Best way to avoid debt is to live within your means!

Sounds simple right? Four simple words, live within your means. But let me tell you, it's not easy for anyone. Part of American society means that you have a credit card and use it. We all just need to be responsible and not charge what you can't pay off. Easier said than done.

According to CNNMoney.com, "The average American household with at least one credit card has nearly $10,700 in credit-card debt, according to CardWeb.com, and the average interest rate runs in the mid- to high teens at any given time." A little scary huh? $10,000+ is a lot of money to owe rather than being able to use that money to help secure your future!

I've got a bit of credit card debt, which I'm working to pay off completely within a couple months. (Knowing that I'll soon be completely out of debt is even more of an incentive to continue to build of my savings account to ensure I don't go back into debt.) The hardest part about paying off my debt is that I have to know what I can afford and NOT put anything on my credit cards, no matter how tempting it may be.

It's such a simple idea, live on what you make. But come on now, there's eating out, traveling and that new "something" that you want. After debating about whether or not I should buy a Kindle to support my reading habits I finally decided that yes I was going to make the plunge and buy it. If you know me, you know I'm insanely impatient and it was rough waiting an additional week until I got my next paycheck to click "Buy Now" on Amazon. Do I feel proud of myself for waiting? Not really...it sucked but I know it was the right decision. Now that I've got a shiny new Kindle in my hands I can't put it down and I love reading more than ever. Will I remember in a year that I waited an extra week to purchase it? Of course not! But by waiting a week I had some extra cash rather than putting it onto my credit card and further adding to my debt.

Instead of buying that new "something" just think about how much you really want it. Can you live without it? Sure you can. Do you have the cash to buy it now? If yes, and there's no other pressing financial commitments, go for it! You've got to treat yourself every once in a while, just think moderation and more importantly...living within your means.

Short Term Savings Account...my new favorite type of account

I've got a checking account, a saving account, a brokerage account, a 401(k) a Roth IRA, the list is endless but none of these accounts were meeting my needs for a short term savings account. Namely, to save for an up-coming Hawaiian vacation with my boyfriend Ryan this summer. I was stumped about how to create a separate account with the goal of saving money for a short term goal, our vacation.

The issue with my current savings account is that ALL of my savings goes into this account and I didn't want to have to keep track of how much was going to our Hawaii trip. Plus, I wanted to add Ryan as a joint account owner so we could both contribute to the account. My current bank wouldn't let me open a second savings account and even if i could, it was not possible to add a co-owner for a single account. I needed another option. After a lot of research I found exactly what I was looking for, ING Direct's Orange Saving's Account. An account with no minimums, a high interest rate and FDIC insured.

ING Direct encourages the use of your account for short term goals, such as a new car, dream vacation or house. They allow you to create multiple sub-accounts for each goal. You can even give each account a name so that it's easy to distinguish and identify! (Mine is called "Travel Fund")

The account was incredibly easy to open and easy for me to add Ryan as a joint account owner. After verifying my bank account was linked correctly I was able to enroll in their Automatic Savings Plan, which allows you to determine how much money you'd like transfered and when so that you don't have to think about it. Just set it, forget it, and watch your savings account grow! Right now $100 from each paycheck is automatically transferred the day after we get paid. There's no thinking, no negotiating with myself about whether or not I should transfer money and I don't have to remember to transfer anything...it's all automatic!

It's always good to do your research and I'm sure there are many other options but if you're looking to start saving for that new car, a vacation or even a cool new appliance it's worth looking into ING Direct. It's never been easier for me to save towards my short-term goal and I couldn't be happier!

10 Reasons to consider ING Direct for your short-term savings goals

1. FDIC Insured up to $250,000 per depositor

2. 1.15% annual percentage yield

(Almost all other banks I researched were under 1%)

3. No fees or minimum amounts needed to start or maintain your account

4. No changing banks. Just link your current bank account to ING Direct

5. Quick application process. It took me no more than 5 minutes from the moment I went to their website until I had my own account.

6. Safe and secure

7. Easy to add a joint account owner

8. Able to download data to programs such as Quicken, MS Money or even an Excel spreadsheet

9. Have trouble remembering your account number? Create a Saver ID to access your account. Awesome feature that I had never seen before.

10. Great source of information, tips and tools for a healthy financial future

Click here to read a review on ING Direct from Money Blue Book

Click here to check out ING Direct

With 2010 I'm determined to keep my credit card balances down, continue to save for my future, and contribute to both my Roth IRA and 401(k)...it's rough! I know that it's going to be an expensive year and all I can do is be pro-active and save as much as I can so that I can avoid getting into debt. With just a little bit of planning, I'll have $1,200 saved up for my vacation in July and that's $1,200 less that I'll have to put on my credit card. If I can do it, anyone can do it!

FREE Credit Report and so much more...

We've all seen the gimmicks to get a "free" credit report, but of course they're not always free. I'm a HUGE advocate that everyone should know their credit score and am constantly looking to improve my score without draining my wallet.

Did you know that on April 1st a new rule to help you weed out the impostors will take affect? Titled the "Free Credit Report Rule", all websites that advertise "free" credit reports but require you to sign up for monthly credit -monitoring subscriptions or other services will HAVE to include a disclaimer. The good news for you is that you'll be able to spot these websites in a second!

The New York Times featured a great article in today's news titled "New Disclosure Roles for 'Free' Credit Reports" if you'd like to get more information on the new rule and required disclosure message.

Click here to read full article

Now on to the GOOD STUFF...

How can you get a FREE credit report?

My secret is a website called Quizzle. I first learned about the site a few months ago when a colleague and close friend suggested that I check it out. Of course I was a bit skeptical but decided to investigate and do a little research. Sure enough, it's FREE with NO strings attached and it's now one of my favorite financial websites. I've been a member for three months and haven't paid a dime.

10 Reasons to try Quizzle

1. It's FREE! Quizzle offers additional paid services and perks, but you can get a FULL credit report AND your credit score that are both 100% FREE

2. Safe and secure website

3. They partner with Experian, one of the main credit bureaus so you get a reputable score you can trust

3. No social security number OR credit card information needed

4. Able to get two credit reports a year, one every six months

5. User friendly

6. Great resource for more information on money management - Check out "Quizzle News"

7. Get more information about your home, including information on your home value, mortgage, along with other neighborhood statistics

8. Helps you evaluate your monthly budget and "rainy day fund"

9. Offers FREE advice on how to improve your credit score, save more money and learn to budget properly

10. Amazing Reviews from CNN, The Wall Street Journal, USA Today and more

Still not convinced?

Click here to read more about their FAQs

I hope you'll check it out and love Quizzle as much as I do! Everyone should know their credit score and with Quizzle there are no more excuses...you can only help yourself and your future!

Click here to go to Quizzle.com

Love & Money

In the spirit of Valentine's Day and per the request of a few friends I thought I'd touch a bit on relationships and money.

Relationships are complicated enough and introducing money into the mix has the potential to get messy. At what point do you start talking about money? What if you're on different financial levels? I've found that in exploring and learning more about money management most people still think that talking about money is taboo. It shouldn't be!

Just as communication is important in any relationship, talking about money is one more thing that can bring you closer together as you can understand each others financial situations. There's no formula for when you should start talking about money, but follow your gut and as you become a more serious couple, it's something you'll want to address. I've found that it's helped Ryan and I understand each other and work towards common goals, such as saving towards our vacation or knowing what we can afford together as a couple.

If you're not on the same level, that's okay too. There's nothing to be ashamed of and by talking about your situation, you can help your significant other understand where you come from. This can help explain some of your habits surrounding money and it'll be great to know that you've got a support system with someone who's there even if you don't have a perfect credit score or tons of money saved up.

You don't need to dish out the details of exactly what you make or the exact amount in your savings account. Honest ball-park ranges are perfectly fine. For example, do you have a savings account? Do you put money into your savings account on a regular basis? How were you raised when it comes to money? What kind of lifestyle do you see yourself living in the future? Do you have a lot of credit card debt? As you get to know someone better, you'll inevitably figure out the answers to some of these questions. Don't be afraid to talk about money, if you see yourself marrying this person, it's better to start talking about money now and understanding each others situations rather than ignoring any potential issues that might cause strife later.

During my daily routine of looking online at my favorite newspapers online I came across this great article from the Wall Street Journal titled, "Questions to Ask After 'I Will' but Before 'I Do'.

The article does a fabulous job addressing the fact that "whether the issues are big or small, money will prove a powerful force in impacting your" relationship. While we may not all be getting married any time soon, it's great to have an open dialogue about money and money management!

Click here to read the full article

...and on that note, time to enjoy a romantic dinner cooked by Ryan. Happy Valentine's Day!

So I've got some extra money...now what?

My friends and colleagues have been a huge inspiration and have been tremendously supportive as I look to help myself and those around me manage their money better. I'm always looking for ideas on what to explore next...

Erica, a close friend of mine wanted to get my thoughts on the following. You have an extra $3,000, what should you do?

1. Pay off your car loan

2. Pay off your credit card bills

3. Save it (in case you lose your job or for a rainy day)

4. Invest it

Great question and a lot of us face this when we get some extra cash, maybe a bonus or a raise that gives us some additional unexpected cash.

First off, following the advice of Charles Schwab himself DON'T invest unless you:

- Already have an emergency fund (6 months of living expenses)

- Are contributing the maximum amount to your IRA and 401(k)

- Are fully insured, ex. health, dental and vision or life insurance if have a spouse and children

(For more information read Charles Schwab's Guide to Financial Independence)

So on that note, I was looking into investing a few years when I started working full time and I'm STILL trying to meet the above three requirements. Plus, especially with this economy I wouldn't recommend investing unless you REALLY know what you're doing. You can lose a lot of money very quickly...

Eliminating investing for now, that leaves you with three options. Who says you can't do all of them! When I got my bonus last year, that's exactly what I did except that I added one more category. Here was what I did...

Keep 10% for yourself! ($300 in this example)

Unless you're in serious debt, treat yourself! I've found that if I am saving or putting EVERYTHING towards paying off bills I start becoming bitter. This way, I can enjoy a portion of the money and do something fun. Don't spend more than that but it's always good to reward yourself for the hard work.

Put 10% in your savings account ($300 in this example)

The only way to accumulate the amount in your savings account is to add money whenever you can. This is another way of "paying yourself" as this is your emergency fund for when those surprise expenses come your way.

Split the rest between your bills ($2,400 in this example)

Figure out which bill has the higher interest rate in paying back what you owe. For example, if your car loan has a 7% interest rate versus your credit card with a 12% interest rate, you should put more money towards your credit card bill. There's no exact formula with how much to pay off, but I like split it so I feel like I'm accomplishing something in paying down both debts. I'd put about 80% or so towards paying down the account with the highest interest ($1,680) and put the rest towards your other bill ($720) Remember to split up paying off your bills based on how you see fit taking into consideration the amount of debt you have and corresponding interest rates.

Balance is good, especially when it comes to your finances. Although getting an unexpected large sum of cash isn't always in the cards, it's always great to have a plan so that you know what you're doing to do when it comes your way.

Follow me on Twitter!

I just added my Twitter account (@maripullen) to my blog!

As I find new interesting and news articles or bits and pieces of helpful financial information/ industry trends I"ll be adding to Twitter.

For example, yesterday an article was published about the moving trend for individuals to pay off their credit cards rather than their mortgage. (Tweet titled "mortgage vs. credit cards")

Click here to read the full article or look at my twitter feed to the left for a link to the article.

Enjoy!

Breaking News: Credit for tweens? Seriously?

Issuing credit for TWEENs? Really? Individuals in their mid-late twenties and thirties can barely manage credit, how can we trust tweens to do the same?

"Buy Now, Pay Later (Maybe with Your Allowance)", a New York Times article published on Friday, February 6th written by Randall Stross outlines a new type of "payment option for anyone without a credit card or a debit card, no matter how young, has just become available." It's name, "Kwedit Promises" issued by Kwedit.com. Kwedit is linked to the newest internet games, also referred to as "nurturing games". (Foo Pets and Puzzle Pirates, think FarmVille) Also, this is the first form of credit that doesn't require getting a parent's consent.

Online participants can "buy" goods and services to participate in their online game. The example from the article talks about buying Purina Puppy Chow for their virtual pet in Foo Pets, a $3 good in this case. Once a participant "buys" their good they have three options to pay it off:
1. Credit card or debit card
2. Cash sent in a mailer
3. 7-Elleven stores. Talk about new trends! "A user can print out a barcode and head to a 7-Eleven store, which will accept cash, scan the code and notify Kwedit that payment has been made. In the next three months, a Kwedit logo will join those for credit cards and other payment methods on the doors of all 7-Elevens, a company spokesman says."

Industry Trends on virtual goods via the New York Times
1. In 2008, $510 million was spent on virtual goods
2. In 2009, amount doubled and $1.03 billion was spent on virtual goods
3. Estimated that in 2010, $1.6 billion will be spent on virtual goods

Here's the scary part...the key demographic is girls ages 12 to 14. Scott Sorochak, Co-Founder of FooMojo, that operates Foo Pets said “so, long run, if Kwedit is successful, that becomes the de facto virtual credit score, like Experian’s and the other FICO scores.”

The next generation of kids are could potentially impact their credit score (for better or for worse) starting at twelve years old! The article suggests that "Kwedit is a way to become acquainted with credit early, while still on training wheels." I don't think that twelve year olds are ready for credit or responsible enough to understand it's potential impact on their future.

Click here to read the full article

Saving money has never been more romantic!

Valentine's Day is just over a week away, do you have the perfect gift?

So let's just start with the fact that I'm a HUGE sappy romantic and I LOVE Valentine's Day!

This is quite the year for my boyfriend Ryan and I as we have 6+ weddings that we're planning to go to and NONE of them are here in Southern California. We were also planning a trip to Hawaii when I found out that my cousin's wedding is going to be in Oahu. It was the perfect excuse to kill two birds with one stone and plan a little Hawaiian vacation after my cousin's wedding.

If you're like us, going to 6+ weddings isn't exactly cheap when you factor in travel, gifts, hotels and possible car rentals.

I was looking for the perfect present to give Ry for Valentine's Day and came across this Dream Bank Photo frame from Spunky Sprout. All you need is a great photo to turn this picture frame into a romantic gift that encourages you or your significant other to save up for something special!

I actually bought two, one for Ryan and one for myself since we've both got quite a bit of saving to do this year. I'm planning to frame one of his favorite pictures from our last trip to Borrego Springs as motivation for our trip to Hawaii this summer. Hopefully it'll be a great way to get him excited about our vacation but also a reminder to save that extra change!

Yes, you should care about your credit score!

I've recently re-connected with one of my closest friends from high school and she's been a huge inspiration in encouraging me to keep on digging into financial issues, so this one's for her!

First of all, let's start with the basics.

What IS a credit score?

Your credit score is a value typically ranging between 300 and 850 and is a way for institutions to asses your creditability. The closer you are to 850 the better. In theory this number tells someone how creditworthy you are or how likely are you to pay your bills. This score is then used to determine whether or your not you're approved for a line of credit, plays a part in determining your credit card limit and can pre-approve you for additional credit.

Your credit score is based on credit reports from one of the three main credit bureaus:

1. Experian

2. TansUnion

3. Equifax

There are multiple ways of calculating your credit score, but FICO is the most popular and widely used. The credit bureaus all have their own ways of calculating a credit score but think of them as directional and don't get hung up on needing a single, exact score.

*Don't fall in the trap of subscribing to contractual gimmicks to get your credit score. Keep reading, take it all in and in my next entry, I'll show you a great website that gives you your credit score for FREE. No credit cards or social security number needed, promise.

Why is your credit score important?

Higher credit scores can help you with the following:

1. Qualify and obtain a loan at a lower interest rate

2. Get a higher credit limit

3. Ensuring there's no fraudulent marks on your report that could be hurting you and making sure no one has stolen your identity

4. Get a house or apartment - landlords can request to check your credit

What's considered a good credit score?

Unfortunately there's no exact answer but generally anything above a 700 is considered a good credit score.

What affects your credit score?

Per FICO, more than 20 factors in five different categories are considered when calculating your credit score

1. Payment history - (35% of your score) This is based on how well and often you pay your bills and I mean ALL of your bills. Payment history takes into consideration your credit cards, retail accounts and details on late or missed payments along with public records like bankruptcies, unpaid tickets, and money owed to collection services.

2. Amount you owe compared to available credit - (30% of your score) This factors ALL of your open accounts and looks at the how much debt you have in comparison to you total line of credit.

3. Length of credit history - (15% of your score) Start establishing your credit as soon as possible! Remember that having a credit card doesn't mean you should max it out. The longer you have had and shown that you can use credit the higher your score will be.

4. New credit - (10% of your score) Open accounts sparingly and only as you need them. Trying to open or opening multiple credit card accounts within a short period of time hurts your credit score. Think about it, you're opening numerous accounts and the agencies don't know how you'll handle it, can you pay off your debt? Are you responsible? You've got to prove yourself and build up your credit history slowly...

5. Types of credit - (10% of your score) This part of your score considers the different types of credit you're using and the total number of accounts you have. For example: credit cards, store accounts, car loans, student loans, mortgages, etc...

In essence a high credit score SAVES YOU MONEY! You can qualify for credit cards at lower rates and obtain important loans that can help you buy a car or even a house.

Stay tuned to learn how to get a FREE credit report and the 10 common myths about credit scores...

Quick tip on the importance of saving from CNNMoney.com

I'm all about looking to the experts for advice on money management. Walker Updegrave is a senior editor with Money Magazine and is the author of "How to Retire Rich in a Totally Changed World: Why You're Not in Kansas Anymore.

A few days ago Updegrave wrote an article about the correct way to build an emergency fund but what I found most interesting was the quotation below...

"The Congressional Budget Office estimated earlier this week that the unemployment rate will remain over 10% for the first half of this year and won't decline to the economy's "natural" rate of 5% unemployment before 2016 is just another reminder that we should all try to have three to six months' worth of living expenses tucked away in a safe place get us through tough times."

2016? A little scary huh? I can tell you that I definitely don't have three to six months of living expenses saved up...but it is one of my new year's resolutions. Happy saving!

Click here for full article on CNNMoney.com

Flex Spending Accounts: Improve your heath tax-free!

I've been thinking with getting a flex spending account or FSA for a few years now and finally decided to try it out. After months of anticipation after signing up with our annual benefits review, my card came in the mail today! So I thought I'd share a little bit more about these pretty cool accounts. Keep reading for a down and dirty review of Flex Spending Accounts.

What is a Flex Spending Account or FSA?

An FSA is a tax-advantaged financial account that is set up with your employer as part of your benefits program. (Sorry guys, not all of you are qualified but I'm lucky enough to work for an amazing company that offers amazing health benefits)

An FSA allows an employee to set aside a pre-determined amount of earnings to pay for qualified health or medical expenses and even daycare. Be careful as it's a use or or lose it type of program. You have to spend your pre-determined amount in the calendar year.

The part that saves you money is that the money taken from your earnings is NOT subject to payroll taxes!

How does it work?

I'll from experience here as I'm not sure this is the case with ALL FSA's but while signing up for your FSA you decide how much money you want in your account.

Using myself as an example I wanted to try it out this year without a huge commitment so I decided to put $500 into my account. At the advice of the calculator, it suggested a total of $499.98 to ensure that equal amounts of money are deducted from each paycheck and deposited into my FSA account. (That means $38.46 out of every paycheck is going into my FSA account)

The full amount of $499.98 is technically available as soon as my benefits start but you can track your progress online throughout the year to see what you've really accumulated.

You're issued a "benefits debit card" that links to your FSA account. When paying for approved expenses, you can either use your debit card or pay out of pocket and submit your receipts for reimbursement.

You can't go over your pre-determined amount set at the beginning of the year but you've got an entire year to use it.

How do you determine the right amount to put into your FSA?

I struggled with this one and as I mentioned I was very conservative knowing that I easily spend $500 a year on contacts, prescriptions and co-pays at my doctor.

I'm happy with my $500 commitment for now but I wish I had stumbled on Principal's calculator sooner as I'm sure I would have budgeted a little different.

Principal Financial Group's FSA Calculator

What's an eligible expense?

Not all programs are the same but here a list of the basic types of expenses that are often covered within your FSA plan. Be sure to check with your health care provider for a full list.

• Medical and dental deductibles and co-payments
• Eye exams, contact lenses/solutions, and glasses
• Prescription drugs
• Orthodontia or other dental care
• Physical therapy and chiropractic care
• Medical devices such as hearing aids and diabetes testing supplies
• Smoking cessation programs
• Over-the-counter (OTC) products

What over-the-counter products are eligible expenses?

This one is a little tricky but keep this in mind, if it's used for "medical care" then you're good to go. For example, band-aids and cold medicine are okay while vitamins are NOT eligible because they're considered preventative care rather than medical care.

Where can you use your debit card?

Luckily most health care merchants accept FSA cards. This includes doctors, dentists, vision care facilities and other locations that sell only medical services or products. Check with you service provider as there are a number of non-health care merchants that also accept FSA debit cards. (For example, the Vons Pharmacy down the street from my house takes the card)

If you try and use your card at a non-approved merchant your card will be denied. This also means no ATM with drawls are possible.

*Note that even though this card is considered a "debit" card you DO NOT have a PIN number. When asked, always select the "credit" option. If asked for you PIN number, simply explain that this particular card does not have a PIN number.

Mistakes can happen

It's possible to accidentally use your card and at authorized merchant for an unauthorized purchase. If this happens, don't stress but be sure to contact your health care provider and let them know.

Keep you Receipts

Your health care provider or the IRS may need or ask for additional information so be sure to save all of your receipts! If you're asked to submit documentation and don't have any, your charges can be classified as ineligible and you'll have to reimburse your account out of pocket.

Hope this helps you understand FSA accounts a little more and if you spend any money at all on health/medical care it's worth looking into!

*Tip: A colleague of mine was wanting Lasik eye surgery and used his FSA account to pay for the procedure. He was able to pay for the Lasik tax free AND pay for it over the span of a year. Pretty cool huh? This might be on my agenda for next year!

Click for more information on FSA's

mint.com: the best FREE way to manage your money

If you're like me, you have more than one bank account. I've got three checking accounts, a 401K, Roth IRA, multiple saving accounts and a handful of credit cards. How do you keep track? To be perfectly honest, until recently I hadn't been keeping track.

With the economic situation I realized that I needed to get a better grasp on my personal finances and started looking for a tool to help me. A colleague of mine recommended that I look into mint.com. I am now convinced that it is the most amazing and surprisingly FREE way to manage your money!

10 Reasons to try Mint.com
1. It's COMPLETELY FREE
2. It's a safe and secure website. They use bank-level data security and even in the worst case scenario IF someone got into your account it's a read-only service and there's no way anyone can move any of your money
3. You can link ALL of your accounts (checking, savings, 401K, investments, credit cards)

4. Personalized budgets based on your spending habits

5. Alerts that tell you when you've spent an unusually high amount or when a large sum (usually your paycheck) has been deposited

6. See your spending and ability to categorize your expenses (with graphs and visual tools)

7. Reduce debt by showing you how much you're spending on interest to know where you stand and can help you cut back on categories to get out of debt quicker

8. It's EASY. It takes minutes to set up and you're ready to go

9. Mobile Access...and for those of you with iphones, there's an app for the iphone to make using mint.com even easier

10. Top rated and reputable (partial list)

- Time - Top 10 Everything List of 2009

- CNN Money.com - Top 40 under 40

- PCMac.com - Top 100 Websites of 2009

- Kiplinger.com - Best Budgeting Site

- Money - Top Pick

- Business Week - 101 Best Web Freebies

Check it out!

I couldn't say more amazing things about mint.com, especially if you're new at money management.

What's the secret to financial success?

Let's face it, we don't all have trust funds and most of us will be working for the next 20 or 30 years. What's the secret to financial success? How can we help save for the future? The answer, I'm still working on it...

I'm lucky to have been introduced to money management by my dad at a very young age and he's still a huge inspiration to me as I work towards my "financial success". In the past few months after many conversations with both friends and colleagues I've found that most people know almost NOTHING about personal finance and money management. Hopefully I can help shed some light on money management, provide links to interesting and new news articles and share any advice I receive along the way.