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    Personal Finance For Beginners In 30 Minutes, Volume 1: How to cut expenses, reduce debt, and better align spending & priorities
    Personal Finance For Beginners In 30 Minutes, Volume 1: How to cut expenses, reduce debt, and better align spending & priorities
    Personal Finance For Beginners In 30 Minutes, Volume 1: How to cut expenses, reduce debt, and better align spending & priorities
    Ebook126 pages1 hour

    Personal Finance For Beginners In 30 Minutes, Volume 1: How to cut expenses, reduce debt, and better align spending & priorities

    By Ian Lamont

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    About this ebook

    If you are looking for a common-sense approach to personal finance and money management, then Personal Finance For Beginners In 30 Minutes, Vol. 1 is for you! In just a half-hour, you'll pick up practical tips and even a few tricks that will help you control spending, reduce debt, and take a smarter approach to managing your financial resources.

    Personal Finance For Beginners In 30 Minutes, Vol. 1 does not feature heavy-duty financial jargon or gimmicky "easy money" schemes. Instead, the guide uses common sense, easy-to-understand language, and lots of examples to show you how to cut expenses and save more money for the things that really matter in life. Topics include:

    * Aligning spending with priorities
    * Income, assets, and equity
    * Flexible vs. fixed expenses
    * Limiting luxury spending and online shopping
    * How to shave thousands off of telecommunications and utility bills
    * Cutting car costs
    * Refinancing explained
    * Dealing with credit card debt
    * Online banking and alternative payment systems
    * Using software to track expenses and budgets

    The ultimate goals of Personal Finance For Beginners In 30 Minutes, Vol. 1 are to help you understand your finances, cut costs, and make sensible decisions about spending which are aligned with your life priorities. Some of the tips can help you start saving hundreds or even thousands of dollars on everything from cable TV to cars.

    Personal Finance For Beginners In 30 Minutes, Vol. 1 is authored by Ian Lamont, an award-winning business and technology journalist and digital media entrepreneur. He has written for more than a dozen online and print publications, and served as the managing editor of The Industry Standard. His writing and editorial work has garnered recognition from the Society of American Business Editors and Writers and the American Society of Business Publication Editors.

    LanguageEnglish
    PublisherIan Lamont
    Release dateFeb 23, 2015
    Personal Finance For Beginners In 30 Minutes, Volume 1: How to cut expenses, reduce debt, and better align spending & priorities
    Author

    Ian Lamont

    Ian Lamont is an award-winning business and technology journalist and the founder of i30 Media Corporation. He has written for more than a dozen online and print publications and has also served as the managing editor of The Industry Standard. His writing and editorial work has garnered industry awards from the Society of American Business Editors and Writers and the American Society of Business Publication Editors. Lamont has written several In 30 Minutes guides, including Dropbox In 30 Minutes, Google Drive & Docs In 30 Minutes, and Excel Basics In 30 Minutes. He is a graduate of the Boston University College of Communication and MIT's Sloan Fellows Program.

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      Book preview

      Personal Finance For Beginners In 30 Minutes, Volume 1 - Ian Lamont

      Introduction: Frank, Jordan & Stephanie

      I’d like to introduce you to Frank, Jordan, and Stephanie. These aren’t their real names, but their stories are all too real.

      Frank, Jordan, and Stephanie are similar in many respects. They work at the same company, have the same job title, and have the same salary — $50,000 per year. None of them are married or have children. None of them have mortgages, crushing educational debt or outstanding loans.

      You may think that their financial conditions are similar, too. $50,000 won’t go that far in a city, but it’s enough to live on. You may have a salary that’s around the same level, or have friends or relatives who make a similar amount.

      But here’s the interesting thing about Frank, Jordan, and Stephanie: Even though they work the same hours and make the same amount of money, their personal finances are vastly different.

      Frank’s situation is the worst. Frank is always complaining that he doesn’t have enough money to live on, and indeed, he was evicted from his last apartment. He takes public transportation to get to and from work, and spends less than $10 on lunch every day.

      Jordan’s financial situation is also precarious, but you wouldn’t know it by looking at her. She dresses well, owns a nice car, and takes small vacations several times per year.

      How can Jordan afford it? She can’t. She keeps the creditors at bay by working a second job four nights a week, waitressing near her home. Needless to say, she can barely keep her eyes open during her day job.

      Stephanie is the only one of the three who has a handle on her finances. She has her own car, manages to pay off her educational loans on time, and has even started to build a nest egg, via her employer’s 401(k) plan.

      Small spending decisions have big outcomes

      How can three people with identical incomes have such vastly different financial situations? Some of it relates to major purchases or household expenses, such as monthly car or rent payments. But people’s financial health also depends on a myriad of small spending decisions, which, over time, can either accumulate into big shortfalls or massive savings. Understanding how this process works and making minor adjustments to maximize your lifestyle can save you thousands of dollars every year, and can help make your financial situation much stronger. It’s one of the central teaching points of Personal Finance For Beginners In 30 Minutes, Vol. 1.

      How to lose thousands on lunch

      Consider Frank’s mealtime spending habits. Going to the cafeteria or a nearby McDonalds costs less than $10 every day. It may not sound like much, but over the course of a year, those hamburgers, McWraps, and sodas add up. In just one year, Frank spends over $1,500 on his lunch excursions.

      Many of his colleagues spend less than half that amount by brown-bagging it with healthier homemade sandwiches or leftovers and only the occasional fast-food treat. Cutting down on the fast-food lunches won’t eliminate Frank’s financial problems, but it will make them a little easier to manage.

      In Chapter 2, we’ll go over how casual meals and other flexible expenses such as cable television, restaurant outings, and luxury purchases can be reduced. There are even some psychological tricks that you can use to make the cuts more bearable.

      Free money for retirement?

      At the other end of the spectrum, we have Stephanie’s growing nest egg, which has been built through relatively small contributions to her company’s 401(k) plan. Don’t be put off by the awkward name of the 401(k) plan, which is derived from a section of the U.S. federal tax code. The plan is a simple method for saving for retirement.

      Every week, Stephanie has 5% of her earnings (about $50) automatically deducted and placed in an investment account. Just like Frank’s lunchtime expenses, $50 per week may not sound like much, and indeed, Stephanie doesn’t even notice the difference. But over time the contributions start to add up — and in Stephanie’s situation, they add up in a positive way. The weekly contributions are automatically invested in mutual funds that own baskets of stocks (such as Apple, Ford, and Disney), bonds, and other investments. Even though the money comes from her salary, the 401(k) contributions are not taxed before they are invested. They will also grow tax-free (withdrawals are taxed as ordinary income, however).

      Further, like many employers, Stephanie’s company offers a matching contribution of up to 5% of the employee’s gross pay. In Stephanie’s case, this means she is getting an additional $50 put into the mutual fund every week. That’s about $2,500 in free money that’s added to her investment account every year.

      Stephanie’s situation is covered in more detail in Personal Finance For Beginners In 30 Minutes, Vol. 2. I also show how Frank and Jordan are planning their retirement savings, including how much they’ve set aside and the types of mutual funds they have selected.

      The core concepts of this guide

      Frank, Jordan and Stephanie serve as real-life examples of how people on limited incomes manage their money. But there will also be explanations of basic personal finance concepts, advice on how to better manage your spending, and even tips on how to organize your records. By the time you get to the end of this book 30 minutes from now, you are going to have a different perspective on how to manage your spending and improve your long-term financial health.

      The core concepts taught in this guide include:

      Evaluating your priorities, spending, and assets (Chapter 1, "Chapter 1 - Taking stock of your life & finances")

      Identifying and pruning unnecessary expenses (Chapter 2, "Reducing flexible expenses")

      Trimming necessary expenses and obligations (Chapter 3, "Reducing fixed expenses")

      Organizing and tracking your financial life (Chapter 4, "Chapter 4 - Managing your accounts & data")

      Personal Finance For Beginners In 30 Minutes, Vol. 1 contains a lot of practical tips and common-sense approaches to spending. By the time you finish the last page, you will hopefully have a solid idea about how you can cut costs, better manage your debt, and establish smart spending habits that can potentially help you save thousands of dollars every year.

      Disclaimer

      Personal Finance For Beginners In 30 Minutes, Vol. 1 is not a substitute for professional financial advice. This guide will not rescue people who are deep in debt, or are facing major life events, such as heavy-duty medical expenses, bankruptcy, or the birth of quintuplets.

      I will, however, describe some of the situations that can arise if debt does get out of control (see "What happens when you don’t pay your bills" in Chapter 3). There is also information on resources that you can turn to — and scams to watch out for.

      If you do have a particularly complicated financial situation, or need advice on how to handle a financial crisis, you should contact an accountant, certified financial planner, or lawyer who specializes in tax or financial issues.

      State and federal agencies can also provide help, or point you in the right direction. For instance, the usa.gov website offers specific tips for dealing with certified credit counseling agencies, and also includes links to a website that provides free credit reports from the major credit reporting agencies (see How to get a free credit report in Chapter 3). The Federal Trade Commission’s website (ftc.gov) is another helpful source of information, and contains descriptions of things to watch out for, including outright scams.

      I’ve rambled on long enough. Let’s get started!

      Chapter 1

      Taking stock of your life &

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