Everyone knows the FIFA World Cup is here! Yes, everyone. Chances are your friends, spouse, partner, family, co-workers, and randoms have been talking about it for the past few days. I personally love to play soccer. Admittedly, I only catch the occasional game in between the World Cup and Europe Cup. Why? It’s the same reason NOBODY ever watches swimming unless it’s the Olympics.

I wanted to apply some of my World Cup observations to the fascinating world of personal finance (you know you’re cool when…). I don’t mean to rant, but recent arguments and debates have really got me thinking about this whole “expert” concept. For the next month every single spectator is going to become a soccer expert. Anyone that reads a dating book is a modern day Casanova. Anyone that reads a personal finance book is quick to judge others’ spending habits.

Everyone is an expert.

I was a soccer referee for three years. I absolutely do NOT understand all of the rules of the game. The best referees still make mistakes. Players begin playing the game as early as 3 years old and prepare their whole lives to be involved in such as major spectacle. Yet when the English goalie fumbles the ball, everyone is ready to castrate him.

Nobody plans to screw up. People don’t plan to get $40,000 into debt. Nobody plans to lose their job. We don’t plan to neglect our retirement planning. This stuff just happens. Instead of proclaiming to be an “expert” you should try to understand that every situation is different. You may be talented when it comes to landing a lucrative position, yet completely clueless with actually saving money. We all have areas in our lives where we need to improve.

I love the section in Ramit Sethi’s book I Will Teach You To Be Rich where he dispels the myth of the “expert.” On pages 143-3, Sethi cites a study where the following occurs:

A 2001 report Frederic Brochet of the University of Bordeaux, where 57 “wine experts” were invited to check out two different wines. What happened? You guessed it. All 57 supposed “experts” were unable to determine that they were drinking two identical wines.

Does anybody do any real research?

I wrote about money myths here the other day. Why are so many money myths prevalent? Because we all rely on experts and take information at face value. Buying is better than renting just because. Does anyone ever run the proper calculations prior to throwing this statement out? Probably not. We’re all guilty of this. It’s much easier to accept mainstream knowledge than it is to dig deeper.

It’s really easy to judge others.

When your buddy Vlad buys the newest iPhone that just came out,  it’s all too easy to say, “you already have an iPhone jackass.” Why would anyone spend a couple hundred dollars on yet another phone? Well maybe this person takes public transportation instead of buying a new car. It’s all too easy to look down at the financial mistakes that others make. How often do we take a realistic look at our own financial situation? We usually don’t because it’s much easier to look at the person that’s thousands of dollars in debt and feel good about ourselves for not being in debt.

Logic is thrown out the window.

Emotions trump logic when major decisions are made. This is what brings people to lose money. When choosing individual stocks, rookie investors will often take the advice of “financial experts” as gospel. Stocks are purchased based on the recommendations of supposedly trusted individuals. When the stock prices starts to drop, we don’t sell because we figure this is a temporary change. We let our emotions get in the way. We heed the advice of those that we view as experts. In the end we wished we followed logic (actually researched the stock) instead of solely relying on the help of others.

I hope you guys understand that I’m not a financial “expert” or “guru.” I will never try to come off as one. I’m just a regular dude learning about finance. Some of you are ahead of me and you come here to help out (I’m looking at you Budgeting in the Fun Stuff). Others are really interested in the newly entered world of personal finance and come here to check out my opinion on stuff that matters to them. Either way I like to treat Studenomics as a  super-helpful resource for everyone involved.

After studying for a majority of the day I decided to work out and then work on a blog post. Unfortunately, I spent an hour reading personal finance blogs before I even thought about a decent topic for an article. The phenomenon of information overload swept me once again. I consumed more than enough information. I just did not know how to apply this knowledge.

There are so many great personal finance blogs out there covering such a wide variety of topics that you could literally spend all day online (hey it beats watching tv all day).

You can obtain so many great ideas on retirement, emergency funds, extra income, etc. that you absolutely do not know where to begin. This is why I wanted to share/implement my own personal cure for information overload:

1. Do not stop reading any blogs.

I don’t want my fellow personal finance bloggers sending me hate mail because they lost readers. Instead try to understand why you are reading the specific blog. What are your goals? Where are you in your financial journey? Do you want beer money for the weekend or do you want to start saving for retirement?

2. Begin to read and only focus on one & only ONE topic at a time.

When you become successful and comfortable with making your own decisions on that one topic (for example you can select the next week to be your retirement education week) you will realize that in the long run you are getting more done. When you read about retirement, extra income, credit card debt, in the same day you will likely cause information overload.

3. Read many different blogs to gain different perspectives on the one topic.

Once you figure out which topic you will focus on, search for information on the top blogs in that niche. One blogger will tell you this is the best source of retirement income while another will tell you that it is a horrible idea  401k vs Roth Ira). The trick is to factor in all sides of the coin before you decide what works for you.

4. Do something!

The problem often is not that we do not have any information available to us. The problem is that we do not apply enough of the information currently available. I could point you to a million great articles on debt reduction (here, here and here) but what are they worth if you don’t apply the information? The next time you read an inspirational article- do something! Apply something from the article. Don’t worry about the minor details and just do what you can.

5. Become a producer.

Once you start applying more of the new found knowledge to your life, try becoming a producer. How can you become a producer? What I do is I write a blog post on the topic to reinforce the concept and hold myself accountable.  Yes I know that not everyone wants to deal with running a blog, so here are some more suggestions to be a producer:

• Try guest posting on your favorite blog. Most bloggers are more than willing to post an informative article that a reader sends in.
• Join a forum. There is a forum out there for everything. When you join a forum you can ask for FREE advice and share your journey with others.
• Teach others. Once you start excelling at one particular concept you can reinforce it by helping out others.

Please bookmark this article and give it a read whenever you feel like information overload is affecting you.

You worried about failing a course? You concerned about not reaching your goals? As the new college semester begins many new or returning college students are probably very nervous about some of the difficult courses. As I enter my final year of college there are a few specific courses that I’m stressing about. Today I wanted to discuss the topic of failure and how one can overcome the fear of failure:

Failing a course in college

Just because you fail at reaching a certain goal it doesn’t mean that you’re an overall failure. Failing a course just means that the specific course is a weakness of yours. That’s all. Not every business student enjoys working with numbers. An Arts student may not be successful in a Science course.

The problem is that many colleges require students of a specific major to take a difficult course from a completely different subject. I understand that it’s import to graduate from college with a diverse set of skills but not all college students have the aptitude for certain courses.

Change your opinion on failure

If you view failure as the end of the line or as a sign to quit then you will never grow as a person. Just because you fail the course with one professor it doesn’t mean that you will fail with every professor. You can take the course again next semester with a professor that better suits your learning style.

It took you a few years to gain all of that weight so don’t expect to lose it right away. Students that graduate with an A spent at least 5-10 hours a week on studying. Failing to reach a certain goal can occur due to a variety of reasons. If you are of the opinion that this failure should be the end of the road then you will never push yourself to the limit.

Failure is a major part of success

Okay I will spare you guys about the story on how Michael Jordan didn’t make his elementary school basketball team and ended up becoming a basketball legend in the end. There’s also the classic tale of Bill Gates or of Richard Branson. I’m sure everyone has heard of all of the great triumphant rises to the top from people that were at the bottom.

Failure should be a viewed as a sign to work harder, to work smarter, and to get more serious. When you fail at reaching a specific goal you need to re-assess the situation and determine what needs to be done differently next time.

Many successful people either have the adversity quotient to bounce back from failure or the understanding to change their strategy next time around. Let’s be honest if you drank every weekend and failed that difficult course then drink less often next semester. Don’t lie to yourself. Failure is needed to grow. Failure is also sometimes needed to kick you in the butt to change your ways.

photo: pierodemarchis

I discussed the cash for clunkers program back when it was first introduced a few weeks ago. Since then I have received a few emails about the program. A popular question was in regards to the tax implications of the cash for clunkers program.

After reading around the official website I can tell you guys that the Cash for Clunkers income is not taxable.It doesn’t matter if you received $3,500 or $4,500. Thankfully his program is no an easy way for the government to collect tax revenue.

The good news from the official website (www.cars.gov) is:

Is the credit subject to being taxed as income to the consumers that participate in the program? NO. The CARS Act expressly provides that the credit is not income for the consumer.

The bad news on the cash for clunkers tax rules:

Do I have to pay State or local sales tax on the amount of the CARS program credit? MAYBE. The question of whether a consumer must pay State or local sales tax on the amount of the CARS program credit depends on the sales tax law of each State or locality. Consumers should review the law of their respective States or consult a tax advisor to answer this question.

States Charging Tax on the Cash For Clunkers:

• Arizona
• Idaho
• Nebraska
• New Jersey
• New York
• Ohio
• South Carolina
• South Dakota
• Virginia
• Washington

States Not Charging Taxes for Cash for Clunkers:

• California
• Connecticut
• Florida
• Georgia
• Illinois
• Indiana
• Kansas
• Kentucky
• Louisiana
• Massachusetts
• Mississippi
• Minnesota
• Texas
• Wisconsin

Please remember that if you purchased a new car with the voucher then you have already paid for the tax.

Further reading on the Cash For Clunkers Tax Rules:

Cash for Clunkers – Tax Rules

Is there a Cash for Clunkers tax?

Cash for Clunkers taxable income?

Cash for Clunkers taxable?

Cash for Clunkers Tax Rules

Cash For Clunkers Tax Rules- The Truth

Tax Rules & Consequences of the Cash For Clunkers Program

Cash For Clunkers Tax Rules

Cash For Clunkers- Tax Rules

I had a few readers on Twitter ask me about the Cash for Clunkers Program that has been popping up on many news outlets and personal finance blogs. To be honest I had no answer for the readers so I told them to hold up while I conducted some research. After searching around for more information on the Cash For Clunkers Program, I found a great post at Good Financial Cents about the Cash For Clunkers Tax Rules and an ABC story on the program.

How The Cash For Clunkers Program Works:

- You may quality if you own a car made in 1984 or later that gets 18 miles to the gallon or less.

- The car must start, and been insured/registered for the last year.

- The government will give you $3500 if you trade it for a car that gets four more miles per gallon.

- You will receive $4,500 if your new car gets 10 miles more per gallon.

- You only have to increase mileage by 2 to 5 miles per gallon for SUV’s and pick up trucks.

- Your new car must be brand new and cost less than $45,000.

What does the Cash For Clunkers Program Mean for me?

1. An incentive to purchase an environmentally friendly vehicle (translation: buy a car cheaper on gas). We all talk about buying a car that’s better for the environment but when it comes down to it we would rather drive whats cheapest or in most cases- what is handed down to us by our parents.

2. An Opportunity to finally buy a new vehicle. I ranted about purchasing a car and I discussed that when buying a new car you should search for value/quality and not image. With the Cash For Clunkers Program you have the chance to finally buy a new car that is also great on gas.

3. Fairly hassle free way of getting rid of your old car. I’m sure many young professionals reading this are thinking about how they can get rid of that old car that has been around since their parents graduated from college. Well now you have a relatively hassle free way of getting rid of that old clunker and you can tell your parents it’s for a “good cause.”

4. An opportunity to get everyone off your case. Your friends can finally stop bothering you about driving a “gas guzzler” and your environmentally friend can get off your case for polluting the environment. We all have that environmentally friend that takes environmental issues very seriously and always lectures us on our pollution.

5. Cash For Clunkers allows you to save money on gas. By getting rid of your old gas guzzler you will end up with a more economical car that helps you save money on gas. Less money spent at the gas pump is always a good thing.

Remember that ever since the US Senate and the House of Representatives passed the Consumer Assistance to Recycle and Save Act 2009, everyone has been looking into this program, not just you. In fact the ABC News story claims that $35 million of the $1 billion set aside for the Cash For Clunkers has been used up. Remember that once the budget for the program dries up the program will come to an end, even if its before the November 1st deadline.

I have heard lots of criticism about the Cash For Clunkers Program so I was wondering if anybody could share any stories on the program?

photo: dave_7

Yesterday I asked if delayed gratification still exists? Today I want to provide you guys with a few tips for practicing delayed gratification. I hope I don’t come off as a know-it-all because if anyone loves instant gratification it’s me. The tips below is just advice that has worked for me and could potentially work for you.

Turn it into a challenge

See how much more money you could save than your friends or get more bang for your buck so to speak. For example, I have been looking for a new gym for a few months now because I knew I wouldn’t be able to access my school gym during the summer. There’s one particular gym that I really wanted to join but the price wasn’t right. Location was perfect, equipment was perfect, atmosphere was perfect but it was just too expensive. A few people that I know joined the gym while I debated my options. Fast forward a few months later and the gym is now offering a 2 for 1 membership. Just by waiting and considering all of my options (and a little luck) I was able to save tons of money and know that I’m paying less than others for the same service.

Make the research fun

Research doesn’t have to involve you reading books or boring websites online, you could meet up with friends and bring it up in conversation. You could even use it as a an excuse to meet someone new or a conversation starter. Whenever you see someone with an item that you desire all you have to do is compliment them on the item and I’m sure a conversation will begin.

Think about what others are doing to have those items you wait to save for

I have a friend that has literally everything before I do, the only difference is when I finally get the item I know it’s all mine while he’s still paying off his credit card. I can sleep better at night because I know I have no debt while this friend has to stress all the time about how he’s going to pay off his credit card. I’m not saying that you should look down at others but  sometimes the best motivation can be found around us.

Think about the bigger picture

Sure you may not wear the trendiest jeans or drive the fastest car but maybe you will pay off your mortgage and live debt free before anyone else. I have considered buying a new car many times but then I would probably end up driving everywhere which would a. cost a lot of money and b. cut out physical activity from my life. On top of that I would not be able to reach my goal of graduating college debt free. We all have different long term goals that will only be met if we practise delayed gratification. Sure it would be nice to keep up with the latest trends but retiring early or paying off your mortgage will be nicer.

What helps you guys practice delayed gratification?

The other day I was talking to a friend about how good it feels to finally make a purchase after saving for many months. I personally prefer to have the money saved in an account before I make a large item. By large I’m referring to vacation, cell phone, laptop and items along those lines. Obviously I don’t always try to save up and there are times my lunch is an impulse purchase. Anyways before I get off topic- the next person I spoke to had a different opinion. This friend truly enjoyed the fact that he could purchase anything he wanted at anytime because of the high limit on his credit card. This got me thinking- does delayed gratification still exist?

You can purchase anything you want

Honestly I don’t think there is a product out there that doesn’t exist. Think about it if you go online to ebay or Amazon you can find literally any product imaginable. From a cell phone with a tv antenna & amazing camera included to pair of used boxers worn by a celebrity. Not only has it become easy to make a purchase but now you can purchase anything your heart desires.

Our generation is not patient at all

I can’t even recall the amount of times I have considered making a purchase immediately only because I did not have the patience to wait and look around for a better deal. Research is seen as boring and everyone just wants to make the purchase without having to deal with having to compare prices. I have seen many friends purchase the first car they see just because they liked it so much. They totally skipped the stage of saving up and researching for the perfect car.

Automation of purchases

I bought something off a site one day and then a few weeks later I go on and they have all of my information saved. All I had to do was click on the item I wanted to purchase and it would have been delivered within days. Online shopping has made shopping so convenient that you never have to leave your house nor do you even have to type in your information again.

Nobody wants to be the last one to have something

When a new model of an iPod comes out or a new season specific clothing line most 20 somethings don’t want to be left out. Speaking of the iPod, guess how smart Apple is? A couple of months ago I went looking through the mall to get someone a gift in the form of a carrying case for the video iPod. For the life of me I could not find this product in the whole mall and then finally one of the sales associates informed me that when a new product comes out Apple slowly stops selling accessories for previous products. Just another incentive to keep up with technology. I’m just as guilty of this as anyone so believe me delayed gratification is a difficult concept for all of us to embrace.

In conclusion, of course delayed gratification exists but it’s just difficult for most young people to embrace this concept. How does one embrace delayed gratification? Well that will be discussed in an article tomorrow.

Yesterday I covered the fundamentals of a budget and I figured it would only make sense to provide a few additional tips today to help you ensure that you stick with your budget. Financial budgeting can work and you need to remember that it is more of a guideline than set rules.

Pay yourself first

The most important thing when it comes to budgeting and saving money is that you set aside money into your savings before you do anything else. I will not give any percentages or numbers because every persons situation is unique. However, the general consensus is that you should aim to save AT LEAST 10% of your paycheck. What form of savings you decide to do is up to you. Most new college graduates will aim to aggressively save for that first home purchase. Homeowners may strive to save more money for their retirement. You get the point, plan your savings accordingly.

Minimize your fixed costs

I know it’s impossible to completely eliminate your fixed costs because we all need a roof under our heads and a means of transportation. With that being said there are many fixed costs that we all should strive to reduce. As a college student or new graduate you must really ask yourself if you need all of those subscriptions or that deluxe cable package. I’m not saying to eliminate all of your fun subscriptions because believe me there are some monthly subscriptions I will never get rid off. The trick is to try to eliminate fixed costs that you know you could live without and wouldn’t really lower the quality of your life.

Embrace budgeting tools & budgeting software

Let’s be honest, when trying to get our finances under control we need to track our spending for the first little while. Trying to keep a mental note of our purchases simply won’t work. This is where personal finance software comes into play. Budgeting tools help us keep track of our spending. More importantly, the budgeting software keeps us accountable for our foolish purchases.

Don’t forget about taxes

It’s easy to make a perfect budget that leaves plenty of room for savings but never ever forget about your taxes. Always set money aside to cover any taxes that you think you will have to pay. I have heard too many horror stories from people about receiving a large tax bill unexpectedly and having to borrow money just to pay taxes.

Plan some fun into your budget

I hate how other personal finance bloggers make it seem like budgets are all serious and no fun. I firmly support setting aside some money for “entertainment” or simply put “letting loose.” I put aside anywhere from $20-40 a week for traveling. Don’t ever feel bad about spending your money on something you truly enjoy or something that helps you recharge after a long week of work/school.

I hope that you guys can give budgeting software a try and realize that it is not as lame as it sounds. I’m extremely positive that I must have missed something so please feel free to share your budgeting tips!

The other week I brought up the fact that it is Financial Literacy Month. After a few days one of the loyal readers of Studenomics emailed me to tell me that I have still not written any posts that cover the basics. I guess I got too used to writing posts that would interest other personal finance bloggers that I forgot to write about some basic concepts for young people that are new to the world of personal finance. One topic that I need to start covering more is budgeting. Today I will discuss the two fundamental features of a budget and tomorrow I will provide some budgeting tips and tactics.

A few tips to help you with your first budget:

Know your expenses

It’s obvious that stuff happens and sometimes we have to spend money that we had no clue we would be spending. Besides unexpected events we for the most part should have a solid understanding of all of our monthly expenses. This is probably the worst part of budget planning because you have to take a realistic look at where all of your money is going. To make things easier you should breakdown your expenses into two categories: fixed and variable expenses.

Fixed expenses- These are the expenses that you have every month no matter what happens. You have to pay your rent every month, you have to pay your mortgage, you have to pay insurance, and you have to phone your other bills (cell phone, cable package, etc.).

Variable expenses- This is everything else that you spend your money on. Anything from drinking, shopping, food, going out, purchasing new items- you get the point anything that is not a constant.

Plan your savings

We all have different savings goals and motivation for saving money. The trick is to set aside money for savings first when you receive your paycheck. If you follow the philosophy that you will go out first and then save the rest then I really doubt you will ever save anything. Savings come in all shapes and sizes- retirement planning, saving for a vacation, saving for a new car, securities (shares and bonds), real estate, and emergency fund. It’s obviously impossible to try to save for everything at once but it is crucial that you plan your savings based on your age and goals in life.

Are budgets really that bad? Not all but it’s a tough pill to swallow when you realize how much money you spend monthly and where the money is going.

Sorry if you thought today was a bit too basic but it is Financial Literacy Month and sometimes we all need to go back to the fundamentals.

“Only 1 out of 10 new businesses will ever see a profit. An investor will only make a substantial profit off 1 out of every 1000 plans that they are presented with. Most of the best positions will never be posted on a job board.”

These statistics are true and frightening for many, whether you are trying to start your own business or grow your career within a given industry. Is there a solution? Is there a substitute? Maybe for some of us, but for 99.9% of us there is no substitute for hard work. What is the point of hard work when chances are you will fail with your new business venture or have a difficult time moving up in your field of choice? The point of all of this is that it all ties into the concept of adversity quotient.

What exactly is the adversity quotient? In the most common sense terms it is your ability to bounce back from a failure or mistake. It is your responsiveness to things not going according to plans.

Who cares about the adversity quotient? The answer is everyone does, from investors to top level management to key authority figures. The fact that you refuse to give up shows a lot about you and leads to people believing in you. There is no shame in having an idea rejected, there however is great shame in giving up.

Why is the adversity quotient so important? To be brutally honest it is what separates the winners from the losers. Everyone fails and in fact if you haven’t failed chances are that you haven’t tried hard enough or taken big enough risks. Your adversity quotient determines your ability to learn from the challenges and set backs that you will face in the real world.

Fred Smith, founder of FedEx, wrote the idea of the FedEx Company for a school paper and the professor failed him for the ridiculous idea of overnight delivery. Instead of sulking in his failure, Smith chose to pursue his idea and the rest is history.

Adversity quotient is the greatest measure of an individual’s strength and resilience. The higher the adversity quotient the higher the productivity, innovation, and creativity. A lower adversity quotient is usually synonymous with a poor attitude, feelings of being victimized, and a pessimistic view point. What kind of an employer would hire someone who can not overcome obstacles without feeling sorry for themselves?

Personal application… Well let’s be honest, not as many people are going to read this as I would like to. Instead of giving up I will continue pumping out quality content until people have no choice but to accept me as a great source of personal finance advice. The key is to turn obstacles into opportunities and learn from mistakes instead of giving up.