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When it comes to saving money and paying down debt, most financial gurus will tell you the same thing until their faces turn blue:

You either need to earn more or spend less money (or both).

In a nutshell, this is basically what personal finance boils down to. But…when you dig a little further…there is another factor out there that is equally affecting your ability to get ahead financially.

Depreciation: The Secret Factor Affecting Your Personal Finances

depreciation chartAs I explained in a previous article about the cost of buying a new car vs. buying a used car, depreciation alone can eat up a significant amount of your family’s income and savings rate.

Consumable Type Purchases: Most of the items we buy on a daily basis are “consumables” that are either used up or of no value after we use them.  Examples of consumable purchases include food, gas, personal care products, and entertainment (going to the movies, golfing, amusement parks, etc.).   Once these items are used up or “experienced”, they no longer have any value.  With the possible exception of donating used clothing and other items to charity.

“Asset Type” Purchases: On the other hand, there are plenty of “asset” type items we buy that we eventually sell or “trade in” after a certain period of time.  My previous article discussed depreciation on cars, boats, ATVs, recreational vehicles, but depreciation can also affect things you buy like furniture, artwork, sporting items/gear, and collectibles to name a few.

While its true that most of these items (a car for instance) are an essential part of everyday life for most people, its worthwhile to consider the affects of depreciation to limit your exposure and reduce this “hidden cost” on your finances.  The more of these “assets” you own, the more money you are loosing each year in depreciation.

How to Minimize the Affect of Depreciation on Your Finances:

1) Buy Used:

Buying used means that the seller has already taken the biggest hit on depreciation, this is true for cars but it is also true for just about everything else you buy too (real estate and collectible items being exceptions).  This is certainly true on cars, furniture and sporting equipment (like golf clubs or downhill skis).  The better deal you can negotiate on the sale price (whether new or used) the less you’ll have to worry about depreciation.

2) Buy Quality:

It may seem counter-intuitive, but sometimes you can come out ahead by spending more money for a particular high quality item.  For instance, you could buy a brand new table from discount furniture retailer like Ashley Furniture or Bob’s Discount for $1,000  that you couldn’t give away after 10 years or so of use.  On the other hand, you could buy an antique or high quality used table for the same price or slightly more.  The difference is (if you wanted to) you could probably sell the antique table for the same price (if not more) than you originally bought it for.

3) Don’t Buy More than You Need:

While many of the newest features on cars, electronics and other items seem cool, many of them end up not being used or fully utilized.  When it comes to selling your car or trading it in on a new model, you won’t get anywhere near what you paid for the extra accessories, options or gear.  The same is true for sporting equipment, unless you’re a world class downhill racer, you probably don’t need to pay an extra $500 for the latest boots or aerodynamic ski poles.  But, that choice is always up to you.  I’m just trying to save you money.

This may seem all too obvious for some people, but for me, considering the depreciation costs of new items helps me to appreciate the total value of item I am about to purchase.

 

 

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If you’re not participanting in your company’s 401(k) plan, there is a very good chance you’re leaving free money on the table from your employer. Thanks to provisions within the US Tax Code, many companies will match your contributions up to a certain percentage of your salary and allow you to defer paying taxes on contributions until you take the money out down the road in your retirement years. But chances are you already knew this…

SO WHY ARE AMERICANS SO LAZY ABOUT RETIREMENT?

According to the US Department of Labor, millions of eligible employees have still not enrolled in their companies 401(k) programs (up to 30% of all eligible employees according to their study). This is simply unacceptable.

ENROLL IN YOUR 401K PLAN ALREADY

401(k) automatic enrollmentsThe Problem With Automatic 401(k) Enrollments

Even if you were automatically enrolled when you hired on with your company (under US law you now must “opt out” of your 401(k) upon hiring instead of opting in), there is a good chance that your contribution percentages and investment options are not as optimal as they should be.

At a minimum, you must make every effort you can to contribute enough money to your 401(k) plan to get the full contribution match from your employee (ITS FREE MONEY). However, if you want to have even a remote chance at a comfortable retirement, you should set aside at least 10%-15% or your earnings toward retirement.

Another problem with Automatic Enrollment programs is that sometimes your money isn’t really “invested” in anything, instead it sits in a money market account (basically a savings account) earning a minimal amount of interest.

As far as investments are concerned, most 401(k) service providers (Fidelity, Vanguard, etc.) offer targeted age appropriate mutual funds that adjust the risk of your retirement accounts based on your age and how close you are for retirement. As you get closer to retirement, the fund managers will invest less of your money in stocks (risky) and invest more money in bonds (less risky).

The irony about this whole thing is that anyone reading all the way to the end of this article probably already knows all this, but hey…if I can help one person better prepare for their golden years, then writing this article was worth it.

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In today’s personal finance analysis, I decided to compare the cost of buying a new car versus buying a used car.  In other words, how much more are you paying for the excitement of that “new car smell”.  The results are shocking.

For my new vs. used price comparison I chose the Honda Pilot as my subject vehicle since Honda’s have a very good reputation for holding their value over time and the 2011 and 2015 are nearly identical in design and performance (you can see subtle differences in the pictures below).

2011 pilot vs 2015 pilot

8 different vehicle expenses were looked at in my cost of ownership comparison including Purchase Price, Interest Costs, Sales Tax, Insurance, Excise Tax, Depreciation, Registration Fees and Maintenance.  The results of the price comparison are summarized in the graphic below:

new vehicle vs used vehicle cost comparison

Based on our example above, you can see that it will cost you nearly twice as much to buy a new vehicle vs buying a nearly identical one that 4 years old.

Purchase Price:

The largest expense in my comparison is obviously the actual purchase price of the two vehicles. The used purchase price was based on current asking prices in online classifieds and the new car purchase price was based on an estimate from the online vehicle pricing site True Car.

Loan Interest:

Another reason buying a new car is more expensive than buying a used car (something that most people don’t think about) is the fact that you’ll pay more in interest on a more expensive new car than you would on the cheaper used model.

Sales Tax:

If your state has a sales tax like mine, you’ll also pay more in taxes on the more expensive new vehicle.

Insurance:

I was actually surprised with this price comparison, but according to my auto insurance company (USAA) the cost of insurance for a new car versus a used car is actually not that different.

Excise Tax:

If your state doesn’t have excise tax you’re super lucky! Unfortunately, if you live in a state like Maine, you’re going to pay a lot more money in excise tax over a 5 year period on a new vehicle than if you bought the used vehicle. In Maine, your excise tax costs bottom out at around $150 after a vehicle is 4 or 5 years old. For newer vehicles like the 2015 Honda Pilot in our example, you’re required to pay a set 2.2% tax on the present value of your vehicle each year. In our case study, you’re looking at an additional $1,700 over a 5 year period in excise tax alone for the excitement of driving a new car off the loan.

Depreciation:

Another factor to consider is the depreciation of new vehicles versus depreciation on a used vehicles. New vehicles tend to depreciate in value much faster than used vehicles. Depreciation values in our example are based off actual prices of vehicles that are for sale that are 5 years older than each of the vehicles in our price comparison.

Registration Fees:

In most states, your registration fees (not including excise tax) are going to be about the same.

Maintenance:

Proponents of buying used vehicles will often cite the cost of maintenance as a reason not to buy used cars. As you can see in our example, you can certainly expect to pay more in maintenance costs for a used vehicle, but certainly not enough to offset the other expenses of operating a new vehicle.

Should You Buy a New Car or a Used Car:

I’m not saying you shouldn’t buy a new car.  As a matter of fact, my family and I bought a brand new Honda Pilot in 2011 (one of the reasons I chose it as an example in my comparison) and we don’t really have any regrets.  I’m just pointing out these price comparisons so you can be a more informed shopper when it comes to buying your next new or used car.

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Getting started on a family budget can seem like a difficult task, but the actual process of setting up a family budget is relatively straight forward (read my tips for starting an easy family budget here).

personal finance meme budgetsThe problem, of course, is sticking to the budget once you and your partner have agreed to the “final” numbers.  It seems like something “always” comes up along the way and the budget gets blown.  Once the budget is blown we get frustrated and go back to our bad money habits.

Here’s some of the biggest factors affecting the success of your budget and some tips to help you stick to your spending limits.

1) Agree On the Budget:

If you’re putting together a family budget, its important that you and your spouse/partner agree to the process.  Its inevitable that one of you will likely be a little more “passionate” about reducing expenses than the other so it is important to be honest about each  of your expectations so reasonable compromises can be made.  The more communication you have when establishing a budget, the higher the chances of success.

2) Set Realistic Spending Targets:

As I mentioned above, if you’re not successful with your budget from the start there’s a good chance you’ll get frustrated and give up.  Be realistic about how much you spend each month on groceries, eating out, gas, entertainment, etc.  Remember, budgeting doesn’t have to be perfect and you’ll likely make several tweaks to your financial plan over the first few months as you get a better idea what you actually spend your money on.

3) Look at Upcoming Expenses:

Another reason people have trouble sticking with their budgets is because they don’t budget for periodic expenses that come up from time to time  (like buying a replacement vehicle, paying winter heating oil costs, buying new car tires, replacing the rough, etc.).  You might be going along fine with your budget and then one month you’re hit with a bunch of expenses you should have planned for (but didn’t).

4) Establish a Goal (Why are You Budgeting Your Money?):

Last, but certainly not least, you need to have a goal in mind for establishing a budget.  What is it that you are working towards?  What are your financial goals?  Having an “end game” in mind when it comes to budgeting will help you stay motivated in your financial journey and help you and your partner stay focus and increase your success in sticking with your budget.

As I mentioned above, it not necessary that you stick with your budget down to the very last penny.  The point is that you’re moving forward with a plan that involves you and your marking making informed decisions on how you spend your money.  How fast you move forward is up to you and your partner in coming up with a budget that balances your desires to pay down debt and establish financial security, while still being able to enjoy life.

 

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College rankings play an ever increasing role in where high school students decide to attend college.  Whether they admit it or not, college and university officials salivate over the reports each year in hopes that their respective institutions moved up on “the list”.

When a college does move up on the list, top administrators issue press releases pontificating their success.  Of course, when a college moves down on a rankings list, its always because of a “flaw” in the ranking algorithms.

US News and World Report, Forbes and Princeton Review each have their rankings and guides on which colleges they perceive  to be the “best”.  While these guides and offer a lot of valuable information for prospective college students, they usually only end up determining which school is the most “prestigious” or “exclusive”.  But unfortunately, this doesn’t necessarily help people out when they get into the “real world”.

college memeRecognizing that some people aren’t worried so much with “prestige” and “exclusivity”, Money Magazine set out to find which schools simply offered the best value and the best return on investment (ROI).  What they discovered in their analysis was very surprising and illuminated colleges that many people probably have never have heard of.

Instead of focusing on meaningless exclusivity factors like “acceptance rates” and “% of alumni who donate each year”, Money Magazine simplified the rankings process into three equally weighted areas: Quality of Education (subjective), Tuition Cost (objective), and Alumni Earnings (objective).   You can find their results and the rankings of the 50 “Best Value” Colleges here.

However, I still wasn’t completely satisfied with the rankings guide.  What I wanted to know was which colleges offered the biggest return on your investment when rated solely on cost and average starting salary of graduates and eliminated the subjective “quality of education” out of the equation.  Using the  data from Money Magazine’s report, I was able to come up with the following rankings of which colleges offer the highest expected salary upon graduation compared the cost of the 4 year degree.  Enjoy!

colleges ranked by return on investment roi

*The score used in the above college rankings was calculated using the expected “early career” salary divided by the estimated cost of the respective college’s 4 year degree.

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How Much Can You Afford to Spend on a Boat

Buying a boat is a very expensive proposition.  Not only does it cost a lot to buy a boat, boats are also much more costly to maintain and operate compared to a car or truck (fuel, insurance, storage fees, repairs, routine maintenance, marina fees, etc.).  Older boats are less expensive to buy but your maintenance costs are going to be even higher (in most cases).

So how much should you spend on a new or used boat?  There are many variables to this decision, but here are some basic rules of thumb to to help you decide how much you should spend on a boat without taking too much risk on your family budget planning.

1) Never Borrow Money to Buy a Boat

boat expense memeThis suggestion is probably going to make quite a few people upset, but I’m just going to throw it out there.  Owning a boat is very expensive and the last thing you’re going to what to deal with is making payments on a boat during the cold winter months while your boat is stored away in a garage somewhere or sitting outside your house in a snowbank (trust me on this).

Another issue with boat loans is that eventually you WILL have a major repair that will need to be made on the boat (trust me on this).  There’s few things financially more discouraging than making a monthly payment on boat that doesn’t run and/or having to pay for a large boat repair job on top of your regular monthly boat loan payment.

Don’t be in a position were you own a boat but you can’t afford to enjoy it.

Another thing that makes boat loans so appealing is that you can get boat loans with 10 year or 15 year repayment periods.  These extended boat loans of 120 or even 180 months mean you’re going to pay a “boat load” of interest over the course of the loan.

Example: A $100,000 boat with no money down would be $1,000 a month for 15 years at 8% (boat loan interest rates are generally higher than auto loans).  Not only would this payment be a steep burden for most people, but you’d end up paying almost twice as much for the boat because of the interest payments.  Banks will almost always lend you more money than you should ever borrow.

But Isn’t Interest on Boat Loans Tax Deductible:  It is true that interest on boat loans is tax deductible if the boat meets certain requirements and you consider it a “second home” (basically, the boat needs to have a kitchen, sleeping area and a toilet).  But as I’ve mentioned many times in the past, you should never finance something for the purposes of writing off the interest payments.

2) Boats Depreciate in Value FAST:

In a previous article about buying a new car, I introduced the concept of “depreciation tax” and how you want to reduce (as much as possible) the value that your vehicles depreciate in value each year because that is money you’ll never get back.  In that article, I suggested that the total value of all your cars, trucks, SUV, ATV, Boats, RVs, etc. should not exceed more than half of your family’s annual salary.  If you do, you’ll likely be loosing a HUGE amount of money each year to depreciation.

If you have $30,000 worth of vehicles sitting in your driveway, chances are next year the value of those vehicle will be around $25,000.  That $5,000 in depreciation ends up eating a large part of your income (8.3%). 

New boats are particularly at risk for loosing a large percentage of their value over the first couple years of ownership.  This is one of the reasons why my wife and I decided to by a used boat.

3) Don’t Go All-In with your first Boat Purchase:

The best advice I can possible give regarding the purchase of a boat is to rent a boat a few times to make sure your family is going to want to use the boat frequently.  If you have your heart set on buying a boat and feel it is a reasonable financial decision for your family, start off small and pay cash for an inexpensive used boat first.  The last thing you’ll want to do is realize your family quickly loses interest in boating (or no longer has the time due to sports, work, etc.) and your $30,000 upside down on your boat loan and you have 8 years left to pay on the loan.

If you save up an pay cash for a boat (you can get a really decent used boat for under $10,000) you can slowly move up to bigger boats as your budget and seamanship skills increase.

Don’t be that guy at the marina with the $100,000 speed boat who doesn’t even know how to safely maneuver the boat away from the dock!

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Reality Check: How Much Car Can You Afford

How much can you really afford to pay for a new or used car?

Calculating how much you should spend on a new or used car is a very important step in budgeting and financial planning.  Believe me, when it comes to monthly car payments and affordability, banks will let you borrow far more than you should ever think about borrowing.

bmw memeIdeally, you should save up and pay cash for a used car.  Not only will you avoid paying interest on the loan, you’ll be in an excellent position to negotiate a good price on the car (especially if you’re buying a used car in a private party sale) and avoid the swift depreciation that comes with driving a new car off the lot.

The problem for most people is they usually end up replacing their current car unexpectedly without saving up an adequate amount of money in a car replacement fund.  Cars break down, families get bigger, job commutes get longer, gas prices increase, there are many reasons people justify needing or wanting a different vehicle.

If you’re wondering how much car you can afford, here’s a few general rules of thumb to help you decide if you’re buying more car than you can afford.

1) AVOID 60 Month, 72 Month and 84 Month Auto Loans:

Never get more than a 48 month term on your car loan.  The problem with car loans that are stretched out over 72 months or even 60 months is the car depreciates in value so quickly that the buyer typically owes more on the car than the car is actually worth over the first 4 or 5 years of the loan.

Compounding this problem is the fact that most people don’t keep their cars any longer than 4 years and they end up trading their car in on another new car and roll that “negative equity” into their next car loan (and this viscous cycle goes on and on…). Paying back your car loan over 5 or 6 years will keep your monthly payments low but chances are you’re spending way too much on a new or used car if this is the only way you can keep the payment within your monthly budget.

But What About 0% Interest Loans, are they a Good Idea:  In my experience, 0% interest loans are usually offered in lieu of taking a cash rebate discount up front.  If you can get a 0% interest loan on a new car (0% loans are not available for used car with the exception of some certified pre-owned models)  for the same price you would have paid in cash, then “technically” you could come out ahead by taking the 0% interest loan and investing the remaining funds in a certificate of deposit, money market account, or low risk mutual fund.  But lets face it, most people don’t have the discipline to do this. Instead, the money gets wasted on other things.

2) Buy Within Your Means and the Effects of Depreciation:

Another financial rule of thumb when it comes to buying your next car is that the total value of all your vehicles (cars, boats, atvs, motorcycles, RVs, etc,) shouldn’t add up to any more than half your annual income.  In other words, if your household income is $60,000 the value of all your “toys” shouldn’t be anymore than $30,000.  Any higher than this, and you’re losing too much in depreciation each year in relation to your income.

If you have $30,000 worth of vehicles sitting in your driveway, chances are next year the value of those vehicle will be around $25,000.  That $5,000 in depreciation ends up eating a large part of your income (8.3%).  You’re basically paying an 8.3% “tax” in depreciation every year (maybe now you’re starting to see why you’re not getting ahead financially).  The higher the value of all your vehicles, the higher this depreciation “tax” and the less money you’ll have left over to save for retirement, paying off your house, or saving for you child’s college.

3) Monthly Payment Affordability:

In a perfect world, we’d all buy the least expensive cars possible that fulfilled our transportation needs (but we know this is not reality).  As I mentioned above, you need to be very careful with monthly payment amounts on automobile loans.  Dealerships work hard to get you to focus on a monthly payment by asking you what you’re comfortable paying each month.  Once they have this number they’ll often try to pad their profits by packaging a lot of extras into the loan (extended warranties, document fees, loan origination fees, window etching, fabric protection, etc.) and then stretch the loan out over as many years as possible to meet your monthly payment target.

Keeping that in mind, you still need to have a reasonable monthly payment especially if you take the high road getting a shorter term auto loan (48 months or less).  My suggestions is to take a hard look at your monthly budget and figure out how much discretionary income you have left over at the end of the month and what you’d be comfortable paying each month.  A general rule of thumb (if you can’t pay cash) is to spend no more than 5% of your monthly gross income on car payments.  If you earn $2500 in income per month, your car payment shouldn’t be any more than $125.  If you make $10,000 per month, your car payment shouldn’t be any more than $500.

Good luck in your car shopping and please feel free to leave comments in the form below!

 

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Cheap Halloween Costume Ideas for 2014

If you’re looking for inexpensive Halloween costume ideas, here’s a few cheap suggestions to rock Halloween in 2014 on a frugal budget!

As you’ll see in some of the examples below, you can make some very unique creative costumes with items that you may already have lying around your house or apartment.

green jacket costume ideaMaster’s Champion Green Jacket Costume:  I would imagine that there aren’t too many golfers who haven’t dreamed of winning the Masters Golf Tournament.  This costume might take a little bit of work, but if you can find a cheap green sport coat or suit jacket on eBay or your local thrift store, you can easily pull off this golf themed costume on the super cheap.  You can print out your own August National logo to put on the pocket or you can go the extra mile and buy one of the “official” August National Golf Course patches on eBay (among other places). Wear the jacket over a sport/polo shirt and khaki pants and you’ll be good to go.

master's golf caddy costumeThe Master’s Golf Tournament Caddy Costume: When combined with the Green Jacket Master’s Champion costume above, this make a great costume if theme theme of the party is dynamic duos.  Traditional Master’s Caddy uniforms are nothing more than a white pair of coveralls with the player’s last name written out in block letters on the back, an Augusta National Golf Course logo on the front right breast and a random number on the left breast (I believe this is the player’s registration number).  Anyway, these are one of the most easily recognizable sport assistant uniforms in sports and would go very well at a sports themed party or paired with the Master’s Champion costume above.

duct tape costume ideasDuct Tape Apple iPod, Crayon, Etc. Costume Ideas:  With a little imagination, you can make virtually any kind of costume you want with the various colors of duct tape available for sale today.  Duct tape is a really good medium for making a variety of group costumes like these ladies have done with their iPod costumes.  Other popular uses of duct tape for costumes include Crayola Crayons, Skittles, Soda Bottle Dresses, etc.  Just Google “Duct Tape Costume Ideas” to learn how to make some inexpensive duct tape costumes.

cheap costume ideasBag of Jelly Belly Jelly Beans Costume:  Who isn’t familiar with these delicious little treats?  This is simple costume can easily be put together at the last minute by grabbing a couple packs of colored balloons and a large clear plastic trash bag.  Extra points if you print out a jumbo sized Jelly Belly Bean Logo and use it as a tag!  This costume is quick and easy to make is appropriate for older children and adults (obviously we don’t want youngsters running around with bags on their heads.

cheap costume ideas1Computer Geek Error Code 404:  Here’s a funny costume for the computer savvy folks out there (just be warned, most people won’t get the joke).  This punk took a plain white t-shirt and wrote “Error 404 Costume Not Found”.  Those of you who aren’t familiar with or don’t recognize the Error 404 computer code, it is the code you get when you try to access a webpage on the internet that doesn’t exist or has been deleted.  Not only is this costume make an understated play on your geeky side, it is probably one of the cheapest and easiest last minute costume ideas you can make.

inexpensive costume ideasLego Pieces Costume:  How to make your own Lego piece costume.  While Lego inspired costumes can be done very cheaply (you can usually reuse old packaging from around your house), they will take a little time to pull off.  In this particular example, you have a Lego piece made out of a large box with some tin cans glued on to the front.  The Costume is finished off with a coat of high gloss spray paint (paint the costume you or your child’s favorite color).  Extra points if you find some solid colored clothes that match the spray paint.

inexpensive costume ideas1Nuclear Fallout Technician:  Another cheap and easy costume idea that you can usually pull together on short notice involves a yellow rain slicker suit.  You can usually by them at Walmart, Target or Home Depot.  Simply print off a large nuclear fallout logo from your computer and past it on the front and back of the slicker suit jacket.  Add a cheap dust mask and you’re ready to go.  Extra points if you can find an old metal detector or similar electronic device to carry around with you (mimicking a Geiger counter).

quick halloween costume ideasGrape Vine Costumes:  Here’s another fun and super easy costume to make.  Similar to the jelly bean bag costume above, all you need to do is blow up some green or purple grapes and attach them to a similarly colored clothes.  Black or dark brown tights work the best to finish this costume off.  You can even go all out and make a green beanie hat with leaves coming off it to complete the look.

frugal halloween costumeNASA Rocket Scientist:  This costume idea uses a pair of blue or white coveralls that you can find online or at home improvement stores.  Once you have your coveralls, you can print off whatever logos you want from your computer and attach them to you coveralls (its a good idea to laminate the logos to ensure they last, you can use clear plastic tape if you don’t have a lamination machine).  Once you have the logos you want, you can finish the suit off by decorating some fancy belts, pockets, and suspenders with black electrical tape.  You can also order cheap NASA patches off the internet too if you have the time.

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diy ant killingIn the past I’ve written quite a bit about professional pest exterminators and whether or not services like Orkin or Terminix are worth it. Not too long ago, my wife and I decided that we would try doing our own DIY pest control around our house to see if we could save some money (pest control service contracts can cost $500 to $1000 per year depending on what region you live in and what services you require).  After nearly two full years of experimenting with various do it yourself pest control products, here is what we found actually works.

Does BORAX Actually Work to Kill Ants:

By far, the biggest problem in our area was several different species of ants.  The first thing we tried in our attempts to kill ants was some simple BORAX detergent booster that you can buy a virtually any grocery or discount department store.  There are plenty of more “potent” ant killing products available but we wanted to start with what we perceived was the “safest” product for our family and pets while still getting the job done.

After reading a few DIY article on the internet, we decided that we would try a mixture of 1 part sugar and 1 part Borax (boric acid).  Boric acid has long been one of the leading recommendations for do it your self extermination of ants.

The Results:

The Results of our first DIY ant killing bait with 1 part sugar and 1 part Borax was not successful at all.  In fact, if anything there were more ants than ever before.  Even after a few weeks with this particular recipe there were still ants crawling all over the place.

New Borax Ant Killer Recipe:

boraxAfter a little more research, we learned that our mixture of 1 part granulated sugar and 1 part Borax was likely not working because the sugar granules were too large and could easily be separated out from the Borax by the ants.  Instead, it was recommend that we try mixing the Borax with confectionery (powered) sugar.  The borax and powdered confectioner’s sugar would bond better and increase the chances of the ants consuming more of the Borax and taking enough back to the queen ant to kill her as well.

We tried this new recipe and it was definitely more successful than using the granulated sugar, but we still had ants crawling here and there.  My wife and kids were not pleased and we were just about ready to call back the expensive professional exterminators (we rarely saw any ants when we hire professional exterminators) but I convinced them to give me one more chance at killing the ants myself.

Borax and Jelly:

After my previous failed attempts at DIY ant killing I had one last chance to kill the ants before my wife was going to call in the professionals to take care of our problem.  One day while vacuuming around the house, I stumbled across a half eaten apple that one of my kids had left under the couch.  There must have been a dozen ants crawling all over the yucky apple core.

Since we lived in Maine, I wondered if the ants were specially attracted to apple juices since this was the predominant fruit in the area.  As my last attempt to kill the ants, I took about a quarter cup of apple jelly and mixed in 2 table spoons or so of Borax (boric acid).  I scooped teaspoon fulls of this thick new pasty ant killing concoction on to little tin foil boils that I made and placed them around the house where we had seen ants (under the refrigerator, base board heater, near the trash can, mud room, laundry room, etc.).

Within a half hour of setting the bait around the house I began to see ants “swarming” around a few of the apple jelly bait traps I had set.  I wondered if I had just gotten lucky and caught the ants at the right time.  But, after another week or so, I stopped seeing ants altogether.  Another week went by, and we still didn’t see any ants.  In fact, over the last 2 months, I have only seen one or two ants in the whole house (probably came in on our clothes or one of the kid’s toys…).

There’s no guarantee that apple jelly is going to work for everyone, but it certainly did the trick at my house Maine.  If it doesn’t work, perhaps trying using jelly of fruit that is naitive to your particular area (orange, grape, strawberry, etc.).  Good luck.

If you live in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin or Wyoming, I’d live to hear about your do it yourself ant killing techniques below.  Good luck!

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When my family and I were still paying off all of our debt, one of the biggest motivations was reading success stories from other folks who have paid off a large amount of debt in a short period of time.  If you enjoy reading debt free success stories from people, here’s a growing list of the best debt free success stories from personal finance blogs, news outlets and online magazines.  If you would like to add your own debt free success story to this page please leave a comment and link in the bottom of this article and I’ll get back to you.

Family Pays Off $92,000 in Two Years: Read about how this family paid off over $92,000 of non-mortgage consumer debt in just over two years.

Man Pays Off $12,000 of Debt in 11 Months:  If you don’t think you make enough money to pay off your debts, take a look at how Jay was able to pay down his debt earning only $2,000 a month.

Couple Pays Off Hundreds of Thousands and Lives Debt Free:  Learn how this couple paid off their mortgage and have lived a debt free lifestyle over the last 10 years.

Another Great Debt Fee Success Story: Couple commits to paying off their debt vows to never borrowing money again.

Family Pays off $90,000 of Debt: Another success story from a family that has paid off over $90,000 of debt.

Couple Pays Off Over $63,500 in 11 Months:  Here’s another example of a family making sacrifices and paying off a tremendous amount of debt in a short period of time.

Couple Pays Off Over $60,000 of Debt:  After fooling themselves for years, one couple finally pulls their credit report and takes stock of how much money they really owe including student loans, credit cards, car loans, etc.  They are shocked when they find out that they owe more than $61,000.  Learn how they came up with a plan and successfully paid off all of their debt.

Couple Pays Off Mortgage on a Beautiful House in 5 Years:  This is a great story of how one couple paid off a large mortgage by living on one salary and using the other’s salary to pay down the mortgage.  Their website is also very well designed and entertaining.

Couple Pays Off $20,000 in Debt in Two Years:  This is a great forum post by a couple who realized they needed to change their spending habits and take charge of their debt.  Even with a few setbacks along the way they were able to pay down their debt in only two years.

How One Couple Paid Off $29,000 of debt on an income of $29,000 a Year:  This is a great story about how another family over came job loss, a medical emergency, and a move to a new city while still managing to pay off over $29,000 of debt on a very modest income.

Thrifty Saver Pays Off $100,000 of Debt in 4 Years:  See how this family of 4 paid off over $116,000 of student loan debt in 4 years.

nancy ray photographyFamily Pays Off $110,000 of Debt in 32 Months: Learn about this young couple who bit the bullet and paid off over $110,000 of debt in 32 months and even went on the Dave Ramsey show to talk about it and scream that they were debt free.

Young Couple Pays Off $70,000 of Debt in 4 Years:  Learn how this young family fought through “blood, sweat, and tears” in their eventual success of paying off over $70,000 of debt in 4 years.

Couple Pays Off Nearly $70,000 of Debt:  Another great real life story of how a young couple was able to pay off over $70,000 of debt and eventually quite one of their jobs so they could start doing what they loved!

Couple Pays Off $75,000 of Debt in 31 Months:  Rhett Smith is a licensed marriage and family therapist and not having to worry about debt takes a tremendous amount of stress out of a family’s life.  That is exactly what Rhett, his wife Heather and their young family was able to accomplish when they paid off $75,000 of debt in 31 months.

Young Couple Pays Off $54,000 of Debt in 3 1/2 Years:  This young couple seems like a lot of fun!  Check out how they buckled down, developed a budget, and paid off over $54,000 of debt in just over 3 years.

Couple Pays Off $237,000 in 5 Years:  Read about how this couple set a goal, developed a financial plan and was able to pay off their debt in half the time they originally thought.

Family Pays Back Over $106,000 in Debt:  Read how this family paid back over $106,000 in debt (including $17,000 to a family member).

Woman Pays Off $46,000 of Debt: Learn how this lady fought back from a divorce and excessive spending to lead a life of financial freedom from debt.

Family Pays Off $118,000 of Debt:  Here’s another great article on a young family that managed to pay off a large amount of debt.

Man Pays Off Over $100,000 in 17 Months:  Read how this guy reduced his spending and focused all his extra income on paying down his debt using the debt snowball method.

Young College Graduate Pays Off $2500 in Credit Card Bills:  Fortunatly for this young lady, she recognized that her spending was starting to catch up to here before it got too far out of control.  Learn how she utilized the “envelope system” to curb her overspending and pay down her debt on a modest salary.

Dude Pays Off $26,500 in Two Years:  Learn how this young gentleman was able to pay off $26,500 in two years aggressive saving techniques and some questionable food choices (eating expired meat???).

Couple Pays Off $52,000 in 18 Months: After returning from their honeymoon and assessing their finances, this couple faced the reality of owing more than $52,0000.  Read about how they paid it off in this interview transcript.

Family Fights Through $100,000 of Debt in 4 Years:  Here’s another great story on how a family racked up and…eventually…paid off over $100,000 of credit card debt in a short period of time.

Woman Pays off $35,000 of Debt in Less than 4 Years:  This great story details Stephanie’s success in paying off over $35,000 of debt (mostly student loans) in under 4 years.

Woman Pays off $38,000 of Debt in 2 Years: Read about Jordann’s successful campaign in paying off over $38,000 worth of debt.

College Professor Pays off over $150,000 of Debt:  Yes, even business school professors can fall trap the predatory lending practices of credit card companies.  Learn how one such professor was able to fight through a heap of credit card debt with success.

How One Man Struggled and Finally Beat $70,000 of Debt: Read about this fella’s 10 year struggle with debt and how he and his girlfriend eventually found success!

Tips From Another Debt Free Success Story: Learn how one man overcame a divorce and financial irresponsibility to eventually become debt free.

Man Pays Off $35,000 of Debt:  Perhaps one of the original and most popular debt free bloggers is JD Roth from the blog Get Rich Slowly.  You can read his debt free success story here.

Savvy Lady Pays Off over $24,000 of Debt:  One savvy lady was able to pay off over $24,000 of debt in 15 months while still allowing herself a little fun money in her “spending diet”.

Man Pays Off $80,000 of Student Loans and Credit Card Debt in 4 Years:  David accumulated debt much like my wife and I did.  A few student loans here, some credit card debt there and before we knew it, we owed a tremendous amount of money.  Read David’s story here and check out his own blog at Money Under 30.

Family Pays Off $26,000 of Debt in 18 Months:  Read how this family committed to paying off all of their debt and how they were able to do it quicker than they ever imagined.

Couple Combines Finances and Pays Off $51,000 in 4 Years:  Read how a single lady was able to fight through a mountain of debt and work with her fiance to pay off his outstanding debt too.

Couple Pays Off Over $109,000 of Credit Card Debt:  Read how this couple struggled for 10 years and accumulated over $100,000 of credit card.  This is also one of the first times that I have heard of someone having success using a debt consolidation company.

Man Pays Off Over $20,000 of Debt:  This is an interesting story of how one man paid off his debt by delivering pizzas.  Jeff also maintains detailed accounts of his pizza delivery adventures which are very interesting to read.  Especially if you want to know exactly how much money you can make delivering pizza!

Young Family Pays off $72,000 of Debt: Read the truly remarkable story of how one couple fought through credit card debt and 2 car loans to pay off over $72,000 in debt.

Young Couple Pays Off $70,000 of Debt in 18 Months:  This is a great story about what grit and determination will achieve if you’re really focused on paying off your debt.  In this case, Jamie and her husband even sold a brand new car they had just purchased to achieve their debt free dreams.

Couple Pays Off $20,000 of debt in Two Short Years:  Learn how this couple managed to focus on their finances to pay off over $20,000 in a short amount of time.

Woman Gets Rid of  $571,000 of Debt:  This story was hard to believe at first and it truly is amazing at what you can accomplish if you put your mind to it.  This dramatic debt repayment success story involved selling a house and a rental property at a loss!

College Graduate Pays Off $20,000 in a 16 Months:  Learn how this recent college graduate was able to pay off over $20,000 of debt in a few short months.  Her success is attributed to the fact that she didn’t increase her spending when she got a higher paying job.

Woman Pays Off $80,000 of Debt:  After being dissapointed with the information available on the internet and in books, JoAnneh created her own unique debt reduction plan which aided in her eventual success in paying off over $80,000 of debt in a few short years.

Harvard Business School Graduate Pays Off $90,000 of Debt in 7 Months:  I thought this debt free success story was good, but when I read about Joe’s determination to eliminate over $90,000 of debt after graduating with an MBA from Harvard Business School, I was really impressed.

Couple Works Hard to Eliminate $90,000 of Debt before Marriage: Learn how this couple was able to reduce spending and take on odd jobs to make sure their financial houses were in order prior to tying the know.

Couple Pays Off $125,000:  Learn how this couple used the Dave Ramsey Plan to pay off over $125,000 of debt in a short amount of time.

Man Pays Off $40,000 of Debt:  Learn how one man paid off over $40,000 of debt while having a very small income.

 

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Should I invest in individual stocks or should I invest in mutual funds?

This is one of the most common questions I get on my personal finance blog. While investing in individual stocks can be rewarding for many investors, here are the top reasons of why I only invest in mutual funds, index funds and ETFs.

1. Increased Risk

Why is investing in individual stocks risky?  The biggest reason is that you don’t want to have all of your investment funds tied up in only a few individual stocks.  When your money is not spread out over a wide variety of investments, you’re portfolio can take a huge loss if one of the individual companies that you’re invested in comes into trouble.  Stock prices of individual companies can drop dramatically for a variety of reasons including poor management decisions, poor market conditions, major PR disaster (Think Tylenol Contamination Scare in the 80′s or more recently the BP Macondo incident).  If you’re still interested in investing in individual stocks, it’s a good idea not to invest anymore than 10% of your net worth in any one company.

2. You’re Probably Not an Investment Analyst

Maybe you are a sophisticated investor, but chances are when it comes to picking stocks of individual companies you have no better idea than the next guy.  I just don’t have the time to poor over the information necessary to make an informed decision on whether or not to buy a stock.  Instead, I leave these decisions to professionals that manage a variety of low cost index funds that track the S&P 500, Dow 30, Russel 2000 and International Stock Fund.

3. Lack of Diversification

Not only are you placing your investment accounts at an increased risk when you invest in individual stocks, you’re also limiting your potential return on investment.  You might get lucky and buy a stock right before it takes off, but your luck may run out soon and all those gains could disappear if the company has a bad day in the news.  Having a properly diversified portfolio will give you more peace of mind and reduce the fluctuations in your investment account.  You can read more about diversification in my article A Beginner’s Guide to Investment Risk.

4. Individual Stocks are Too Easy and Tempting to Sell

With today’s online brokerage options, it is almost “too easy” and tempting to sell your stocks.  As you probably know, the longer you hold your stocks the better off you’ll be.  Unfortunately for people with brokerage accounts, they tend to panic as soon as their stocks drop even a little bit and then sell; they move on to another stock and then sell again at the first sign of trouble.  Not only are they selling the stocks for more than they bought them for, but they also pay a bunch of commissions to the brokerage company.

 5. Day Trading Addiction

Last but not least, buying individual stocks ends up being gamble for most people don’t do their research.  This “gambling” can quickly turn addictive to the investor especially have the have a few successful stock transactions early on.  You can read about my own addiction to day trading through an online brokerage account on my website if you haven’t already.

 

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