Financial advisors don’t know as much as they fool you into thinking they do.  Many of them can’t give you any detailed information about the calculations they do on your finances.  CNN Money’s mole gives advice on how to choose a financial advisor that actually knows the financial business.

When you’re interviewing advisors, venture outside the basic questions and dig into some details.  Here are a couple of questions suggested by The Mole:

What’s the annual standard deviation of my portfolio?What asset classes in my portfolio have low correlations with each other?

You don’t have to know the answers to the questions, but your financial advisor should.  Read “What your adviser doesn’t know might hurt you” in its entirety for more.

If you got your 2007 refund via direct deposit, you’ll get your rebate sooner than taxfilers who opted to receive a check in the mail, MSNBC reports.  The lower the last two digits of your social security number, the sooner you’ll get your rebate.  So if your social ends in ’03 and you used direct deposit when you filed this year, you’ll likely get your rebate sometime in May.

Read the full article: Direct deposit users to get stimulus first

Related posts
Don’t Be Surprised By IRS Mail in the Coming Weeks 
Desperate For a Tax Refund? Don’t Get Scammed

I didn’t really choose my first bank.  My parents used it, so I did too.  Had I known anything about checking accounts and fees, I would have shopped around and that bank would have been my last choice.  Their “business days” were set up in such a way that deposits were credited to my account 1-2 weekdays later.  Not a good thing when you have to deposit money in a hurry to cover a check or debit purchase. Of course, had I known better, I would never have spent money from my account that wasn’t actually there. 

When I finally left that bank, I owed more than $600 in fees.  (These were the days when the bank would process a transaction twice and charge non-sufficient funds fees both times.)

I was much smarter with my next checking account at a bank with business days that matched real days.  In 7 years with that bank, I’ve only had 2 overdraft charges, which I got forgiven for being a long time customer.  Here are some tips for managing your checking account and avoiding hefty fees.

• Understand your bank’s fee schedule and know what you can do to avoid fees. Some banks, for example, charge when you make too many withdrawals or when you go below a minimum balance.  If your bank is one of these, save the fees.  Don’t go over your withdrawal limit and keep your balance above the minimum.
• Don’t pay for ATM access to your own money.  Unless your bank refunds ATM fees, avoid using ATMs from other banks.  You’ll likely end up getting charged twice – once from the other bank and once from your own bank.  If your bank doesn’t have any ATMs near you, consider changing banks.  You can also use debit when you purchase inside a store.  You may still get charged, but not nearly as much as if you used an out of network ATM.
• Always know your account balance and don’t spend over it.  Actually, it’s even better if you don’t spend anywhere near your balance.  That way you have a cushion.  If you’re not sure you have enough in your account to cover a purchase, find out first.  Program your bank’s customer service number into your phone so you an easily get your balance.
• Know when your deposits will get credited.  Banks’ business days don’t always follow “normal” business days.  Sometimes a deposit made after a certain time won’t be credited until the next day.  If you’re expecting a deposit to cover a charge, this is something you’ll need to know to avoid an overdraft fee.

In case you haven’t heard companies are slashing jobs at record numbers.  What will you do if your employer let you go without any kind of severance?  How would you survive?  Collecting unemployment might be a viable option, but are you sure you qualify?  (Read How to Collect Unemployment).

To prepare for times like these, every wage-earning person should have an emergency fund.   Consider your emergency fund as your backup plan for losing your job and being unable to collect unemployment.  A good emergency fund will contain at least three to six months of living expenses.  More is always better. 

Putting your emergency fund into an interest bearing savings account is a good idea.  However, it’s not a good idea to put your fund into any kind of account that has early withdrawal penalties.  (This means you shouldn’t think of your retirement savings as an emergency fund).

Credit cards and loans don’t make good emergency funds because that money must be repaid.  Financial trouble has a funny way of compounding and using debt to bridge a job loss will only make matters worse.

Take advantage of being employed and start putting money aside for a rainy day.  Remember, the ideal emergency fund will cover your living costs for at least three months.

A good read: How to prepare for a layoff

The first time I took a look at my monthly spending, I realized I was spending around 6-7% my take home salary at the grocery store.  Not bad for a family of 2 or 3, but I was feeding just 1 person – me.  I realized that was absolutely unnecessary. 

If you take a hard look at your monthly spending, you might also be surprised to see just how much you spend on groceries each month.

 SmartMoney gives some tips for reducing the amount you spend on groceries.  Here’s a few of them:

• Buy store brands, you probably won’t notice a different in the taste.
• Find out when the store marks down foods that have an upcoming sell by date
• Think outside the supermarket box, e.g. superstores, wholesale stores, and drugstores

Smart Money: 8 Ways to Cut Your Grocery Bill

It’s tax season and id theives and crooks use this season,  just as they do winter, summer, spring, and fall, to scam consumers out of money and personal information.  Here’s an email I recently received from “service@irs.gov”.

After the last annual calculations of your fiscal activity we have determined that you are eligible to receive a tax refund of $129.72. Please submit the tax refund request and allow us 3-9 days in order to process it. A refund can be delayed for a variety of reasons. For example submitting invalid records or applying after the deadline.

To access your tax refund, please click here.

Best Regards,
Tax Refund Deparment
Internal Revenue Service
© Copyright 2008, Internal Revenue Service U.S.A. All rights reserved.
TAX REFUND ID: IRS980221

This message contained all sorts of red flags.  Most noticable, hovering over the link, you can see that it points to a URL that clearly does not belong to the IRS.

I clicked the link, just to see where it led.  The page does strongly resemble the IRS’ “Where My Refund?” page, down to the scam warning “IRS never initiates emails.”  (Ironic, since I arrived at the page by clicking on a email that was supposed to have been initiated by the IRS.)

Don’t click on links in emails that say they’re from the IRS.  If you have questions about your tax refund, consult your tax preparer or visit the IRS website directly – www.irs.gov.  Enter “where’s my refund” in the search box to be taken to an explanation about how to find your refund.

Keep your personal information safe.  Look for the security lock in the bottom right corner of your web page before entering any information into a website.  If you don’t see the lock, don’t enter your information.

See the IRS guidelines on protecting yourself from email scams.

Noticing you need more money in your budget is one thing.  Taking action is another.  It doesn’t take long to convince yourself that everything you spend money on is absolutely necessary.   Changing this mindset is the first step to getting rid of unnecessary expenses.

Each time you get ready to spend money on something, ask yourself, “What’s the worst that would happen if I didn’t buy this?” and “Are there any cheaper alternatives?”

Pretend you’re out shopping and you pick up a pair of pants.  You ask yourself question one and answer, “I wouldn’t have any black pants to wear to work.”  That may be a viable reason for buying new pants, but then ask yourself the second question.  You’ll likely answer that you can find some cheaper pants at another store.

By asking yourself those two questions and answering honestly, you can start spending less money on things you don’t really need.

The IRS is probably the last business you want to get mail from.  But, if you get a letter in the next few weeks, don’t be afraid to open it.  MSNBC reports the IRS will be sending out notices about the tax rebate being sent out later this year.

The IRS mailing will be titled “Economic Stimulus Payment Notice” and it will alert people that they may be eligible for a one-time stimulus payment of up to $600 for individuals or $1,200 for a married couple filing jointly.
[…]
The IRS notices are informational and do not seek any financial information. The mailings will go to taxpayers who filed a tax return last year.

Read the full story: “A letter from the IRS? Don’t be alarmed“

If you took a close look at the amount of money you spent each month, you’d be surprised at all things you buy that aren’t really worth it.  Last month, I decided to “trim the fat” from my spending.  So, I looked at my debit card transactions (since that’s how I typically spend money) cut $…  Here’s what I found to cut.

• $11.95 on credit monitoring service
• $21.95 on Blockbuster Online subscription
• $24.25 on renter’s insurance
• $26 on Cinemax and HBO (do I really need to watch that many moves?)
• $90 on cell phone bill
• $145 on car insurance
• Total = $174.15

It took some work, but I was able to cut $100 from these expenses.  How’d I do it?

• Cancelled the credit montoring service
• Cancelled Blockbuster Online
• Reduced insurance coverage and saved $7
• Cancelled HBO & Cinemax
• Lowered cell phone bill by $30 by cutting out features and reducing my rate plan
• Got some discounts and cut car insurance by $9

I know I’ll have to adjust to the drastic reduction in movie availability, but I’ll survive.  What am I doing with the extra $100? Saving it.

Having trouble saving up?  You’re not the only one.  According to CNN Money, almost half the people who make a New Year’s Resolution to save more money don’t make it past the first month.  So, as a solutuion, here are 4 ways you can “fool yourself into saving.”

1. Do it automatically
2. Give yourself a reward for meeting your goal
3. Punish yourself for not meeting your goal
4. Use a Roth to save and lower your taxes

I especially like #2.  Nothing is more motivating than positive reinforcement.  Be careful that your reward isn’t something that blows your entire savings. Otherwise, what was the point?

Read the full story: “Fool yourself into saving smarter“