reports gives MainStreet the lowdown on how you will be able to write yourself a $600 check by Labor Day.
Eat Smarter
Sometimes foregoing certain items can be hard, but it means a few extra dollars will be saved. Consider choosing generic over name brand. It’s the lower-cost brands that, according to the Department of Agriculture, can save a family of four an extra $190 during monthly trips to the supermarket. Need to save another $30 to $60? Cut back on eating out. Consumer Reports also recommends taking advantage of off-hour discounts and prix-fixed meals (and always ask for a doggy bag). Amount saved: $250.
Update Your Life Insurance
With life-insurance premiums decreasing, if you bought your policy way back in the 1990s, it’s time for a change. Example: A healthy 50-year-old would have paid $2,125 for a $500,000 20-year policy from Prudential (PRU) in 1998. Today, a 60-year-old man could pay $1,385 over the next 10 years. Not comfortable with getting a new policy? Then get healthy. It’s no secret the healthier you are the lower your premium will be, so get fit before purchasing a new policy. And if you are shopping for another policy, Consumer Reports suggests checking out www.accuquote.com and www.lifeinsurance.com. Amount saved: $110.
Re-Examine Your Car Insurance
Lots of factors determine how little or how much you pay for car insurance. A New Yorker’s insurance payment will vary from a Montana car owner, which makes shopping around for a new policy even more important. Compare premium quotes online by visiting sites like www.insweb.com or www.insurance.com. If you can’t find quotes in your state, then pick up the phone and call you local insurance branch. Amount saved: $65.
BBQ Cheaper with Charcoal
It’s summer time, which means barbecues are in full use. And with gas prices on the rise, the cost to fill up a propane tank is getting expensive. In short, it’s time to cut back on your grilling, or at least switch to cheaper charcoal. It costs around $30 to fill up a BBQ tank, depending on the size - tanks range in size from 5lbs to 20lbs. Filling only half of your tank will cut your propane expense in half. Websites like www.nextag.com and the Home Depot (HD) offer consumers BBQ tank help. Amount saved: $15.
Phase Out ATM Fees
Last year, banks collected $39 billion in account fees and penalties, according to the Federal Deposit Insurance Corp. Meanwhile, the American Bankers Association reports that 52% of consumers don’t pay a fee. Now for those stuck paying at least $28 per month, per household, Consumer Reports suggests using a large bank with lots of ATMs and shopping for “free checking and strictly adhere to provisions for a minimum balance.” Amount saved: $25.
Figure Out Your Phone Situation
Cell phones, pagers, landlines and phone cards cost the average family $90 a month. When shopping for phone service, check out everything from service providers to long distance carriers to your cable TV company. Consumer Reports editors warn cell phone users to manage their minutes: “Don’t buy more than you need if you rarely go over 900 minutes per month.” Amount saved: $35.
Make an Easy Tax-Friendly Fix
Retirement will be a lot sweeter if you up the amount of your current 401(k) contribution. Not to mention, the amount paid on your income tax will be cut. How does it work? If you put $500 into a 401(k), there will be a $50 to $175 reduction on your federal tax income, which of course, depends on your tax bracket. And what should you do now? “Invest your tax savings or use them to offset rising prices elsewhere.” Hello stimulus! Amount saved: $100.
Total Savings: $600.
(And you can save another forty-one cents if you don’t feel the need to mail yourself the check. Happy saving!)
Related:
* How the Tax Stimulus Can Stimulate Your Travel Plans
* Retailers Want Your Stimulus Check! Here’s a List of Five Big Store Deals
* Don’t Fall Victim to A Stimulus Check Scam
Booyah!
Today we are very excited to announce that TheStreet.com (TSCM) has made a strategic investment in Geezeo. You can check out the full press release here.
Having TheStreet.com as a strategic partner/investor is hands down the best next step in Geezeo’s evolution. Along with the capital needed to take Geezeo to the next level, our relationship with TheStreet.com will also help us reach millions of new potential users and expand our content offerings in the areas of personal finance and investing
There is so much alignment between Geezeo and TheStreet.com’s properties it’s easy to see why we are so excited for the future of our product. From their flagship site, TheStreet.com that will help strengthen our investment education and tools to the recently launched MainStreet.com “where life and money intersect”. MainStreet.com focuses on life events and takes a light informative approach to helping people address financial situations at different stages in their life. Two other fantastic Street properties that we look forward to aligning with include Stockpickr.com, the social investing site created by author and investor James Altucher and BankingMyWay.com, the nations leader in providing consumers with the largest collection of banking rates online.
We are also fired up to be working with the talented team over at Promotions.com (recently acquired by TheStreet.com). Promotions.com works with many of the world’s largest brands and online publishers to create, build and execute online marketing promotions. We are working very close with their team on a number of initiatives. Check out this recent project they worked on for Verizon and you’ll get an idea of what’s to come.
We are totally confident that we are now partnered with the absolute best company to help us gain exposure, enhance content, and make Geezeo the very best free personal finance management site on the web.
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