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May 242017

5 Home Upgrades That Are Actually Worth the Investment

By |May 24th, 2017|General Personal Finance|1 Comment

home upgrade advice, home upgrade tips, investing in home upgrades

Today we have a guest post for you from Anum Yoon.

Upgrading your home can be a great way to make an old building feel new, get some extra floor space, or improve the overall value of your home. Unfortunately, it can be hard to tell which upgrades are going to be worth the money you’re putting into them and which ones are the equivalent of pouring money down the drain. What are home upgrades actually worth the investment? Here are five you should consider.

  1. Basic Kitchen Upgrades

A full kitchen remodel might be tempting to add value to your home, but it could also end up being a total money sink — no pun intended — if you try to design a state-of-the-art kitchen in your little tiny townhouse. Places you should consider spending money include:

  • Backsplash — Adding a clever-looking backsplash is fairly inexpensive and can be a DIY project. It protects your walls from water or cooking splashes and adds some aesthetic points as well.
  • Appliances — If you’re staying in your home or not setting it up to sell, invest in good, energy-efficient appliances with good warranties.
  • Cabinets — It’s much cheaper to replace your cabinets than it is to rebuild your entire kitchen, and new cabinets can add a whole new look to your cooking space.

If you’ve got a 50-year-old outdated kitchen, then you could benefit from a full remodel, but other than that, some fresh cabinets or a new backsplash could do wonders for the appearance of your kitchen and your home.

  1. Energy Efficiency

Optimizing your home for energy efficiency can have multiple perks. It increases the resale value of your home, and it can lower your heating and energy bills over time. It doesn’t take a ton of money or effort to improve your home’s energy efficiency. Try:

  • Replacing your weather stripping — Doors and windows are the worst temperature loss points in a home. Old or dry-rotting weather stripping should be replaced.
  • Adding insulation — If your home was built before the mid-1970s, it probably doesn’t have insulation in the attic or walls. Spend the money to get high-quality insulation installed.
  • Replacing old appliances — Old appliances are not designed to be energy efficient, so replace them if possible.
  • Replacing your windows — We’ve already mentioned that windows are major heat loss points — replacing your windows with energy-efficient alternatives will reduce heat loss.
  1. Technological Advances

Even if you’re not a fan of the internet of things, there are some technological advances you can add to your home to improve both your quality of life and your home’s resale value:

We know most of your technology will go with you if you choose to move, but devices like smart thermostats can add resale value to your home and make it more comfortable and energy efficient while you’re living there.

  1. Outdoor Spaces

If you live in an area that has nice weather or you have a backyard you’d like to do more with, consider adding a deck to your backyard.

You can expect to recoup more than three-quarters of the investment in your new wooden deck at resale. Most outdoor decks are much more affordable than adding square footage to the inside of your home, costing less than $23 per square foot instead of more than $80 for indoor square footage.

  1. More Square Footage

Sometimes moving to a new home just isn’t an option, so consider adding some additional square footage to your existing home. It’s probably one of the most expensive additions that you can make to your home, but sometimes that extra square footage is all you need. Of course there are options like a quick trip to The Container Store for additional storage in your current home layout. One study found for every 1,000 square feet of space you add to your home, you increase your home’s value by 3.3%. A few things to remember about additions like this include:

  • Use reliable contractors — Poor work will cost you and end up detracting from the value of your home.
  • Be prepared to vacate — Depending on the work being done, you may or may not be able to stay in your home for the duration of the construction.
  • Expanding the foundation is costly — If you need to expand your foundation, it will add to the cost of your remodeling.

When it comes down to it, if you need more square footage, then you need more square footage. Don’t skimp on the contractors — you get what you pay for, after all.

Upgrading your home can be a great way to improve its resale value or make it a bit more comfortable while you’re living there. Just avoid money sinks and focus on the upgrades that get you the best bang for your buck.

Anum Yoon loves all things related to personal finance. She founded Current on Currency after realizing there wasn’t a personal finance blog that tailored posts for international students. Current on Currency has since expanded to become a millennial money blog, so follow her on Twitter @anumyoon to check out her updates.

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May 222017

Want An Extra $668? Take The 365 Day Money Challenge

By |May 22nd, 2017|Blog|2 Comments

Want An Extra $668- Take The 365 Day Money ChallenFor far too long I’ve tried to save money but always fail after just a few weeks. I’m one of those people that need a little extra reason, other than saving money of course. Therefore money challenges are the best option for me and possibly you too.

Some challenges are saving a certain amount per month, others per week, but there is one that saves money every single day.

How The 365 Day Money Challenge Works

On the first day the 365 day money challenge, you save just 1 penny. On day two you save 2 pennies, three 3 pennies, and so on. On day 365 you will save 365 pennies ($3.65) and have $667.95 total saved.

Interesting to note you never save even $5 in a single day. Anyone can find an extra penny a day even if it’s just walking down the street and looking for coins on the ground.

Make Sure You Save Everyday

Though you don’t save much in a day the habit of saving is what’s truly important. The hardest part about saving money is to start.

We make excuses like “I don’t make enough to save”, or “I’ll start saving when I get a raise” or anything else. However, if we just start saving then the habit will be formed and it will no longer be a something that causes stress in your life.

Saving a penny may seem useless and unnecessary, and we may forget at first but make sure you catch up when you do remember.

How $668 Can Change Your Life

$668 won’t send you on a huge vacation, it won’t buy you a car or even pay your rent or mortgage but you can go out for a nice dinner. You can cover an unexpected bill that may come up, go on a long weekend, or cover your Christmas spending.

Will having $668 after a year change your life? Not in major ways, but you can do something nice and you will have also built up a savings habit that can make it possible to save a $1,000, $5,000, $10,000, or $100,000.

What To Do After The 365 Day Money Challenge

Don’t ever stop saving. The 365 day money challenge can become the 730 day money challenge. Or better yet it can just become the everyday money task instead of a challenge.

The 365 day money challenge is all about building a habit, yes you save a certain amount of money, and yes you can use that money for many things, but creating habits that will last a lifetime is really the main goal.

If you find that without an actually named challenge you can’t save money and have already succeeded at the 365 day money challenge then find others. There is the 2-liter challenge, the 52 week money challenge, or any other alternative that saves you money.

Whether you continue to save money on your own or join the next money saving challenge make sure that you build the habit of saving. Build your strength and learn to live without in order to save for the future.

Disease Called Debt

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May 152017

Danny Willett’s Net Worth And Career

By |May 15th, 2017|Blog|Comments Off on Danny Willett’s Net Worth And Career

Danny Willett's Net Worth And CareerDanny Willett’s net worth is $2 million dollars, but how did he get there? How did he make his money? And, what sacrifices did he have to make to get there?

Danny Willett’s Personal Life

Danny Willett was born in Sheffield England on October 3, 1987. He started playing golf at a very young age and never stopped.

In 2013 he married Nicole Harris and 3 years later, just days before the Masters he would ultimately win, they had his first son Zachariah Willett.

The Early Years of Danny Willett

In 2005 Danny won a scholarship and played for JSU (Jacksonville State University). Which lead to winning the 2006 Troy Invitational. The following year he won both the Mission Inn Collegiate Classic and, the Ohio Valley conference championship making him the number 1 amateur in the world.

Danny Willett’s Pro Years

Danny Willett went Pro in May of 2008. Though he played well his first year finishing 5th in the Riverwood Open, 10th at the Spanish open, 13th at the French Open and 12th at the Russian, it wasn’t enough to earn his tour card. However in 2009 he came in at 4th place at Qualifying school earning him the coveted touring card for the season.

In 2010 he came in fifth at the BMW Championship which moved him in to the top 100 World Golfers. His first professional win would come 2 years later at that same BMW Championship.

In 2014 he won the Nedbank Golf Challeng and in 2015 the Omega European Masters, even still his greatest win was no doubt the 2016 Masters Tournament at Augusta national shooting 5 under par.

Before winning the Masters Danny Willett’s net worth wasn’t even $1 million. However, the prize of winning the masters was $1.8 million. That, along with the winnings he had won (totaling $880,000) brought his net worth over $2 million dollars.

How Danny Willett’s Net Worth Affects You!

We can’t all win $1.8 million dollars in a day, nor should we. It took years of hard work that didn’t pay off for Danny Willett before he made that money.

Think about it, he has been playing Golf since he could walk almost. He has dedicated blood, sweat, and tears, not to mention money into learning and perfecting his game. And yes he did receive a good ROI however, that doesn’t belittle the work he put in.

Likewise we need to put in hard work if we want to reach our goals. Sometimes we don’t see the benefit right away, it may take weeks, months, or even YEARS, before the real benefit comes out. It may be starting a side hustle, which if your very very good you may make enough to operate your first year.

Most people spend a lot of time, energy, and money starting and continuing such a side hustle and only see the benefits years later. Which isn’t that how Danny Willet’s net worth got so high?

We may never win $1.8 million like Danny Willet, but if we focus, work hard and take steps towards our future selves we can become not just thousandaires, but millionaires.

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Apr 102017

Merchant Cash Advances: What You Need to Know

By |April 10th, 2017|Blog|1 Comment

merchant cash advance tips, types of cash advances, merchant cash advance tips

As you explore various business funding options, chances are you have (or soon will) come across something called a merchant cash advance. Below is a basic overview of this increasingly popular alternative to conventional bank loans and 401(k) loans; especially for startups and small businesses.

What is a Merchant Cash Advance?

A merchant cash advance is a type of business funding that is suitable if you conduct most of the transactions by credit card (e.g. retail, restaurants, car repair, etc.). The loan amount can be anywhere from under $10,000 to over $100,000, and the term duration ranges as well from a few months to over a year. Generally, it’s a good idea to obtain a smaller amount than you anticipate, and then re-apply for additional funding later if your forecast turns out to be correct.

How do they work?

Now that we know what they are, you may be asking how do merchant cash advances work? With a conventional bank loan, a prescribed amount is paid back on a scheduled basis (usually monthly, but sometimes bi-monthly or weekly). However, a merchant cash advance handles repayment quite differently. Instead of a fixed amount, you’ll pay back a small percentage of your daily credit card sales.

For example, if the repayment amount is 2% and on a particular day you generate $400 in credit card sales, you would pay back $8. Or more specifically, $8 would automatically be transferred from your bank account to the lender. This is an important aspect because it’s one less administrative task for you to do (or as is often the case, forget to do since you’re so busy trying to get other things done!).

Dynamic Repayment

Aside from being easy to administer, merchant cash advances are unique in that (as noted in the example above) the repayment amount is dynamic and adjusts based on actual daily sales. As such, when sales are high and cash flow is ample, a bit more is paid towards your loan — and the needle moves closer to full repayment. Alternatively, when sales are slow and sluggish, a bit less is paid towards the loan – which means there’s more cash-on-hand for you to pay bills, and allocate towards revenue-generating activities and projects such as advertising, running promotions, extending business hours, and so on.

No Collateral or Long Credit History 

In addition, merchant cash advances typically don’t need to be secured with collateral, and you don’t need a long, virtually flawless credit history. Many lenders only need to see a few months of operational history. As long as they think your business has a future and are confident in your leadership abilities, there’s a very good chance that your application will be approved. Even a past bankruptcy typically isn’t a deal-breaker, provided that it’s discharged at the time of application.

Is a Merchant Cash Advance Right for You?

Naturally, it’s beyond the scope of this (or any other) article to confirm or conclude that a merchant cash advance is the right business funding option for you. However, if you do conduct most of your transactions through credit card, then it could indeed be a favorable option that helps your business survive, and thrive.

Disease Called Debt

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Apr 52017

Are There Alternatives to Logbook Loans?

By |April 5th, 2017|General Personal Finance|Comments Off on Are There Alternatives to Logbook Loans?

logbook loans, alternative to logbook loans, other options for logbook loans, different types of loans

Nowadays, the thing that troubles a lot of families in the UK is overcoming their financial difficulties. Paying your monthly bills and covering all your needed expenses and purchases has definitely become more burdensome than it used to be. The rise and fall of the economic situation has wrecked the ship that carries many individuals to the shore of financial stability.

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Mar 312017

Improving on the Safe Withdrawal Rate

By |March 31st, 2017|Blog|2 Comments

investment tips, investment advice, stock market tipsOne important concept in personal finance is financial independence.  You are financially independent when you no longer need to work for a wage in order to support your standard of living. 

Sound awesome?

How do you get it?

Well, you save enough money to create a portfolio of stocks and bonds which you can live off of instead of your wage. Turns out the money required to replace working for a living is quite substantial…

According to the trinity study withdrawing 4% of your starting portfolio and adjusting the figure upward for inflation every year would result in a hypothetical starting portfolio lasting at least 30 years in 95% of cases.  In most of those cases, the portfolio ends up larger in real terms than you started with, ready for another 30-year stint.

For this reason, you are generally considered to be financially independent once your portfolio is 25x as big as your annual living expenses.  This is to say you are financially independent when you could choose to retire and not have to change your standard of living.  I confirmed the trinity studies numbers by taking Robert Shiller’s inflation adjusted S&P 500 data (going back to 1870) and adjusting a hypothetical portfolio on a monthly basis for withdrawals and dividends as well as portfolio growth over a 30 year period.  I repeated this, starting the hypothetical portfolio at each year starting at 1870. This gave me over 100 runs which I plot below:

Portfolio-Based-Retirement

These are all of the portfolios runs just plotted on top of each other. I found a 98% success rate with the 4% rule.  I’m not quite sure what results in the discrepancy.  You can see that on the left side of the graph each portfolio starts at $1,000,000. On the right side, you can see that results are very different.  Sometimes you end up with $20,000,000, sometimes you go bust and end up with nothing.  As a prospective retiree, this chart looks pretty scary.

You have to save $1,000,000 just to be able to spend $40,000, and then you still go bust a bunch!

Sure sometimes you end up with way more money, but you’ll probably feel pretty stupid sticking hard to that $40,000 budget, then dying with $20 million in the bank.  The number of busts are scary, many prospective early retiree’s try to be conservative they switch over to a 3% rule.  This means that to spend $40,000 they’ll have to save over $1.3 million!  This could mean adding a substantial amount of years to your working life.  It could possibly mean that you don’t mind earning an extra house worth of money before retirement, but hey, then you don’t really need to worry about most of this.

Improving on the 4% rule

What if, rather than viewing our portfolio as a pile of money, we viewed it as ownership of operating businesses?  If you owned a car wash chain, and every year the chain earned $60,000 in profit, how would you calculate the amount that you could spend year to year?

Would you think, “well I could sell the car wash for $1,000,000 and 4% of $1 million is…”

NO!

NO!

You’d probably just say, “I earn $60,000 annually, I should save some to grow the chain, and provide some cushion against bad years.  I can probably spend like two-thirds of this. So I can spend $40,000 annually.”

You should look at your stock portfolio the same way!

Why?

When you own a stock you are really just a fractional owner of an underlying business.  You should act like it.  Don’t base your retirement on the size of your portfolio, base it on the accounting earnings of the underlying businesses!

Introducing the 2/3rds rule:

Let’s assume you have a portfolio consisting only of the S&P 500.  To apply our above rule, we decide that we’re financially independent once we hit a specific dollar value of accounting earnings.  Since we want to spend $40,000, we need $60,000 of accounting earnings from the S&P 500. (2/3rds of $60,000 is $40,000).

One “share” of the S&P 500 earned ~$16 in 1985.  Therefore, in order to have $60,000 in earnings from the S&P 500 we’d need 3750 “shares” of the S&P 500.  This isn’t necessarily easy as it sounds, as one of these “shares” cost $180 at the 1985 index level, this means that you’d need about $675,000 to retire based on this rule.  That’s a substantial difference than the 4% rule which would require $1,000,000.

It isn’t a free lunch, however, because when the price per dollar of earnings is higher you would need more to retire than the 4% rule would indicate.  If you decided to retire in January of 1999, S&P earnings were $38, thus in order to have $60,000 in earnings you’d need 1579 shares of the S&P 500.  Given that the index level at that time was 1,280 that would imply that you’d need a portfolio over $2,000,000, twice the level that the 4% rule would predict.

So how well does the 2/3rd’s rule actually perform?  I repeated the same study, only initial portfolio levels were set for constant accounting earnings ($60,000) of the S&P 500.

Earnings-Based-Retirement

There is more spread in the starting portfolio values (on the left) compared to the previous plot.  This is to be expected, the original plot started each run at $1,000,000, in this case, we start each run at a variable portfolio size based on the trailing earnings of the S&P 500 for that month.

What’s more interesting is that there is less spread on the right end of the plot!  The highs are lower and the lows are higher.  This indicates that the result for the prospective retiree is somewhat less random if they base their retirement on accounting earnings rather than portfolio size.  The success rate using this method of retirement, 1% better than the 4% rule.  While I’ve been unable to reproduce the trinity study values precisely, I conclude that somewhere between 20% and 50% of the portfolio failure events that would have happened if you followed the 4% rule in a random month sometime over the last 130 years would not have happened if you were following the 2/3rds accounting earnings rule.

This isn’t the only benefit.  By applying this rule, not only does your portfolio fail to carry you through a 30-year retirement more rarely, you also need less money on average to retire.  Following the 4% rule requires a starting portfolio size of $1,000,000 every time, regardless of the underlying earnings of the S&P 500.  Following the 2/3rds rule required only $800,000 on average.  Sometimes, you do have to accumulate more money, because valuations are high and each dollar invested doesn’t buy you much in the way of earnings (like in 1998, or present day), but on average you can accumulate substantially less money and still retire with a greater level of safety.

Disease Called Debt

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