My roommate used to work at a liquor store. He worked there for about a year before he quit for a more professional position. But there was one thing about the liquor store business that intrigued me for a long time. He told me that one of the most profitable areas of that particular location was check cashing. Yep, check cashing, not alcohol. Well, don’t get me wrong, that store probably made the bulk of the sales from alcohol but their check cashing business propelled them higher in profits than they probably ever imagined.

Check cashing, just like payday loans, work almost the same way. Vendors such as this liquor store would provide their customers with cash in advance but with very high interest or transaction fees. I never understood why people would even consider using such services. Cash advances, check cashing and payday loans are something I would never suggest to anyone for any occasion. There are so many other alternatives to get cash without breaking the bank with fees and interest rates.

1. Ask a friend or a family member for a personal loan. You can pay them back with small nominal interest as opposed to paying 20-30% interest with cash advances and payday loans.
2. Have a garage sale or put some of your old items you don’t use up for sale on craigslist or ebay. Save up this cash and use it for emergency purposes only.
3. Sell your car and buy a cheaper one with the money. You’ll have instant cash available without having to pay any fees or interest.
4. Build up cash availability by saving money. I know that’s obvious, but try to save up cash little by little every day, even if the rate is very low, it’s a start. Save up loose coins and put them in a piggy bank of some sort. Eat smaller meals and portions. Avoid drinking sodas and drink more water. Once you have some cash saved up, you can use place them in a high-yield online savings account to accrue interest of your own.

Once you have some cash available, you won’t ever have to use a check cashing or cash advance vendor.

The recession is still hanging around and with it comes the opportunists. While the government regulations can provide some oversight for payday loans, mortgages, or credit cards, it’s not just the financial sector that can end up taking your money. You can end up being scammed in the most unlikely places these days, from social networks sites to your business and most is due to too much information exposure.

Your Friends Want To Know Your Every Step

Twitter and Facebook are great ways to stay in touch and let your friends know what you’re up to. Unfortunately, it’s also a great place for thieves to find out when your home and when you’re not or any other ways to take advantage of your need to share. Even if you just want to rent a room in your home, if you provide too many pictures and an address, you are begging to be ripped off. Keep your messages short, and don’t let people know where you live, when you’re there, or when you plan on going on vacation.

Your Romantic Profile

Unfortunately, dating sites are another place where scammers abound these days. If it’s not the scam artist from Nigeria trying to get air fare so they can meet you, it’s a recession romeo who wants to know how much you make (all included in the profile) and if you own a home, a boat, or some other property they hope to get either use or ownership of by the time they’re through. Fill out your profile, but keep your financial data and assets off the Internet.

Your Business

It’s a place of business, right? If you’re not careful it can be a place for fraud and embezzlement, too. Make sure to run credit checks on employees. Keep track of your financials even if someone else is handling the details. Keep track of who has access to company credit cards and don’t let that information get out. Don’t rent out space in your business as you can open yourself to credit card fraud hen your leassee fills out an application with your business name, their privae name, and your address, takes receipt of the cards in their subletted space, and then runs up a huge charge. Keep your voicemail and computer passwords secure and don’t use anything that can easily be hacked. You never know when you’re going to come back from a long weekend to find out that you were charged thousands of dollars for calls to Nigeria on your phone accounts because someone hacked into your phone system.

I was watching TV one day with a few friends and they asked me what an APR was as we finished watching a Toyota commercial. I explained to them what it meant and then it dawned on me that not everyone understands the meaning of some of the key financial terms we toss around everyday. So I took it as an opportunity to make it into a blog post to define some of these key terms. As I was even writing this post, I had to look up a few terms myself just to make sure I had it right.

1. APR

Annual Percentage Rate refers to an interest rate that’s tacked on to the borrowed money. For instance, if you borrow $10,000 and the APR is 5%, then you would end up paying $500 in interests at the end of one year. However, if you borrow $10,000 and the interest due is 5% at the end of one month, then the APR jumps to 79% (1.05^12).  On the flip side, if you borrow $10,000 with an APR of 5% and pay back in one month, you would only end up paying 0.42%.

2. Refinance

Refinance generally refers to your mortgage. When you refinance, you’re basically selling your house at a certain price and rebuying it at the same price, but with lower interest rate. Typically, it is encouraged to refinance when the new rate is more than 1 full percentage point less than your current mortgage rate. I refinanced my mortgage twice in the span of 4 years. My initial rate was 6.75% and refinanced at 5.5%. Then I refinanced again at 4.375%. I’m currently saving over $400 per month from my original monthly mortgage payment.

3. Fiscal Year

Fiscal year and calendar years are different. They both have 365 days in one year, but the “seasons” are different. Calendar year is broken down into four seasons. Fiscal year is broken down in four quarters. First quarter begins in October and ends in December. Second quarter lasts from January to March. Third quarter starts in April and ends in June. Fourth quarter is from July to September. Fiscal year is used by businesses and corporate companies due to government business taxation and laws. Although different countries adopt different months for their fiscal quarters, the same principle applies.

4. Balance Transfer

When you have a credit card debt and your APR (see above) is really high, say over 15-20%, then you should consider transferring your outstanding balance to a lower APR credit card. There are many 0% APR balance transfer credit cards that are available to all of us. The 0% promotional period is typically anywhere from 6 months to 18 months. There is usually a nominal 3-5% fee on the transfer but that will quickly be paid back when you don’t have to pay any more interest on your outstanding balance for 18 months.

5. Credit Card Rewards

Nowadays, you can’t find a credit card that doesn’t offer some sort of incentive rewards program along with the card. Even the debit cards are now rolling out with rewards program of their own. Grocery store chains and pharmaceutical chains also have their own rewards program for shopping there. Rewards are typically given out in either points or cash value. In most occasions, you can convert the points into cash, or redeem the points to purchase something else. I currently take advantage of my Discover Card rewards program as well as my Chase Freedom rewards program. I believe they’re both very excellent in terms of getting back on what you spend. Currently, Discover Card is offering $75 when you sign up for Discover More Card. Chase is offering $100 cash back when you sign up for Chase Freedom Visa Card. When looking for rewards credit cards, focus on what would be most beneficial to you. If you fly a lot, then you might consider frequent flyer rewards. If you like music, then music rewards might be more suitable for you. If you drive a lot, then gas rewards cards would make sense.

6. Emergency Savings

People generally open up a separate savings account, whether it’s online or brick and mortar bank, it doesn’t matter. The purpose of this account is not to earn money, but to have money safe and easily available emergency purposes. How much money to have in this account differs for each person, but typically, a 3-month salary is a good rule of thumb. I currently do not have an emergency savings account, but I recently opened a Discover Bank savings account for all my wedding stuff.

7. Cash Advance

When you take money out of your credit card, it’s called cash advance. Basically, you’re borrowing money from your credit card company, at premium interest rates, sometimes going as high as 30%. I would stay away from cash advance transactions at all costs. If you have too much credit card debt with high interest, consider transferring your balance to a 0% balance transfer credit cards.

8. Equity

When you own something, you have equity. If you have cash, you have equity. If you have a mortgage and is 50% paid off, you have 50% equity on the value of your home. So when people ask you how much equity you have in your property, they’re asking you how much of it is owned by you. The more equity you own, the higher your overall net worth becomes.

9. Certificate of Deposits

Otherwise known as CDs, these are very similar to savings accounts, but you’re not allowed to deposit or withdraw from them until the agreed CD term expires. There are 1 month CDs, 6 month CDs, and up to 5 year CDs. CDs often have higher returns in interest than your typical savings account so if you know you won’t need the cash for a few years, purchasing a CD might be a good savings solution. Currently, Discover Bank offers a 1.50% APR for 12-month Cd and Ally offers 1.47% APR for their 12-month CD.

Have I forgotten anything? Please add to the list if you wish.

I was fortunate enough to lock in my mortgage rate at a low 4.375%. There’s still some chance of going lower, but at this point, the chance of going up is greater than it is to go down further. But before you lock it in now, you must still be careful not to get ripped off. Yahoo Finance released an article today about some of the warnings. It’s a short article, but allow me to briefly summarize it for you.

Reliable lenders will help you as much as they can to give you the best rate as possible. But there are still some shady lenders out there and will oftentimes confuse the consumers with rate quotes, which is much different from rate lock-ins. Typical rate lock-ins take no more than a day or two, so if your lender is requesting more time, it should give you a red alert signal and stay away from this lender.

I didn’t have to worry about foul play during my refinancing process because it was through a friend who is a mortgage lender. I knew I could trust him. So, when locking in your rate, always have a documentation indicating such, instead of relying on the lender’s verbal statement.

To read the full yahoo article, you can do so here.

2010 World Series of Poker is well under way as the grueling day after day progresses. Players are scrambling to win chips from their opponents in hopes to be the last player standing at the end of the massive 13-day poker tournament. This year’s main event tournament was amassed by the second largest number of players in live poker tournament history with 7,319 players and $8.9 million going to the winner of the tournament. It’s very exciting for poker players in the world and fortunately for non poker players like us, a few money lessons can be derived from these poker tournaments. I came up with 4 lessons that can be learned from this year’s WSOP tournaments.

1. Bankroll Management

A good poker player will have a smart bankroll management plan. A bankroll is the amount of money a poker player will always have available to play poker with. With this money, he will use to purchase buy-in tournament fees into various poker tournaments. He will also use this money to play cash games.  With a smart bankroll management plan in place, the poker player will never ever go broke, unless he plays out of his bankroll plan. As long as he is within the means of his bankroll, he should be able to play poker forever without going broke. For instance, a good bankroll to have is about 100-250 times the amount of the highest buy-in fee for a poker tournament he is willing to play. The World Series of Poker Main Event tournament buy-in was $10,000. In order for any given poker player to be able to play in this tournament by directly buying into the tournament, he should have somewhere between $1,000,000 – $2,500,000 in his poker bankroll.  In the same way, he can play a cash game with maximum buy-in of $10,000 at the table to comfortably play without worrying about going broke. Poker is a game of skill and luck and professional players find ways to minimize luck and maximize skill. By playing within the bankroll, they minimize the risk and luck factor involved in the game. With this bankroll management practice, a poker player will never go broke. Refer to Boku87 Challenge for his bankroll strategy. Boku87 is an online professional poker player at Pokerstars who challenged himself to earn $100,000 from his $5 bankroll.

In the same way, we need to have a proper “bankroll management” with our money. We can do this by budgeting our everyday spending items carefully, and never spending outside of our budget limits. Once we spend outside of our spending budget, we’re allowing luck to factor in the system, which allows our budget to become less stable. Use a budgeting tool to help you limit on what you spend. If you budgeted yourself $500/mo for credit card purchases, do everything you can do to ensure you don’t exceed that amount in credit card purchases. You can download a free budgeting spreadsheet I personally use myself.

2. Patience Patience Patience

A poker player can not be judged on how good of a player he is after just one cash game session or one poker tournament. It only takes couple hours to learn the game of poker, but a lifetime to master it. A poker tournament is very similar. A single tournament can last well over 10 hours. The WSOP main event this year is played over 13 days, with each day lasting for over 10 hours. After only a couple of days, fatigue can definitely affect the way a poker player plays his game. Imagine just sitting there in your seat for hours and hours playing a card game. It can get quite boring and tedious and monotonous and will become a challenge to maintain a sharp mind to make optimal decisions hand after hand.

The same principle applies with your savings. Money doesn’t grow like wild weeds in your yard. But your savings will grow when they are properly taken care of.  It takes time though. If you put $1,000 in an online savings account such as Discover Bank or Ally which has an annual return of about 1.3% or so, you can expect to double your initial investment in about 55 years. If you are saving for your retirement, you are looking to save for about 30+ years. If you’re saving for college tuition for your kids, you will end up saving for about 18-20 years. The bottom line is that saving money takes time and patience. Keep working at it and stick to your original plan. The winner of this year’s WSOP will reap the rewards after 13 days of grueling poker. You, however, will reap your rewards in your future by being patient.

3. Avoid Emotions

Have you seen any WSOP coverage on ESPN lately? Have you observed the faces of poker players? They’re all emotionless, especially during a hand. Poker players must put all emotions aside when playing cash games or tournaments. If they allow their emotions to persuade their decisions, they will make decisions that they would not normally make, ultimately allowing them to bust out of the tournament or losing all their money in their cash game session. Seeing hundreds or even thousands of dollars move from one player to another player for many hours can have dramatic emotional effect. Good poker players are able to put their emotions aside and make sound decisions based on their poker experience, odds and probability, and their skills.

One thing I always used to do back when I was really into trading stocks was buying and selling according to my emotions. It cost me a lot of money trading this way. If I saw a stock falling, I would sell in panic. If I saw a stock rising, I would buy more in excitement. My emotions got the better of me. When you’re dealing with your money, whether in trading stocks or savings or personal budgets, you have to leave your emotions aside. Make sound decisions based on what’s reasonable. Don’t let your emotions influence your choices, especially when you’re shopping.

4. Short Term Goals

One thing a good poker player does is set short term goals and change gears in their gaming strategy as they reach their short term goals. If the poker player plays with the same strategy throughout the entire tournament, other players will catch on, allowing them to become vulnerable. If they don’t change gears in their strategy, they will lose all their chips to their opponents. Setting short term goals throughout the tournament will allow the poker player to change their playing strategy accordingly, ultimately confusing their opponents.

When you’re saving up for a big purchase, you need to set short term goals as well. If you need $10,000 in two years to upgrade your home or build a deck or need money for a down payment on a house, it can get a little overwhelming when you look at the final number of $10,000. But if you set goals in between, then it might become less intimidating. Set goals of saving $1,250 every 4 months and then re-evaluate. If you need to change your gears after the first 4 months, then do so to reach that ultimate goal of $10,000.

It’s definitely some exciting time of the year for poker players. It’s every poker player’s dream to win the Main Event of the World Series of Poker. What would you do with $8.9 million dollars?

In light of planning for the wedding, I just opened Discover Bank online savings account. There were so many to choose from, such as Everbank and Ally, and also ING Direct. I chose Discover Bank due to their high yield rate and low initial deposit to get things started. Since this is my short term solution to help me save money for my wedding and honeymoon, I wanted to open Everbank, which offers 1.51% average for the first year. But I could not afford the $1,500 initial deposit. I’m still kicking myself in the head because I believe I budgeted well for the engagement ring, but poorly for the wedding.

I plan to dump all of the money I save every month in this new account. This savings account along with tax returns and potential additional tax benefits for filing jointly will help me reach my financial goal to help pay for the wedding and honeymoon.

Update (July 9, 2010)

When you sign up for Discover Bank Online Savings Account, you’ll start accruing interest immediately at 1.35% apr. To read my full review on other high-yield online savings account, read my previous post entitled, Highest Rate High-Yield Savings Account. You’ll be required to fund your account of at least $500. I funded my account by simply providing my bank information. I plan on starting out with $500 and depositing whatever amount I save every month into this account. If I save $1 this month, that’s the amount I will transfer. Also, one thing I wasn’t very clear on was online access to my account. Apparently, when you sign up for the savings account, you don’t create a user name and password. You have to register your account at Discover Bank Online Access Account. They don’t give you your full account number until your funds are fully transferred, in which they will send you a welcoming kit with the account number included. So, today, I received an email saying that my funds have been fully transferred and that the welcoming kit has been sent. It’s a little annoying, but sometimes, to save money, it becomes annoying.

I’m in a unique situation where getting married will actually benefit me in terms of tax returns. Typically, when two people get married, they will have to pay a small marriage tax fee when they file jointly, mainly because of dual income status. But for me, my fiancee is a student and currently has zero income. When we get married early next year, I’ll be the sole source of income so there will be some tax benefit for both of us when we file jointly. Whether we get married in January or June or December, it does not matter because the benefit will kick in for the entire calendar year for the year we are married. Since we are deciding to get married in 2011, we’ll only see tax benefits for 2011 and so on, provided that she does not work full time. If, however, we decide to push the wedding forward and get married in December 2010, we’ll take advantage of the tax benefit for the entire 2010. So, with that said, how much is the tax benefit and is it worth the effort of getting married early?

Last year my taxable income was $36,575. If I assume the same income this year and file jointly by getting married in December 2010, I’ll be in the 15% tax bracket. The tax I will be required to pay is $1,675 plus 15% of the difference between $36,575 and $16,750. The total I will owe comes out to $4,649.

Now, if I were to remain single this year by getting married next year, I will be in the 25% tax bracket as a single person and be required to pay $5,325. So, by marrying this year, I’ll save $676. For my income bracket, there is no tax benefit in the state of Maryland. I don’t think $676 is high enough for us to go through all the trouble of trying to marry early. However, what we can do is get married in the courthouse, legally, in December and then have the normal wedding ceremony at the regular scheduled time frame. $676 is low, but I’m looking for any possible way to save money and to meet wedding budget. For some others, it might be enough to give it a consideration. When I first performed this calculation, I used gross income and thought I would save over $4,000.

I asked my girlfriend to be my wife and she said…YES! Now comes the stress and agony of preparing for the wedding! I just came back from a friend’s wedding this past weekend and it was a lot of fun. They told me that they spent about $23,000 for the entire wedding and reception for about 230 people, equating to $100/head. This is I think pretty reasonable. They were able to get a massive discount for having the wedding in the middle of a holiday weekend, which I might have to consider for my wedding.

I was smart by saving early for the engagement ring but I forgot to consider saving for the wedding ceremony and reception. So, I’m in a big hole to start things off. We haven’t set the wedding date yet, but I figure we’ll give it about 8 months or so from today, giving us about spring time of 2011 time frame. My goal right now is to be able to have $10,000 available to spend on the wedding. Our wedding budget is still unknown because my folks and her folks will talk things over and come to an agreement on how to finance for the wedding. I don’t expect them to pay for everything, so having some money available will be nice and will relieve some burdens off of the parents. On top of that, I also want to have about $5,000 available for the honeymoon. Since my fiance will be in school during the spring time, we might have to postpone the honeymoon until the summer, which will give me more time to try to save up as much money as possible. So, essentially, I would need to save $15,000 in about 1 year. It’ll be hard, but I think I can do it.

How To Save For Wedding

My plan is to open up a brand new online savings account, probably Discover Bank or Everbank, due to their high-yield return, and dump all of my savings into that account. My other savings account will just sit there and collect interest in the mean time. Currently, I have been saving about $800-$1300 every month so all of that will go into my new savings account. If things are tight, I will probably need to re-evaluate my budget spreadsheet so I can save a little more every month. At this rate, by the time spring rolls around, I will have $10,000 saved up. For $5,000 needed for the honeymoon, I will probably need to rely heavily on my tax returns. I will also continue to save for couple more months at $800-$1300 so I think I will be OK in that category as well.

That’s what I’m thinking at the top of my head at the moment and plans will most likely change. But what’s for sure is that I need a good financial plan and need to stick to it no matter what. Any suggestions or ideas would be much appreciated.

I bought my house back in August 2006. Back then my mortgage rate was at 6.75%. It was absolutely the worst timing I could possibly be in. The rates had just started to go up and the housing boom peaked in late 2006 to early 2007. Fortunately, the rates started to come down again and I was able to refinance at 5.5% in January 2008. This lowered my monthly mortgage payment from $2250 to $2020, about 10%. I recouped all the fees in less than 18 months from the money I was saving. Now, the mortgage rates are down to new record lows once again and I didn’t hesitate to jump in to refinance again. Once again, I should be able to recoup the fees in about 18 months. It might even help me increase my credit score.

When To Refinance

The rule of thumb to refinance is when the rate you are able to lock in is at least 1 full percentage (or point) less then your current rate. In my case, my current rate is 5.5% and my new rate I was able to lock in at is 4.375%, which is greater than 1 percent. Also, make sure you have at least 20% equity in your home. If not, you may be forced to buy private mortgage insurance (PMI) which can add to your monthly payments by $150 or more. There may be a way out of buying PMI if your mortgage is owned by Freddie Mac or Fannie Mae. In my case, due to the drastic drop in home prices, my initial 25% down payment has decreased to only an 8% equity. But because my mortgage is owned by Freddie Mac, I don’t need to buy PMI.

What Can You Expect When Refinancing

One thing that caught me off guard during the refinancing process few years ago was the upfront payment that was required. I was told initially that all I needed to pay were the fees associated with the refinancing, about $2900, but when I was asked to pay $6300, I was very confused. However, they explained to me that the difference I was paying are the payments I needed to pay in advance, such as 1 month interest, home owners insurance and property taxes which came out to be about $3400. Although it appears that I’m paying $3400 extra, it really is not. The money goes into your escrow account where homeowners insurance and property taxes are paid out. The one month interest you’re paying is offset by not having to make your first payment until the following month. Since I’ll need cash up front, I will probably take some cash out of my online savings account to pay for all the fees. With the money I’ll be saving every month, I can re-budget my finances which will give me some additional breathing room to start saving even more. Since I’ll be paying less interest with the new mortgage rate, I also need to look into maybe decreasing my allowances in my paycheck. I don’t want to end up owing too much money in taxes by claiming too many allowances, but I think I’ll be OK for now.

Homeowners Policy

I was able to lower my homeowners insurance due to the declining value of my home. It turned out that I was over-insured by $200,000. When they reassessed my home, my  new rate went down by over $200/yr. Don’t pay more than you have to for your homeowners insurance. Get competitive home insurance quotes now and save!

There are so many high-yield savings accounts nowadays and the majority are from online banking companies. You would be a fool if you put most of your savings in a savings account offered by a typical brick and mortar bank that offers a measly 0.25% return on your money. The absolute minimum you can do with the savings you have is put them in a high-yield online savings account that typically offers 4-5x the national average interest rate.  I use my budget template which I wrote previously about how to budget, to help me figure out exactly how much I’m saving every month. Whatever savings I have each month, I deposit it straight into my online savings  accounts (I have multiple). So, allow me to introduce you to some of these high-yield online savings accounts.

Note: I should remind you that it is a government requirement that a maximum of 6 withdrawals per month can be made from any online savings account. There are no such requirement for deposits.

Discover Bank (1.35%)

Discover Bank recently decided to offer a high-yield savings account and it is very respectable. At 1.35% APR, I believe it’s the highest of all competing money market accounts. And you know you’ll be getting great customer service because it’s Discover! Additionally, there are no fees, and it’s only $500 minimum initial deposit requirement to get you started. If you own a Discover Card already, you can deposit your cash back rewards into your new Discover Bank online savings account to earn and save even more money.

EverBank (1.51%)

Currently, EverBank is offering a special 2.25% APR for new money market accounts for the first 3 months for balances up to $50,000.  After 3 months, the APR will drop to the normal variable rate, which currently stands at a respectable 1.26%. This equates to a first year APR of 1.51%. This is a great rate for any one, considering the current US financial condition. The only thing I don’t like about it is that you need $1,500 initial deposit requirement and must maintain a $5,000 minimum balance. If the balance falls below $5,000, an $8.95 monthly charge will be applied. There are no other fees associated with this account so you can close it at any time without penalty. If you have a good amount of savings and have zero chance of falling below the minimum balance, then EverBank might be a good fit for you.

Ally (1.29%)

I really like Ally money market account. Not only is the APR at sky high at 1.29%, they also give you a check card and 50 checks for free. There are no fees associated with this account and no minimum balance. You can use your check card to make withdrawals (unlimited). The only bad thing is that you’re only limited to 3 total check card (not atm) or check transactions per month, or a $10 fee for each additional transaction applies.

WT Direct (1.21%)

WT Direct is also a respectable online banking company. Their savings account boasts a 1.21% APR, but there are restrictions. In comparison with other online savings account, this one doesn’t really compete very well. It offers a 1.21% for all balances up to 60 days. But after 60 days, if your balance is above $10,000, then you’ll continue to earn 1.21%. If it is less than $10,000, then you’ll earn a measly 0.15%.

ING DIRECT (1.10%)

Everyone’s heard of ING DIRECT. You see their ads everywhere and they were actually one of the very first to offer a high-yield online savings account. Currently, their Orange Savings Account offers a 1.10%. ING DIRECT is great because there are no fine lines on their offer. It’s exactly what it says and there are no catches. No fees, no minimum, no nothing. When you deposit your money into ING DIRECT, you’ll always know you’re getting a great rate without worrying about fees and penalties.

HSBC Direct (1.10%)

HSBC is just like ING DIRECT in a sense that there are no catches with this offer. They also offer a 1.10% return on your money. They do have a minimum deposit requirement of $1 but who cares about that? If you can’t afford to deposit $1 in your savings account, then why waste time opening it?

Bottom Line: Go with Discover Bank. They give you the highest return for your money and only $500 requirement for initial deposit. There you have it. The choice is yours. Where do you want to put your money?