Archive for the ‘ Personal Finance ’ Category

Marketing tricks and scams to be aware of – for people interested in personal finance and financial independence

You earned it, and yet all kinds of tactics and tricks will be thrown around to part you from your money. Here are some of the tricks you might need to keep an eye on –

1. Only 1 item left or promotion code valid for 24 hours only ( sense of urgency) : It is meant to create a false scarcity or sense of urgency to urge buyers to spend their money in a rash. Just stay calm, do your own research and make a rational decision before you fall to this trap.


2. Up to $1000 bonus, up to 75% off – “Up to” makes any statement always true and thus deceiving. Keep an eye for this word. It is also heavily used by corporate Public Relations(PR) personnel in the media – say a big company claiming they gave a bonus of up to 10,000 to their employees. In reality, only 1 person might have received 10k, while the rest less than 100 dollars. Very tricky word.

3. Prize scams – applies mostly to online scams telling you that you have won something and you need to wire some money to insure delivery of the prize. Just label the email as spam. The FTC has details on this –

4. Recurring payments ( death by thousand cuts) – businesses love this because most of the consumers who signed up for recurring payment don’t use the service as much. Evaluate all your recurring payments and cancel the service if you don’t need it.
When you sign up for a service which has renewal options, such as buying a domain name, insurance etc., the system might default to automatic renewal and keep your payment method in their system. Always make sure to check all the options on the site to turn this off. Paypal is notorious for this, if you make payments using Paypal, chances are the automatic payment is enabled. Paypal makes it difficult to find the option to turn recurring payment off –

5. For sale banner with price in small fonts – From a distance you will see the a house for sale banner for “200s” in big ont and if you look closely there is a “mid” word right in front of 200s with a very small text. All kinds of pricing tricks here –

6. Store tricks – dairy products and other essentials on the back wall and Pricier items at eye level.

7. Work from home scams – if it is too good to be true, it is most likely a scam :

8. Amyway recruiters ? Multilevel Marketing (MLMs) – They mostly target people sitting on their own, use phrases such as “be your own boss”, “generate passive income”, “work from home”, “what would you do if you had a million dollars?”. They will strike a conversation with you as if they want to be your friend, and pretend like they admire something about you or your smart phone or whatever.

Additional resources on avoiding the financial trap of pyramid schemes – “Multi-Level Marketing: How Selling Your Way Out of Debt Can Sink You Deeper“.

Personal Finance Blog Directory

A project to track all active financial blogs.

No question there are too many personal finance, early retirement, deb etc. related blogs out there. It is very difficult to keep track of all these blogs. Luckily there is a project by Rockstar Finance not only keeps track of these blogs but also updates the list on a daily basis. Here is the link to the personal finance blog directory.

Looking at the list the categories of these blogs is very diverse, as of today it includes these –

    Early Retirement
    General Finance
    Making Money
    Real Estate
    Traditional Retirement

The directory also allows you to easily filter the list by –


I found this directory quite useful in filtering out the relevant blogs that I am interested in based on the category. If you manage a personal finance blog, you can also submit your blog to the directory admins so that they can post it there.

How to be financially independent.

For clarity I am going to define financial independence by what it is not first. There are different meanings of financial independence out there, for the sake of this post I will narrow down the scope. It is not objective definition but hopefully you get the gist of it once you finish reading this article. Financial independence does not mean full retirement where you spend the rest of your life travelling or relaxing in some pristine beaches. Neither does it mean just being out of debt or having a few months of emergency fund.

You might consider yourself to be financially independence once you get to the point where you no longer have to panic if you were to lose your job right now, or you don’t lose sleep about upcoming day to day expenses. You will reach it once you have your basic needs easily met from what your assets generate. It is possible that you might have to work, but you will no longer pick jobs on which one pays more, or keep on staying in a toxic work environment. You will have plenty of time to focus on your hobbies and personal development, and might actually end up doing creative work from your imagination, not because someone told you to do so under a deadline. With some of the tips given below, it is achievable and it is worth it.

Rule of thumb – Multiply your annual expenses by 25. If that number is closer to or better yet less than your net worth, then consider yourself financially independent. Or if 4% (7% market gain – 3% inflation) of your net worth is closer to (or less higher than) how much you need per year, you are financially independent.

1. Pay all your debt and stay out of it – financial independence and debt do not go together. There are exceptions of course, where the debt is considered as an investment such as going to medical school. No credit card debt, no mortgage for a house you can’t afford, no auto loans, no student debt for a worthless degree. Make sure to pay the ones with high interest rates, especially credit card debt. Pay it all and stay out of it! Good debt vs. bad debt.

2. Live below your means – this is no-brainer. If you are spending more than what you are bringing it, then say bye bye to financial independence. Frugal living is not death sentence.

3. Cut expenses – go check all your expenses and eliminate the ones you don’t need. Pay special attention to multiple small fee subscriptions or recurring ones. This is death by thousand cuts, they add up. Think of all the expenses that you can cut.

4. Stay healthy – Health care is expensive, I have read somewhere that sixty percent of personal bankruptcies are due to health care related expenses. Besides, you won’t enjoy your free time if you are not healthy. So take good care of your health – eat healthy food, exercise, sleep well and don’t stress out. Be healthy.

5. Have a marketable skill – one way to earn more money is to be skillful in an area which is in high demand. Finding a job will be easier and the pay would be better. This does not necessarily require college degree, there are many professions with plenty of self taught professionals. Continuously update your skills, all you need is access to the Internet and by this I don’t mean Facebook! Fastest growing occupations.

6. Take advantage of 401k, Roth IRA or traditional IRA – If your employer provides 401k, contribute to the maximum allowed. Similarly with Roth IRA, you can do this one on your own. Create an account with Vanguard or Fidelity, and start investing in low cost mutual funds, the risk is minimal. If you are adventurous you can invest in real estate, peer to peer lending etc. How to open an IRA.

7. Build passive sources of income – Put your money where it works for you, it should generate some dividend or interest. Don’t stash it in a zero interest saving account, eventually inflation alone will wipe it out. So be thoughtful of where you put your money. CD rates.

8. Have multiple income streams – Diversifying is good, make sure you don’t put all your eggs in one basket. If you have any free time – besides what you set aside for fun, family time, socializing etc. – you can use it to do freelancing, tutoring, selling stuff online and more. The passive sources of income mentioned above can fall into this category as well. Some tips on how to generate extra income.

9. Don’t give in to peer or social pressure – Stick to your plan even if your immediate circle of friends or family members have a different life style and pressure to make decisions that hinder your financial independence journely. This means no new car every two or three years, in fact buying a new car is a bad financial decision in most cases. Save for a car and pay cash for a slightly used car. Avoid keeping Up With The Joneses’, it might actually keep you broke.

10. Give – this might sound non sequitur, but remember the objective of financial independence is not the accumulation of money for the sake of money. Use money as a means to an end – in this case to personal freedom, free time, accomplishing your dreams – not hoarding money. Giving releases us from the power of money.Help the less fortunate folks. Volunteer.You are not an island. No one did it on their own, we all had someone in the past who steered us to the right direction be it a parent, relative, teacher, stranger etc. Be part of something by giving your money, time etc.

Note – these are rules of thumb and generalizations. If you have a justifiable reason and you surely know what you are doing, you can break some of these rules.

Some other sites to visit, I don’t fully agree with all the opinions on these sites, but I found them helpful in one way or another –
Mr. Money Mustache
Retire by 40
Can I retire yet.
Financial samurai
The Millionaire next door.