Grant Baldwin's Blog » Money & Finances

BrokePiggy LIVE in Perry, Oklahoma

Grant — Thu, 19 Nov 2009 14:48:51 +0000

Yesterday, I had the honor of hanging out with some great students in Perry, OK to discuss entrepreneurship and personal finance.

We discussed investing, savings, banking, spending, credit cards, career choices, taxes, and a plethora of other things related to the world of money. It was a great event, and I know the students got a lot out of it.

If you’re looking for someone to teach your students about personal finance or entrepreneurship, let me know (grant@brokepiggy.com). Get more information about our money program here and be sure to check out our student money site, BrokePiggy.com.

Borrowing Money From A Family Member Is Stupid

Grant — Thu, 29 Oct 2009 11:00:37 +0000

When things get tough financially, the path of least resistance is to seek help from people you know love you: family. But I’m here to warn you…this is a horrible idea.

Although a family member may have the ability to help you out when you’re in a bind and may even want to help you out, you shouldn’t go that route. When you borrow from a family member, you change the dynamic of that relationship. No longer is it a parent-child or sibling-sibling relationship but now it becomes a borrower-lender relationship. And I don’t know about you, but I don’t get together with my mortgage company to exchange Christmas presents!

When you borrow from a family member, you’re also less likely to stick to the terms of the loan. If you couldn’t make a payment one month, you wouldn’t think anything of it because they’re family. They’ll understand right?! But you couldn’t pull that stunt with a bank. You would have late fees and penalties to remind you not to do that again.

If you’re really in a tough position financially and a family member wants to help out, the only way I would agree to it would be if it’s a gift. No repayment necessary. Now if you’re on the giving end and you want to help out a family member in need, make sure you’re actually helping them and not simply enabling their poor money decisions.

But the bottom line is if you have to borrow money, don’t borrow it from a friend or family member. You’ll ruin that relationship.

Why Countless Options Leads To Indecision

Grant — Tue, 13 Oct 2009 14:00:23 +0000

I was reading this month’s issue of Money Magazine over the weekend and came across an article titled…

What To Do With $1,000 Now: Here Are 68 Of The Smartest Options.

SIXTY EIGHT OPTIONS?! Are you kidding me?!

Now I understand that they are in the business of just presenting people with the possibilities and allowing them to choose what’s best based on their individual circumstances. But who in their right mind wants 68 options to choose from? This was a great example of why most people end up doing nothing with their money except waste it. If I’ve got 68 options to choose from, then I’m probably going to take the path of least resistance which is to spend it on something I don’t need.

Who has the time to truly sit down and evaluate all 68 options to determine which one best suits their needs and situation? So what can we learn from this?

Don’t Allow Yourself Too Many Options – Limit the possibilities from the beginning. Whether you’re selecting a college, where to go for vacation, or what to have for dinner, don’t allow yourself to have 68 options! Keep it to just a few and you’ll be more likely to make a better decision.

Don’t Over-Think Things – Once you’ve got your initial list of just a few options, there’s nothing wrong with taking the time to analyze your options. Make a list of the pros and cons of each. Compare apples to apples. How is (A) better than (B)? Keep in mind though that not all decision require this much thinking. If I’m picking a vacation destination, I’ll definitely think through my options but if I’m deciding what to eat for lunch, you won’t find me making a pros and cons list!

Make The Decision – Don’t put off the decision. Once you’ve determined what the best course of action is…DO IT! So often people are guilty of talking about doing something different but not actually doing it. If you just talk about it but you don’t actually take action, you’re wasting your time.

How I Handle My Business Income

Grant — Mon, 12 Oct 2009 14:00:22 +0000

When you’re self-employed, you have to learn how to handle your income in a slightly different way compared to a “normal” job. In a “normal” job where you receive a consistent paycheck, everything is basically taken care of for you. They subtract out your taxes, insurance, retirement, etc. and you get to keep what’s left over.

But whether you’re 100% self-employed or you’re just doing some freelancing on the side and making a little extra cash, it’s important to know how to handle your income. So I thought I’d share what works for me and how our system is set up. Sound good? Here are the steps I take…
1. Let Excel do the math – When I receive a check (books sales, speaking fee, etc), I first put the numbers into an Excel spreadsheet that tells me how I need to distribute that money.

2. Subtract out expenses – Are there any expenses directly tied to that check? For me, it typically involves travel expenses that I’m being reimbursed for. Other expenses may include printing, shipping, etc. A lot of freelancers and small-business people skip this step and have no way to pay off their expenses. Sometimes I may get a check and half of it actually needs to go to expenses. It would be tempting to pocket that half, but I have to be diligent in reimbursing myself for expenses.

3. Pay tithe (10%) – As a Christian, I pay a 10% tithe on all my income. I choose to pay it on the gross amount (after direct expenses but before taxes). Obviously, this step would depend on your belief system, but it is something that is important to me.

4. Pay taxes (25%) – Taxes can destroy a small business if you’re not careful. I transfer 25% of the net check to a high-interest online savings account (I use HSBC Direct). Then once a quarter I empty that account into my business checking account and pay my estimated quarterly taxes for the year. I hate doing it, but if you don’t stay on top of this, your end-of-the-year taxes will eat your lunch.

5. Business account (15%) – Any small business or freelancer should be setting aside money out of each check to help fund the business. You should have a separate business checking account from your personal accounts. I use this account to pay my speaking coordinator, marketing expenses, design fees, shipping, etc…anything and everything related to the business.

5a. Printing account – I self-publish my book “Reality Check” so whenever I sell books from my current inventory, I set a little of the profits aside to build up a reserve for the next printing. My initial printing was 2,000 copies which costs several thousand dollars. I know I will be printing more soon (actually in the next month or so), so it’s important to make sure the money is there for the next time around.

6. Personal savings account (50%) – After everything else has been subtracted out, the remaining amount goes in our personal savings account. So as you can see, I get to keep only HALF of the check amount! We try to keep a month’s worth of “salary” (I’ll explain in the next point) within this account, so we’re always essentially a month ahead on our bills. This helps us balance out the ebbs and flows of our income. Sometimes this account is nearly empty (slow season) and sometimes it’s packed (busy time of year). Any time this account has enough in it to cover one month’s salary, we take anything above that and put it in our emergency fund (another HSBC Direct account online that we keep 4 months worth of expenses in) or our Roth IRA.

6a. Pay ourselves a salary – We create a monthly budget for our home and have set up a “salary” for ourselves. So twice a month, we pay ourselves out of the savings account listed above. Again, the point of this is that it helps balance out the highs and lows of our income. It would be tempting to spend more money when you have it, but you have to prepare for those slow seasons when you’re not raking in the cash.

So that’s how we handle our income from the business…any questions?

“Get Rich Quick” Is As Real As Unicorns

Grant — Thu, 01 Oct 2009 13:00:00 +0000

When I travel, I try to find little hole-in-the-wall local places to eat at. Sometimes that is a very wise decision (for the food is pure decliciousness), and other times…not so much.

I had lunch in this little local restaurant in a small town in Kansas and found myself eavesdropping on the conversation between the waitress and two of her other tables. They were discussing what the lottery was up to and what they were going to do with the money when they won. I gathered they all already had tickets and were planning on buying more today before they announce the winner later on.

I thought about turning around and telling them, “You guys are dumb.”

But I decided not to for fear that grandma might beat me with her walker. Of course they would argue what most lotto participants would say: “Somebody’s got to win…it may as well be me.” Sure, that may be true (I decided against explaining to them that their odds are better to get struck by lightning twice and get swallowed by a whale…in Kansas), but what bothered me was their attitude towards the lotto.

To them, it was their ticket to freedom. It was their one-way pass out of their current mediocrity and into a “better” life. It was as if they were helpless in their situation and the only thing that could rescue them was winning the lottery. Winning the lotto may be a shortcut to a “better” life for some, but here’s a news flash…

You’re Not Going To Win. You’re Not Going To Get Rich Quick. Regis And Howie Aren’t Offering You Suitcases Full Of Money.

But tell you what…instead of just breaking your heart with this fact, let me at least give you some hope. You know how you can get rich and get out of your boring existence?

Hard work. Set goals. Think of what could be rather than what is. Don’t give up. Stop settling.

These aren’t just cliche motivational phrases. When you realize that there are no shortcuts and you start to take ownership for your own life, things will start to improve.

Until then…keep buying lottery tickets.

New BrokePiggy LIVE Program For Students!

Grant — Fri, 14 Aug 2009 13:30:13 +0000

I’m really excited to announce a new program to educate students about money and personal finance called BrokePiggy LIVE! It is a relevant one-day program that partners with high schools and other youth events to teach students about personal finance in a way that makes sense to them! One of the best parts…BrokePiggy LIVE is actually two programs in one!

A high-energy and entertaining 45-minute assembly/keynote
An interactive and more in-depth workshop (up to 3 hours) for a smaller group of your students.

You can download more information about the program here or visit our new page on the BrokePiggy.com website. If you’re interested in bringing BrokePiggy LIVE to your school, conference, or other student event, click here or email us at info@brokepiggy.com.

Teens & Money Survey From Seventeen Mag & Bank of America

Grant — Thu, 13 Aug 2009 15:33:07 +0000

Yesterday, I read a new survey that was released in Seventeen magazine regarding Teens & Money.

Yes, I subscribe. Please don’t judge me.

Anyway, it was a survey of 2,000 teenagers across the U.S. Here were some of the findings with my 2 cents…

88% are stressed about money – That seems fairly high to me. I wonder how much of it is attributed to their parents being stressed about money or the shock value of the news media?
34% believe they’re in total control of their finances – I’d be interested to know what they define as being in “total control”. I’m sure some students are and hopefully with resources like BrokePiggy.com, more students will feel this confident with their money.
63% would rather have a career that makes a difference over one that makes a lot of money – I wonder how this would compare with their parents? Most of our parents were taught to find a career for the money rather than passion but Gen Y is the opposite.
40% think their parents should bail them out if they don’t have enough money or find themselves in debt – This needs to be 0%. Stop expecting someone else to bail you out for your lack of responsibility. If you want to be an independent adult, then don’t count on bailouts.
45% say their parents are worrying/fighting more about money lately – Studies consistently show that the #1 cause of divorce is money-related issues. My guess is that continues to increase in this economy. All the more reason to learn to handle your finances.
38% have had to altar their college plans because of the economic downturn – Hopefully this economy has been an eye-opening experience for students so they may attend less expensive schools to save money and avoid school loans.

Any observations you have from these numbers?

And That’s Why You Have An Emergency Fund

Grant — Fri, 31 Jul 2009 13:00:29 +0000

Last week I had the “check engine” light come on in my car.

Awesome.

I love it when lights on my dashboard come on. Not really. It’s never something positive like “you just won the lottery” or “hey Grant, you look nice today.”

A light on the dashboard typically means, “Hey buddy, hope you didn’t have plans for the weekend, because I’m about ready to cost you some cash!”

So I took it in to be worked on. First, it was just a sensor that needed to be replaced. Then, some tune-up work came into the picture. And next thing you know, I was swiping my debit card for $372 (because you don’t need a credit card for emergencies).

Awesome.

But here’s my point. A few years ago, this would have been a major stress, because I wouldn’t have had $377 for such a situation. But thankfully we have an emergency fund for times such as this.

So while I can probably think of 372 different things I’d rather do with $372 than pay a mechanic, it didn’t cause a panic attack.

Instead of it being a huge crisis and cause for stress, now it’s just an inconvenience. A very minor bump in the road (which my car will be better suited for now with it’s awesome new sensor and tune-up).

And that’s why you have an emergency fund…for when lights appear on your dashboard.

New FREE E-Book: “How To Go To College For FREE!”

Grant — Wed, 29 Jul 2009 10:00:52 +0000

Really excited about a project I’ve recently completed that I wanted to share with you. It is a new e-book called “How To Go To College For FREE!”

It is a 21-page e-book with 15 different tips for not only finding extra money to help pay for college, but also tips to decrease the cost of your education.

It’s extremely practical with “now what” steps included with each tip. In addition, there are several websites and valuable links to help with the process.

Here are a few of the items covered in “How To Go To College For FREE!”:

Why submitting the FAFSA early gets you more money (page 5)

How to earn $50 per hour through scholarships (page 7)

3 websites you can use to get family and friends help pay for your education (page 11)

How to save $20k+ per year by starting at a community college (page 15)

The story of how one student earned 72 college credits through AP & CLEP tests…while still in high school! (page 16)

How one student earned an additional $10,000 in scholarships with a few simple phone calls (page 19)

You can read the entire e-book online or download a FREE copy at http://www.brokepiggy.com/resources-tools/how-to-go-to-college-for-free/.

What Money Questions Do You Have?

Grant — Fri, 01 May 2009 21:07:23 +0000

As you may know, I’ve got a new money site for students called BrokePiggy.com.

Everyday we answer a new question from students about anything and everything related to money and personal finance. Here are just a few of the questions we’ve covered so far…

But I want more questions from you! What do you want to know about savings, banking, credit cards, investing, retirement, the economy, entrepreneurship, scholarships, debt…you ask it, we’ll answer it!

Send all your questions to info@brokepiggy.com or go to our Ask A Question page.

And if you haven’t had a chance to visit BrokePiggy.com yet, go to the How To Use This Site page to familiarize yourself with the place.