Tips for saving money without a budget

Just because the rest of the world has a complicated life doesn’t necessarily mean you have to as well. Simplified living can be sustainable according to June, 2010 report in USA Today. Moreover, budgets are not an absolute necessity when it comes to saving money because something more important underlies the capacity to save, specifically personal cash flow.

If cash flow is consistently negative, having no budget isn’t the problem, spending too much is. With material goods comes responsibility, and responsibility costs money. The following non-budget saving tips may be of utility. Moreover, in addition to saving money, you may find yourself saving time with the following methods as budgets often require account entries in financial software or a financial record keeping system.

• Reassess expenditures

Reassessing expenditures can help save money without a budget. This involves reviewing your financial profile and seeing where the money pits and vacuums are. If there’s something like a low mileage vehicle, or high credit card debt using up most of your cash, it may be possible to approach the debt in a different way in order to increase savings. For example, with a high credit card debt, you could refinance at a lower rate, and reduce monthly payments in order to save more.

• Calculate mentally

If you can add, subtract and multiply, you can probably calculate mentally as well. Keeping a mental tally of accounts and expenditures isn’t that much different from remembering how many eggs are in your fridge, or when the milk expires. Similarly, knowing which bills are paid and which aren’t will help avoid late fees and save unnecessary charges.

• Minimize numbers

Remembering a lot of numbers takes mental capacity. Minimizing mental calculations, account balances and transactions can be helpful to the overall goal of saving money without a budget. For example, the one number method just uses a single number, the balance of your checking account. By remembering what the balance is, you will be aware of how much extra money you have for saving after all expenses are paid.

• Time finances

Another way to save money without a budget is to pre-pay your savings account. This is also referred to as paying yourself first. For example, before you spend money on anything, transfer money to your savings account, and you’re done. The reason why this method works is timing. By transferring money before paying bills, buying things or investing, savings can consistently increase if this practice is periodically continued without withdrawals.

By reducing the amount of goods and services in your life, costs go down regardless of whether or not you have a budget. For example, more expensive cars can cost more in property insurance, and too many paid memberships or services lower balances. To save money without a budget it can help to avoid overspending and increase savings.

How to pick conservative stocks

Picking conservative stocks involves finding good returns on investment for low risk. Ideally conservative stocks are as safe as a savings account insured by the Federal Deposit Insurance Corporation (FDIC). A good starting point in knowing how to pick conservative stocks is understanding how much conservative stock to invest in, and for how long as even invested money in lower-risk stocks becomes risky if that investment may be needed in the short-term.

• Protection against economic downturns

A 'conservative stock' that maintains or grows value during most parts of an economic cycle doesn’t necessarily mean it's conservative during a recession; this possibility makes the whole concept of conservative stock somewhat fallacious. That is to say, since market and economic conditions can change relatively quickly, unless one has picked stocks able to withstand share price volatility, then the value of those shares can drop.

• Identify low risk

If there is such a thing as a conservative stock, one’s chances of picking the right one might be somewhere between finding the holy grail and spotting a $1 bill in a parking lot. In other words, be prepared to do some research. An important step in performing due diligence on investments is defining low-risk. This could mean a number of things; high dividend, low beta, and consistent profit margin are what some might look for.

• Forecast future risk

Just because a company is low risk in the present doesn’t mean it will be a safe stock in the future. It is not impossible for a large, stable blue chip stock to take a turn for the worse. To illustrate how a blue chip stock can decline, Merck & Co,. Inc. (MRK), the large pharmaceutical firm, dropped from an all time high over $80.00 per share in the early 2000’s, to the low $30s in 2011. A part of the risk for Merck might of included expiration of drug patents and not enough high demand patent protected drugs to grow revenue.

• Assess capital gains

To pick a conservative stock, the value of the company’s shares, or total investment in the stock, should also rise over time. The conditions for long-term capital gains are quite diverse and vary by industry, economy, and market conditions. An investor can increase the  chance of capital gains by locating a well managed company with strong financial statements. Companies that have a high percentage of market share and consistent product or service demand  have a potentially increased chance of consistent capital gains.

• Evaluate capital structure

The capital asset management of a business is also an indicator of how 'conservative' a stock is. This is because use of capital in part indicates how a company plans to grow, maintain revenue stream, and improve profit margin. Companies that invest in projects with high internal rates of return, and operate with low costs and efficient  cash conversion cycles are examples of potentially good capital structure.

Summary

Selecting conservative stocks is not really a fool proof endeavor as stocks themselves do not provide guaranteed returns nor are they insured financial instruments. For this reason, money management that involves picking conservative stocks is more akin to choosing lower risk stocks. Lower risk stocks sometimes share a few characteristics, some of which include profitability under adverse conditions, strong and proven business models, and legacies of success that help ensure at least medium-term investment stability.

Sources:

1. http://www.finance.yahoo.com (Yahoo Finance)
2. http://www.investopedia.com   (Investopedia)

Ways to save on taxes

There are several ways to save taxes in any given fiscal year. The earlier in the year one starts thinking and preparing about taxes, the more options one has to save on taxes. Lowering taxes can be achieved in every income bracket level with the right tax savings awareness and strategy. This article will demonstrate some of the possible steps that may lead to lower taxes in terms of 1) tax information, 2) common tax strategies, 3) lowering adjusted gross income, and 4) other non-income tax techniques.

Tax information

A good first step in saving on taxes is to have access to the right information. To gather the right information it can first be a good idea to estimate adjusted gross income, tax deductions and any tax credits one has in the case of 1040's, the standard U.S. Individual tax form. From there, one can determine what tax bracket one is in, for example 15 percent.

Tax information can be obtained from a number of sources including the U.S. Internal Revenue Service, county tax offices, tax accountants, financial advisors, tax attorneys etc. The difference between tax information and tax advice is that advice must be obtained specifically from certified and/or licensed tax professionals. The more pertinent information one has in regard to saving money on taxes the better because then one can apply that information to a tax saving strategy.

Tax saving strategies

There are several ways taxes can be saved either through a strategy, or tax savings tactics, or both. Tax strategy involves a long term tax saving plan such as annual contributions to either tax exempt or tax deferred retirement savings vehicles such as Individual Retirement Accounts (IRA's) and life insurance policies with retirement annuities built in.

In the short run, other tax methods that are commonly used are tax deductions in excess of one's qualifying standard deduction. In other words, if a tax filer can itemize deduction on Schedule A that are higher than the standard deduction, it has more tax savings than using the standard deduction. Items that are deductible on IRS Schedule A include mortgage interest paid, paid taxes, job expenses, charitable donations and miscellaneous expenses. (IRS Schedule A

Additional tax deductions that can be taken along with either the standard or itemized tax deductions include exemptions, education credits, child credits, foreign tax credits and savings credits, self-employment tax deduction, tuition deduction and student loan interest paid deduction. ( IRS Form 1040 ) For a complete list of deductions, consult the IRS forms and instructions.

Lower tax by reducing adjusted gross income

The key to saving money on taxes as an individual tax filer is to have the lowest adjusted gross income possible as this is the amount that is used to determine tax. Since deductions and credits lower taxable income, qualifying for deductions that don't cost money but either defer or allow money to grow tax free are ideal. For example, for a regular filing of a 1040 with no other forms required other than W-2's and 1099's, an income below a certain amount does not require tax filing at all, however if tax is due to that tax filer, a tax return should be filed to receive withheld taxes.

All income earned by an American overseas is taxable in the United States if that person is a resident of the United States for more than 6 months of the year. Some persons who don't live in the United States, who are American simply don't live in the U.S. and have all their assets, income and investments in foreign banks, trusts, or tax protected instruments. In some cases this may be legal avoidance of tax due to the U.S. Government, and in other cases it may not. Knowing the difference between legal and illegal tax savings techniques is key to complying with tax laws.

Non-income tax saving techniques 

Since income tax is not the only tax Americans pay, it can be prudent to consider other tax savings techniques as well. For example, tax on everyday items such as food, gas, property, automobiles, retail purchases, utility services such as cellular phones etc. all add a considerable amount of tax payments in excess of both federal and state income tax. Naturally, these types of taxes add up as well so avoiding having to pay them through legal tax saving techniques can also lower tax and increase disposable income.

To lower non-income tax consider making normal purchases via the Internet if the shipping and price together are less than the same item(s) would be had they been purchased retail with tax. Secondly, some states tax more for certain products such as gas and food. If one lives close to a state line consider making purchases for certain products with lower taxes in the other state if the cost of gas does not offset the tax savings.

Automobile and property taxes can also be quite high, in which case the lower the value of both, the less tax will be paid. Evidently then, driving one car instead of three, and driving an economic model of car, perhaps even used will minimize this type of tax paid. Secondly, for property tax on homes, consider living in rural areas rather than urban areas if the cost of tax is greater than the transportation costs to and from any pertinent locations such as places of employment, food stores, garbage dumps, entertainment venues etcs.

Lastly, to save even more on taxes, growing as much of your own food as possible on a rural property with low income tax in addition to driving a used economy model vehicle could save a bundle. Also, consider avoiding highly taxable services such as cell phones because they charge a great deal in additional taxes in comparison to land-lines Being as self sufficient as possible can reduce the need for a number of products and services, and hence taxes.

Summary

There are many ways to save taxes just as there are many types of taxes. Taxes are everywhere and are usually tied to things that are either consumed or income that is received. This is not to say there are ways to reduce these taxes because there are. In some cases only a few adjustments to where one puts money may be needed, but in other cases larger more definitive lifestyle changes may be required. Which ever the tax saving strategy or technique one uses, researching and learning as much information as possible about saving taxes is an important step in becoming aware of how to reduce taxes.

Sources:

1. http://www.irs.gov
2. http://www.irs.gov/formspubs/index.html
3. http://www.irs.gov/pub/irs-pdf/i1040sa.pdf
4. http://www.irs.gov/pub/irs-pdf/f1040.pdf

How to choose what to invest in

Choosing what to invest in or how to best get involved with stock trading is ideally less like window shopping and more like an investigation if you want to base your choices on information rather than feelings. Some people still do choose what to invest in by what they feel is a good investment. However, at best, that is an intuitive approach to investing, and there are several other ways to go about choosing what to invest in that might be more worth while.

Fundamental analysis

Fundamental analysis studies the financial profile of a company in detail. This can be as in depth and comprehensive as one makes it. For example, one may simply look at a company's earnings per share for the past five quarters and choose what to invest in based on that. Others may be more thorough and study the company's revenue trend, profit margin, asset management, and so forth. What fundamental analysis doesn't reveal however, is the future.

Market performance

To glean how an investment will perform in the future requires a certain amount of informed foresight. For example, if it's the autumn, you can induce some birds will fly south for the winter. Financially, if it's a business that follows a business cycle and the high end of that cycle has passed, revenue's might decline. Businesses are not as predictable as bird's flight patterns however, so choosing what to invest in also involves looking at another aspect of the market.

Supply and demand

Businesses might not be worth investing in at all. If the demand for businesses services is lower than a commodity for example, then maybe commodities are a better investment. To know that an investor would look at any number of factors that can influence both the availability and need for a certain product such as corn. For example, when corn based ethanol became a legislated fuel additive, it affected the price of corn. However, if large amounts of  farmers were to switch to another form of feed for their livestock in the future, that could affect the price of corn as well.

Economic factors

Knowing how to choose what to invest in also involves understanding a little more about economics. Economics is like a barometer for markets of all kinds. For example, if an economy is in a long term secular trend what does this suggest for the market? It could mean business cycles will be suppressed despite demand, or it could mean prices won't rise much for businesses causing less profit if their costs do increase. The economy is made up of a lot of components such as employment, monetary policy, trade balance and so forth. Each economic component can affect how well an investment will perform.

Technical analysis

Technical analysis is the chartists way of choosing what to invest in. Chartists look at the price movement of a company's or product's price movement over time and draw conclusions based on patterns of probability. Technical analysis helps some investors choose what to invest in because they believe the patterns they see confirm a higher probability of a price movement. Although technical analysis is used more for short-term trading, investors may also use it to assess medium and longer term price patterns.

Traits of A Successful Budget

A successful budget grows wealth and manages debt within an organized framework that easily manipulates and apportions money for maximum financial benefit. The traits of a budget are what help make it successful by providing the basis with which the budget can operate and assist with appropriately managing the budgeter’s life.

• Capitalized

No budget can work without money to budget so a budget must be capitalized to be successful. Examples of sources for capitalizing a budget include income, capital gains, and interest earned from assets. Once a budget has been capitalized, the financial parameters within which the budget can operate are established.

• Prioritized

Another trait of a successful budget is they are often prioritized. In other words, some expenditures and allocation of money may be more important than others. To determine which budget allotments should take priority, consider the affect on basic needs, cost of debt, reduction of debt, and amount of savings. For instance, a good budget accounts for basic short-term needs such as food while simultaneously preparing for longer term financial horizons.

• Systematized

Systematization of a budget is a similar trait to prioritization except its focus is more on the functionality of the budget. For example, a successful budget might distribute money across a number of categorized goals such as retirement planning, emergency savings, high interest debt and so on.

• Optimized

Optimization of money is a key trait of a successful budget because it allows that money to go as far as it can go. For example, if debt can be paid off within six months, and the money used to pay that debt is then re-allocated to savings for another six months will there be more savings over a course of one year than if an equal amount of debt payments and savings contributions had been made?

• Accessorized

A successful budget may also be accessorized, not necessarily by expensive financial software, but rather with useful budgeting techniques. Simple mathematical analysis of a budget is one such accessory. To illustrate, mathematical analysis is a useful if not essential accessory because it allows the budgeter to determine if one use of money has a more advantageous affect on net worth than another.

Since finances and people’s lives are diverse, a budget can vary from simple to complex based on the financial needs of the individual or household. For example, an overly complicated budget may be simplified to better meet the objectives and requirements of a straightforward financial plan. Moreover, successful traits of budgets reflect tailored financial allocations that meet specific needs, and goals using comfortable and suitable methods.

Advantages of Interstate Banking For Personal Accounts

Interstate banking provides financial security, increases banking services, and provides more efficient, cost effective banking to clients with personal accounts. Moreover, advantages of interstate banking emerge out of increased competition and effectiveness among banks that have utilized interstate banking privileges and competitive financing options for consumers.

Improved and efficient interstate banking advantages was the reasoning for interstate banking back in the 1980's when banking deregulation was taking its early steps.(1)  By 1994, interstate banking had become a legislative reality with the passing of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. (4)

• Interstate check deposits

Before interstate banking was allowed, interstate banks owned by the same company had to be subject to interstate agreements allow acquisition of the out of state banks, and  individuals could not make check deposits despite the interstate bank ownership.(2) Moreover, this restricted individuals from making deposits into their personal accounts at bank branches that did not have an interstate agreement even if they were owned by the same firm according to the St. Louis Federal Reserve Bank. Interstate deposits allow business people, travelers,  and people who work and live in different states more convenient banking options.

• Competitive interest rates

With interstate banking comes economies of scale, combining of banking assets for increased loan activity, and more competitive interest rates due to the cost savings banks incur from profitably expanding their operations across state lines.(3) In other words, when banks are able to lower their costs by efficiently branching out management across state lines the costs can be passed on to consumers through interest rates that attract more profitability for the bank and better returns for clients.

• More banking locations

A clear advantage of interstate banking is the number of possible branch locations at which banking services can be rendered to clients.(2) This convenience not only can increase banks revenue but also better facilitates interstate banking activities that can grow consumer wealth. For example, individual proprietors that can spend less time making deposits and taking care of personal/business banking transactions can also increase their efficiency, and potentially their profitability as well.

• Increased service options

Another advantage of interstate banking is increased services. These service can arise out of more resources that become available to the bank through interstate banking acquisitions and branches. (3) Additionally, a wider range of clientele also puts increased pressure on banks to provide a greater range of services. Examples of enhanced services may include personal account electronic banking, expanded loan products, and more voluminous transaction types.

• Financial security

In his book 'Banking Across State Lines' Peter Rose asserts Interstate banking can benefit consumers by improving financial security regarding funds within their personal accounts. More specifically, Rose claims that the consolidation of banks to form larger corporations tends to have a stabilizing affect on bank assets thereby better protecting consumers from bank insolvency. Even though bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC), having to claim such insurance against lost assets is generally not a slight inconvenience, but rather potentially financially debilitating to banking customers who rely on one bank for all their banking needs.

Sources:

1. http://bit.ly/4xOpuh (Time)
2. http://bit.ly/dhZSRs (St. Louis Federal Reserve Bank)
3. http://bit.ly/c1I1pJ (Rose: Banking Across State Lines)
4. http://bit.ly/b2yGXU (FDIC)

Investing in the Stock Market as a Route To Wealth

Investing in the stock market as a route to wealth involves being aware of the techniques and strategies that lead to investing success. In order to understand and implement these stock market techniques usually requires both knowledge and practice. Additionally, being prepared to accept loss and keep one's emotions in check is a useful aspect of investing in the stock market as a route to wealth.

• Learn and practice stock market investing
• Train emotions and prepare for loss
• Test invest using techniques from step 1
• Develop investing techniques and strategies
• Reinvest using enhanced investing plan

Learning about Investing

To invest as a route to wealth it often helps to know about investing. Learning about investing requires one to research businesses, study investing manuals and instruction guides, and become familiar with a number of financial tools used for analyzing stocks. There is a large amount of investment material, but here are two books that provide fairly solid introductory financial advice.

• The Intelligent Investor by, Benjamin Graham
• One Up on Wall Street, by Peter Lynch

The pseudo-science of investing

Statistical analysis such as Betas, Correlations and Covariances are used in charting and predicting stock value, but the fact remains, the future of value is both undetermined and unknown. We have all seen the warning "Past performance is not a predictor of future success"

More of the story is that the 'science' of money is a reflection of economic thought, regulatory environment, political belief, consumer psychology, supply and demand among other things. Few if any of these things can be predicted with 99.999% accuracy or lower.

The role of money, economy and regulation in investing

To investing in the stock market as a route to wealth involves being aware of money, the economy and financial regulation. For example, in Europe the securities markets are not regulated the same way as they are in the United States or Japan and in 2007 the value of the Chinese Yuan was pegged to the dollar making the products it represented a better import deal for various economies. This along with regulated interest rates helped fuel China's stock market.

While the supply of money is regulated, that amount grows every year. In the United States, The Federal Reserve limits the supply of money so it doesn't lose value, but the Federal Reserve also keeps a constant watch over the money supply in order to ensure there is an amount large enough to match the wealth being created by economic forces such as innovation, labor, enterprise, science, medicine, technology etc.

Money supply also referred to as liquidity impacts the stock market because liquidity is needed for large investments. The more work a population puts into an economy, the more money is needed to reflect the wealth generated by that work. Work as measured by employment and unemployment statistics is a measure of economic performance which is related to stock market performance.

Summary

By keeping in mind certain factors that do play a role in the stock market, investing may afford one the opportunity to invest as a route to wealth. This opportunity is assisted by being aware of the market, the economy and also knowing how to invest and having the discipline to invest correctly using investment techniques and strategies.

Since the stock market is not a scientific phenomenon in the sense that market psychology, economics and politically driven market conditions are real factors. The stock market will theoretically never be predictable.

Sources:

1. http://bit.ly/ar5dau (Google Books)
2. http://amzn.to/9brRb1 (Top 10 Investment books)

Bad Credit: Bank Account Reference Guide

The "no-chexsystems" bank account is a type of bank account extended to individuals with an unfavorable credit scores. A bad credit bank account should be insured by the Federal deposit insurance corporation (FDIC), if located within the United States. FDIC insurance allows the money within the account to be protected. If the money is not FDIC insured, the bad credit bank account may be located offshore or be an unsuitable type of account.

To obtain a bad credit bank account and individual should be of legal age i.e. 18 or over and have a valid form of appropriate identification. These types of bank accounts can be set up online and deposits can be made via an electronic payment service of which there are several on the internet that are reliable.

As with any transaction involving finances, it is wise to take precautionary steps before depositing and/or sending money to a financial institution. Such steps may include but not be limited to verifying a physical address in the case of online banking within one's country, performing fraud and scam searches using the bank's name, and by contacting the FDIC to verify insurability of the funds.

Obtaining a bad credit bank account may allow an individual to later obtain a secured credit against the account or obtain loans against the funds in the account. In such instances, this would allow the account holder to build credit and have a bank account in which to deposit paychecks, and/or other funds. Bad credit bank accounts may also allow the account holder to obtain debit cards, issue checks, offer interest on savings etc.

Disadvantages of bad credit bank accounts include the possibility of few or no physical locations other than ATM machines. This is especially the case if the bad credit bank account is obtained through an online financial institution. Additionally, the risk of online identity theft is present when conducting financial transactions over the internet. Whether an account is through a brick and mortar financial institution or via the internet, confirming privacy policy with the bank may be necessary.