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The
Editor's Desk - From Beneath the Clutter
Feature Article -
The Worst Money Mistakes You Can Make
Guest Article -
How To Overcome Exercise Excuses
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What a weekend. I got to visit my dad at his house for the first time since my daughter was 3 months old. We've seen him briefly at other family members' homes, but this was the first visit directly to him in far too long. Ariel was scared of him at first, as she's going through a shy phase, but she warmed up to him at last.
The drive home was fun. We took the long way and just stopped whenever we saw something interesting and Ariel was awake. Really made the trip feel shorter, for all it took 10 hours, including the breaks.
Have you been to the discussion boards lately? A couple of folks are helping me try to get things moving there, so I'd love to see you there. Come on over and join the fun. Talk about your kids, your job or business, or anything else, including politics and controversial issues. It's OK to disagree, just keep things reasonable.
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We all know that we should save more and spend less, but for most people that is extremely hard to do. In some cases, the reason why it is so hard to do is that many people and businesses are conspiring against that happening. How so? Well, real estate agents, for example, technically work for the seller of a property and not the buyer. That means that they will try and get you to up your bid rather than tell you what the seller will really accept. Lenders have come up with creative ways to get you to borrow money that sound like good financial advice. The real reason for all of these financial shenanigans - to boost fee revenue at the bank. But just what are the biggest money mistakes out there and how can you avoid them.
Mistake #1: Taking Out a Home Equity Loan to Pay Off Credit Card Debt Americans love to spend and one idea that has been peddled hard lately, particularly because of the low interest rate environment, is to borrow against the equity in your home to pay off those high interest credit cards. Are people taking the bait? You bet. Last year, Americans borrowed $701.5 billion against their home equity. The problem with this strategy? It only works if you stop using your credit cards altogether. A recent study by Brittain Associates indicated that nearly two-thirds of the people who borrowed against their home equity between 1996 and 1998 to pay down credit card debt had run up their credit cards within two years. As a general rule, the people who use a debt consolidation loan to get a handle on their debts need to do it again and again. If you are going to use the equity in your home to pay down your higher interest credit cards, then you need to cut up your credit cards so that you can be certain that you won't abuse them again.
It can make sense to tap the equity that you have in your home, but only in an emergency. A home equity line of credit is a revolving line of credit (like in a credit card) that allows you to tap the equity in your home in case you lose your job or need quick cash in an emergency. If you happen to have an outstanding home equity loan, pay off your loan as fast as possible and by all means avoid using this type of financing to buy luxuries and other items that are only going to decline in value.
Mistake #2 - Borrowing Against Your 401K People love to think that borrowing against their 401K is a smart move because when they repay the loan they are essentially paying themselves interest. Some eighty-three percent of plans allow workers to borrow against their retirement savings and about one in five plan holders actually borrowed against their savings. The average balance outstanding - $6,856. So what's the big problem with this strategy? For starters, if you lose your job the loan must be paid back in its entirety within a couple of weeks. Fail to pay the loan back in full and it will be considered a distribution from the 401K so taxes will be owing on the full loan amount. As well, the money that has been removed from the 401K will no longer be compounding tax-free inside the plan. Just like the equity in your home, it is best to leave this money alone and not to touch it. The benefits of a future mortgage free home and ample retirement savings are worth more than any short-term benefit from borrowing against your home or retirement savings.
Mistake # 3 - Buying More House Than You Need This is a very common mistake. All around you are people who are conspiring to have you bite off more house than you can chew. Your real estate agent who is trying to maximize his/her commission is against you. Bankers, too, have been more lax in terms of the amount of money they are willing to lend against residential real estate. It used to be that bankers would only lend 26% - 28% of your pretax income to cover the monthly cost of principal, interest, taxes and insurance (PITI). Today, many lenders will lend you up to 33% of your pre-tax income to cover PITI. The upshot? You can buy more house than you could previously. Your friends who argue that your salary will rise in the future which will allow you to grow into an oppressive mortgage, also conspire against your future financial success. The problem with buying a bigger house than you can afford is that you are essentially forgoing other activities such as travel and dining out to afford your dream house and cutting things dangerously close to the financial edge. Many people forget to factor in the costs associated with maintenance and repairs in the home that they purchase. Experts say that most people should budget at least 1% of their home's value each year for maintenance and repairs.
If you end up stretching to buy that dream house you could find yourself house poor in the future. Sure you have a house that may be worth a lot of money, but if you are unable to go out from time to time and enjoy other pleasures in life that can be pretty limiting. Not only that, but you are much more likely to start dipping into a home equity loan or your credit cards to finance your lifestyle - a dangerous practice. If you really want that dream home, try living for six to eight months on the same budget that you would have to follow if in fact you were to actually own that dream home. Chances are that when you actually see what such a plan will cost you, you'll be happy that you stayed put.
About the Author
John Stephenson, Brooklyn, New York, USA
johnstephenson@reportonmoney.com
http://www.reportonmoney.com
John R. Stephenson speaks and writes on a variety of money and wealth creation topics. His principal expertise is in the areas of investing, capital markets and small business. John is the founder of Report on Money and also runs The McConnell Group, an investment research and consulting practice.
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You've told yourself dozens of times that tomorrow you are going to start exercising. Yet, tomorrow has come and gone, and you still haven't starting moving. So, what's holding you back? What excuse seems fitting today?
It's time to face your excuses head-on so that you can overcome them and choose to live a healthier lifestyle. Here are some of the most common excuses for skipping exercise along with ways to combat them.
I Don't Have Time: This if by far one of the most common excuses used. But, it still doesn't hold water. People that use this excuse are actually saying that exercise is not enough of a priority to make it on their weekly to-do list. If you fall into this category, then it's time to review your daily priority list. Certainly there is something less important that you are doing for 20 minutes every day that can be replaced with exercise. After all, exercise is one of the most important things you can do for yourself and your family to ensure that you live a long, full, disease-free life.
I've Tried And Failed In The Past: It's true that it can be difficult to get motivated to try something after you've failed before, but isn't your health worth another try? If you've been unsuccessful at exercising in the past, then re-evaluate what went wrong. Did you try to do too much, too quickly? It's very common for new exercises to be overzealous when starting their workouts and end up either burning out or getting injured early on. Did you set unrealistic goals for yourself? Try to stick with small goals that are truly achievable. For example, that you will workout three times per week for the next month.
I Can't Afford A Gym Membership: You don't have to spend a single minute in a gym in order to lose weight or get fitter. Just walking outside is a great place to start. Also, home fitness equipment has become very affordable and accessible. For as little as $30 you can buy some great home equipment that will really challenge your body. A resistance band and an exercise ball allow you to work every muscle group and even get a cardiovascular workout.
I'm Too Fat (or out-of-shape): Unless your physician has forbidden exercise, then it's very unlikely that this excuse has any validity. If you are extremely out-of-shape, then you simply need to start with baby steps. Walking is always a great place to start. You may have to start with just five minutes. That's okay. You can gradually add more time each week. If walking is not an option, then you could try some pool exercises. At the very least, you can start by getting active while sitting. There are many beneficial strength training exercises you can do while sitting.
I Don't Have Any Exercise Equipment: Nice try, but it doesn't require special equipment to get your heart pumping. Don't underestimate what you can do with things that are already in your house. For example, if you have a flight of stairs in your house then you've got an awesome way to get your heart rate up with through walking or running the stairs. Grab soup cans or milk jugs filled with sand to immolate dumbbells for strength training exercises. Try push-ups and tricep dips and you'll quickly realize how hard your body has to work when just using it's own weight.
I Don't Know What Exercises To Do: There are literally dozens of ways to learn what exercises will help you. A great way to ensure your workouts are most effective is to hire a personal trainer or an online personal trainer. They can guide you every step of the way so that you don't waste any time doing exercises the wrong way. Also, there are books, online websites, television shows and videos that offer loads of advice and tips.
I'm Too Old To Get Started: It may sound cliché, but you are never too old to get started. Everyone can benefit from exercising. Even if you are a senior citizen you can reap many rewards from starting an exercise program. Okay, so maybe you won't be a marathon runner or a bodybuilder, but you'll be able to walk the stairs easier, play with your grandchildren, improve your balance, improve your strength and more.
I Just Can't Get Motivated: Don't view exercise as a lifetime evil. Set small, short-term goals to help you get started. Start with a promise to just take the stairs instead of the elevator, for example. Then you might move onto scheduling 10 minutes of activity a couple of times per week. Also, make a list of all the positive benefits exercising has on your life. Your list might include giving you more energy, reducing your health ailments and more. The list should be pretty long. Post it somewhere that you will see it regularly and it can serve as a reminder to you as to why you need to workout.
I Hate Exercising: You probably think you hate it because you've been stuck doing activities that you don't enjoy. Many people still have the old "no pain, no gain" mentality and think that in order for exercise to be worthwhile you have to be miserable doing it. This just isn't true. Consider things that you really like to do. Do you prefer competitive situations? Then consider joining a recreational sports team. Do you enjoy spending time alone? Maybe Yoga or evening walks are for you?
I'm Too Tired: This excuse can create a vicious circle because the more sedentary you are then the more tired you become. Of course, the more tired you are then the less appealing exercise sounds. So, try to nip this in the bud quickly. Exercise can actually make you feel more revived then a nap. Regular physical activity increases your energy level. Plus, exercises tend to sleep fall asleep faster and sleep better, which allows you to truly feel rested every day.
When you find yourself making an excuse not to exercise, read through some of the above tips again. And, remind yourself of all the many benefits of working out: lower body fat, decreased risk of many diseases, reduced instances of depression, improved bone density, reduced risk of injuries and many more.
About the Author
Lynn Bode,
info@workoutsforyou.com
http://www.workoutsforyou.com
Lynn Bode is a certified personal trainer specializing in Internet-based fitness programs. She founded Workouts For You, which provides affordable online exercise programs. Visit: http://www.workoutsforyou.com for a free sample workout. Fitness professionals improve your business, visit: http://www.trainerforce.com
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