Major Credit Card Fraud
If you needed another reason not to use your credit card, then here it is.
Fourty-four million cards have been compromised and 11 arrested in one of the largest credit card scams ever in the USA. But it can happen here just as easily, so don’t think it can’t.
Credit card fraud seems to be one of those things people don’t worry about until they realise they have just become a victim of it.
There are a few simply things you to do to protect your card:
- Check your statement for any purchases you didn’t make.
- Keep your credit cards safe and if you do lose them ring your bank immediately.
- Only use your credit card at reliable websites and brick-and-mortar stores.
- Stop using your credit cards.
That last one will also save you from major financial stress and help you find your financial freedom.
Have you ever been a victim of credit card fraud?
Image credit: ShutterCat7
The Emergency Fund: How Much Is Enough?
There is a lot of talk today about Emergency Funds and how important they are to your financial security. But how much exactly should you have in your emergency fund?
What Is An Emergency Fund?
Firstly, for those of you who have never heard of an emergency fund, it is simply an amount of money that you can easily get access to use in case of an emergency. Such emergencies would be losing your job, or needing to pay a large unexpected medical bill.
What Should I Consider When Deciding How Much I Need?
I have read a lot on emergency funds and every commentator (including myself) has an amount in mind when they talk about them. Usually emergency funds are rated by how long you would be able to survive if you cease having any income. I have heard totals of everything from 6-8 weeks, right up to 3-6 months, or more.
Personally, I would feel comfortable with 8 weeks worth of income in my fund. (Incidentally, I don’t technically have an “emergency fund” but I do have what is called an “FU Fund.” You can find out more about the FU Fund in this post.)
But that is an amount I personally feel comfortable with and not one that would suit everybody.
After all, my level of comfort and “survival” may not equate to someone else’s. The basic idea of an emergency fund is for you to be able to meet all your financial commitments and live comfortably until you start earning income again. That is to say, to meet your bare minimums.
Your ability to do this will depend upon many factors, not limited to what constitutes “comfortable” to you, your health, your ability to find another income and how quickly you can do this.
How Much Should You Have In Your Emergency Fund?
Firstly, you need to list how much you would need to meet all your bills, loans, repayments, etc and your basic requirements, such as food, medical, etc.
Hopefully you have created a budget so you will already know what these amounts are. Have a look at your budget and pull out anything that doesn’t meet this “bare minimum” description.
For example, my budget is divided into 9 categories: Rent, Bills, Loan Repayments, Food, Miscellaneous Expenditure, Health Fund, Savings, FU Fund, and Fun Money. Out of these, four are absolutely necessary: Rent, Bills, Loan Repayments, and Food. The others are all optional. That is, they are not essential to my survival. I would probably be inclined to keep the Miscellaneous Expenditure category too as odd expenditures may crop up.
This totals up to approximately 65% of my total income.
Now all I need to do is simply multiply this amount by how many weeks or months I think I would need to find another source of income (for most people this would be how long you think it would take you to find another job.) As I stated before, I would be comfortable with 8 weeks.
If you do the math, 8 weeks x 65% of my income = amount I would need to have in my emergency fund.
If you follow this example, you will find your own total.
How Do I Get Started With This Emergency Fund?
I would recommend opening up a free online savings account that offers you a good interest rate and putting aside some money into this account each time you are paid. Make it a part of your budget. Over time this fund will grow and you will soon have enough to feel more comfortable with the possibility that you may lose your job (or other unfortunate event.)
Last Words Of Advice
This is an EMERGENCY FUND. Not a fund you dip into when you are short one week for cigarettes, food or to pay a bill. This money is something you are putting aside for a true emergency - losing your job, a medical emergency or something similarly BIG. Think twice before raiding this fund. And besides, if you have a functioning budget in place, you shouldn’t need to raid the money in your emergency fund.
Do you have an emergency fund?
Image credit: c.violette.run
Save Money - Don’t Buy Gifts
With Fathers Day just around the corner I thought I would share my tip on saving money when it comes to gift-giving:
DON’T DO IT.
Buying gifts for people (even family) is a fast-track to losing a lot of money. Think about all the times that you are required throughout the year to buy gifts:
- Birthdays
- Christmas
- Easter
- Valentines Day
- Mothers Day
- Fathers Day
The list, I am sure, goes on. And now think about how many people you buy gifts for. All that gift buying needs to be funded some how. And that some how is your future.
Businesses and marketers love those days and there is a good reason: people spend millions on gifts for others. And why? Because they are basically forced too. Society dictates that you buy your Mother a gift for Mothers Day otherwise you are just a bad son or daughter. Didn’t bring any gifts for anyone for Christmas? Judas!
But why should you spend so much on these gifts? When you could keep that money and save it for your retirement.
There are many other ways to show you care about someone other than buying gifts for them. Several comes to mind: make them something instead, call them to tell them how much you love them, simply spend some time with them, and I am sure there are many others. All it takes is a little bit of imagination and effort.
Every time I mention this to people I always seem to get the question: ‘Don’t you feel bad when someone else buys you something and you don’t have anything to give them in return?’ Well, to be honest, no, I don’t. And there is one good reason for this. Gift-giving isn’t suppose to be about getting something. It’s suppose to be about giving something.
If someone wants to give me something because they want to, who am I to deny them of that pleasure? But I will not feel bad just because they expect something in return. In fact, if they do, I think they should feel bad.
And trust me when I tell you that after a couple of times of not giving someone a gift, you will stop receiving any from them soon enough. So after a while you will no longer have to feel bad (assuming that you do).
If after that rant you still feel like buying someone gifts then maybe restrict who you do buy for or for what occasions you buy for, or both! Instead of every member in your family buying a gift for every other member of your family at Christmas, maybe decide beforehand to only buy for one other person (drawing names randomly out of a hat is a good way to do this).
There are many ways you can stop or reduce your gift-buying, and you will be doing your bank account and your future a big favour.
If after all this you still want to buy everyone a gift for every holiday imaginable then have you thought about budgeting for it? All you will need to do is to write down everyone you buy a present for and for each occasion you buy one for each person for the year and assign a value to each gift, then total this up. This may just shock you enough to stop buying so many gifts!
Once you have the total for the year, simply divide this into monthly, fortnightly or weekly expenditure depending on your budget and place this much away each pay. That way, you will not be blowing your budget each time there is a gift to be bought.
Do you still give gifts? If so, have you ever thought about giving up on it?
Image credit: JasperYue
Budgets Don’t Have To Be Complicated
Drawing up a budget is one of the most important, if not the most important thing you can do.
It doesn’t have to be an overly complex one either. It can be as simple as putting away 10% of your income as savings each time you get paid. But one thing you do need to do when creating a budget is to write down how much money you have coming in and how much you have going out.
Usually the coming in part is the easiest, so start there. For most of us this is a wage of some kind. But if you work more than one job or are lucky enough to have some other income stream coming in regularly then total all of this up - this is your incoming.
The outgoing is a little harder. Write down on a piece of paper or in excel or wherever you like a complete list of all your outgoings. This will include rent or mortgage, bills, travel, food, clothes, basically anything your spend money on. Take time to do this as you need to have a comprehensive and accurate list.
Add up both lists and if your incoming is higher than your outgoings you are doing well already. If your outgoings are more than your incoming then you have a problem. And you will need either to increase your income some how or cut back on your spending.
That’s why creating a list of all your expenditure is a good idea as well - it gives you a list of areas where you can possibly cut back to save money.
Now it’s time to figure out a budget.
As an example I am going to show you my budget (I have blacked out the actual amounts - hope you understand why). I used a simple excel spreadsheet to create mine, but if you don’t have excel you can always use Google Doc’s spreadsheet or Open Office (they are both free of charge), or simply use a pen and paper.
My budget is not overly complicated but I have given it some thought. The trick is to draw up a budget that you easily understand and are comfortable with. There is no point in making up a budget that tracks every cent if you aren’t going to understand or follow it.
As you can see all my expenses are listed on the left hand side. I have bundled all my bills up for simplicity sake as I found that far easier than keeping track of each one separately. Then all I did was to calculate the total of all my bills and work out how much they came to per fortnight (which is how often I get paid). This is how much I need to put aside each pay for bills.
The first four are pretty normal expenditures that most of us have. Travel is simply how much my weekly train pass is (multiplied by 2 as the budget is made out for the fortnight). The fifth one, misc expenditure, is simply money put aside for anything that crops up that I need to buy that isn’t a day-to-day expense. For example if I needed to buy a new fry pan then I would use this money.
The last five entries are where I think some explaining in required.
While the names I have given them are pretty much self-explanatory, I will touch on why I have these budgeted for.
It is very important when making up a budget that you cover everything that you have to and want to pay, and this includes yourself. The two most important entries for me on the list are “savings” and “fun money”.
Every time I get paid I place approximately 15% of my wage into a free high-interest earning online account that I never touch, and another 5% into an account I can access using my debit card.
The savings account is my base savings and, like I said before, I never touch it. If I save nothing else each fortnight it will be this 15.7%. The 5% is money that I can spend on whatever I want totally guilt free. It’s important that when making up a budget that you leave something for yourself. Otherwise you will find it very hard to stick to. And besides, everyone likes to treat themselves occasionally.
The three “funds” I have set up in my budget - the health fund, super fund and the FU fund - are all important to me and each have their own separate free high-interest earning online account that I transfer money into each and every fortnight.
The health fund is one that I have only recently created and is mainly due to the fact that I don’t have any private health cover. I have never liked paying for private health cover as I always saw it as a big waste of money, but I also have the occasional medical bill (be it the dentist or physio) so that money is there to cover any medical expenses I may have.
The super fund is for topping up the super contribution that my employer makes. They contribute 9% and from what I have read you should be putting away at least 12%, so this makes up that shortfall. I am not sure what I will be doing with this money just yet. Two thoughts I have had so far is to take advantage of the co-contribution scheme the government offers, or to try and invest it myself in a mini-self-managed fund of my own.
The last one on the list, the FU fund (which stand for Fuck You Fund), is one that I read about a little while ago and thought was so funny and brilliant that I had to incorporate it into my own budget. The FU fund is money that you set aside just in case you need to say FU to your employer or you get laid off or cannot work for whatever reason. Basically it’s a buffer that you can use when you lose some or all of your income.
From what I have read you should have at least 8-12 weeks worth of income in your FU fund. I am nowhere near that yet but I am well on my way. It will take me a total of just over 4 years to save 8 weeks worth of income at my current rate, but I am not too worried about this. I figure having some money in there is better than not having any. And I can always add to it later if I want to.
So that’s my budget. I have a look at it at least once a fortnight and I am always looking for ways to improve on it or tweak it. A budget doesn’t need to be static, especially when you first start one. And if your circumstances change, you budget should change to reflect that.
What does your budget consist of?
Image credits: Jeff Keen and Gaetan Lee
Superannuation: The Sky Is Not Falling
With all the news over the past week on Superannuation you would be inclined to think that we should all run screaming down the street because our lives are pretty much over and we will be spending our retirement in one-room shanties eating dog food.
But one must realise that all investments, including Superannuation, are (or should be) about long-term growth. A striking statistic, and one that has all but alluded most of the main-stream media is the following:
One-Dollar invested six years ago was worth $1.70 this time last year, but is still worth $1.60 today.
People seem to forget too quickly that we have just come out of a very good period of growth that has put most super funds in good stead for the coming bear market.
So next time you see a news story on how much your Super has dropped try and remember that it isn’t at as bad as the media reports. With all invests you need to think long-term.
Do you know how much your superannuation has gained over the last 5-10 years?
Image credit: Welsh Boy
