Earlier in the week, I discussed the Obama administration’s proposal to tax earnings on so-called 529 college savings plans, part of a package of tax hikes that will pay for new programs such as his proposal to make the first two years of community college free. This has been touted as a plan to hike taxes on the rich to help the middle class, but in fact it’s more of a plan to redistribute money from the upper middle class to the lower middle class.

1. Spend less than you make: The first thing to do when you’re starting out is to figure out your budget and then to figure out the hardest thing, which is to spend less than you make. I wish I could tell you if you make more money it’s an easier problem. Whether it’s your first job out of school, $30,000, $50,000, $100,000, it turns out everyone has problems spending less than they make.

2. Build an emergency fund: An emergency fund is like a buffer. You can’t build long-term goals if every time your car breaks down or some unexpected expense comes up, you have to hit your long-term savings. That actually is worse than not having long-term investments at all, because you’re pogo-sticking back and forth between your goals. People recommend about four to six months of expenses saved in something very safe — we’re talking a cash savings account, FDIC-insured.

7. Savings accounts won’t keep up with inflation

slavetothedetail asked:

Can you manage my money?!?! :)

No, but I can give you my best tips.

Granted, I am fortunate that I only have to worry about my needs/wants and my pay check is enough to cover enough so that I don’t live paycheck to paycheck.   I realize some of the things I do just aren’t possible for everyone — you can just do the ones you can.  So here are my tips on managing and saving money:

1.  Use a free service, like Mint, to make a budget and savings goals.

2.  Make sure you are using a credit card that gives you the most points (or miles) for your shopping habits.

3.  Unless it is an emergency, don’t buy something you don’t have the money for.   I pay off my credit cards every month so I don’t waste my money paying interest.

4. Check your debt.  I had student loans to pay off and I was in the process of looking for a house.  When I started my offer process, I realized that my student loan interest rate was 6% but I was able to get a mortgage at 2.3 something (I used a 30 year adjustable rate that I can re-lock in on any current rate at any time before my 5 years is up).  It made more sense to pay off my loans and put a little less down on the house.

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