Smart consumers are always trying to find ways to stretch their dollars. After all, the first step of financial success is to live below your means! Follow these tips to help you find ways to save money, spend less, and improve your finances.
Tip 1: Deal With Your Debt
The place to start saving money is by dealing with money you’ve already spent. Overspending can lead to credit card balances, expensive personal loans, and other high-interest debt. Unless you develop a plan to pay off these debts - and then stick to that plan over time - the odds of paying them off aren't in your favor!
Set aside a specific dollar amount for debt repayment each month, and make sure this amount is above the minimums due on all of your debts. Pay the minimum due on each of your debts and then direct the remaining amount toward the debt you'd like to pay off first.
Paying extra toward the debt with the highest interest rate is the best way to go mathematically. But if you're dealing with multiple debts, starting with the debt with the lowest balance might be the best way to go since you'll start reducing the number of your outstanding debts faster.
Tip 2: Implement A Cooling-Off Period
Impulse purchases are a big reason why many of us overspend. Even if your spending habits don't lead to you having debt, they could still hurt you by taking away money that could be used for your financial goals.
One way to cut down on impulse purchases is by implementing cooling-off period. And remember it's not just big-ticket items like TVs, smartphones, and
cars that can lead to trouble; smaller purchases add up quickly! Consider implementing a cooling-off period of a week or two before making purchases. Use this time to see how the purchase will affect your budget and to determine whether the purchase is a “need” or just a “want.”
Tip 3: Stick To A Shopping List
How many times have you gone to a store like Wal-Mart or Target for just a couple of items and come out with a cart full of stuff? Making a list before you go shopping – and sticking to it once you’re there – can help you spend less.
It also helps to go directly to the part of the store that has what you're looking for. Wondering around a store aimlessly or carefully going down every aisle are two great ways to end up buying things you don't really need!
Tip 4: Use Automatic Bill Pay
Late payment fees are expensive and can add up quickly. You can make
sure you never miss a due date by setting up automatic bill pay for your credit cards, utility bills, phone bills, etc. Not only will this make sure you're never charged a late fee, but it will also free up some of your time.
Most banks offer automatic bill pay, or you could have your bills charged directly to
your credit card. I prefer to have my bills charged to my card and then have my card
automatically deduct the full statement balance from my checking account at the end of the billing
cycle. That way I get reward points and only have to worry about one draft from
my bank account each month.
Tip 5: Check For Recurring Charges
It’s easy to lose track of how much you’re paying for magazines, newspapers, credit monitoring services, video services like Netflix and Hulu, and other recurring subscriptions. So go through your bank statements and credit card bills to see
what you’re paying for and determine whether or not it’s worth keeping.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com
Tuesday, October 29, 2013
Monday, October 7, 2013
The Importance Of Stock Dividends
Stock returns come from two sources: capital gains and dividends. A capital gain occurs when a stock you purchase appreciates in price. Dividends are payments made directly to shareholders and are not affected by the day-to-day changes of a stock's price.
Capital gains tend to be the most exciting portion of stock returns since stock prices fluctuate daily, but dividends have the potential to make a huge difference in your total return over time.
Price Return vs. Total Return
Return figures of indexes like the S&P 500 are often based on the "price return" that only includes price changes of the index (i.e. capital gains or losses). The "total return" figure also includes the dividends that were been paid out by the companies in the index.
The S&P 500 averaged a total return of 9.7% per year over the past 40 years. With dividends removed the return falls to 6.4% per year. So over the past 40 years dividends made up around 1/3 of the total return of large US stocks.
To put this into perspective, a $10,000 investment would grow to over $400,000 if it compounded at 9.7% per year over 40 years. That same investment would only be worth around $120,000 if it grew at 6.4% per year. That’s a huge difference and illustrates the impact of letting stock dividends compound over time.
How To Profit From Dividends
Hold Value Investments – Adding “value” investments to your portfolio can increase your dividend income since they tend to pay more dividends than “growth” investments. Keep in mind that growth and value tend to fall in and out of favor over time, so you might want to have a mix of both in your portfolio.
Don’t React to Market Swings – Instead of panicking out of stocks during downturns, focus on the fact that you’re able to buy shares at a discount with your dividend income. And remember that you won't receive the dividends if you sell your stocks during the downturn.
Be Careful Of Equity-Indexed Products – Some advisors sell annuities and insurance that promise “equity returns” without losses. Unfortunately most of these products use the “price index” that leaves out dividends, so your long-term expected return will be much lower than you might think.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Capital gains tend to be the most exciting portion of stock returns since stock prices fluctuate daily, but dividends have the potential to make a huge difference in your total return over time.
Price Return vs. Total Return
Return figures of indexes like the S&P 500 are often based on the "price return" that only includes price changes of the index (i.e. capital gains or losses). The "total return" figure also includes the dividends that were been paid out by the companies in the index.
The S&P 500 averaged a total return of 9.7% per year over the past 40 years. With dividends removed the return falls to 6.4% per year. So over the past 40 years dividends made up around 1/3 of the total return of large US stocks.
S&P 500 Returns (12/31/1972 – 12/31/2012)
With Dividends
|
9.7% Per Year
|
Without Dividends
|
6.4% Per Year
|
To put this into perspective, a $10,000 investment would grow to over $400,000 if it compounded at 9.7% per year over 40 years. That same investment would only be worth around $120,000 if it grew at 6.4% per year. That’s a huge difference and illustrates the impact of letting stock dividends compound over time.
Initial Investment Of $10,000 Over 40 Years
@ 9.7% Per Year
|
$405,756
|
@ 6.4% Per Year
|
$119,582
|
*For
educational purposes only and does not take into account taxes, investment costs, and other fees.
How To Profit From Dividends
Hold Value Investments – Adding “value” investments to your portfolio can increase your dividend income since they tend to pay more dividends than “growth” investments. Keep in mind that growth and value tend to fall in and out of favor over time, so you might want to have a mix of both in your portfolio.
Don’t React to Market Swings – Instead of panicking out of stocks during downturns, focus on the fact that you’re able to buy shares at a discount with your dividend income. And remember that you won't receive the dividends if you sell your stocks during the downturn.
Be Careful Of Equity-Indexed Products – Some advisors sell annuities and insurance that promise “equity returns” without losses. Unfortunately most of these products use the “price index” that leaves out dividends, so your long-term expected return will be much lower than you might think.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
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