The Financial Student

How To: Get Started With Running Cheaply and Quickly

I think I’ve mentioned this before, but just in case you weren’t aware – I’m a runner. No, not a sprinter. That’s for pansies. Just kidding. Kind of. I run long distances. During all my junior high and high school years, I’ve been a member of the cross country team. In HS, races are 3.1 miles (5K). Day-to-day runs were in the neighborhood of 4-8 miles.

What’s this have to do with personal finance you ask? Well, I want people to be aware that it’s possible to exercise without breaking the bank. Many sports and forms of exercise are a constant drain on one’s finances. Golf requires clubs to be bought. Gyms have membership fees. Baseball needs bats and gloves.

Running however, in my opinion, is a much cheaper (if not frugal) sport to “play”.

To start running, you need:

• a pair of decent running shoes
• a plan

The shoes don’t need to be ridiculously expensive. I require motion control shoes because my feet naturally roll in, which can lead to injuries. They usually cost about $80-$100. If you’re more genetically gifted, you should be fine in a cheaper neutral running shoe. Thanks to the Internet, you can usually fine deals from stores like Zappos.com and Runningwarehouse.com

Other than shoes, you honestly don’t need to buy anything else.

The following is a list of things that are nice, but by no means necessary:

Digital watch – You will probably want to pick up one of these once you start increasing distances and want to measure your (hopeful) decrease in time. Also useful for races.

Moisture-wicking tops/bottoms/socks (Nike Dri-FIT, Under Armour, etc.) – I read a lot of articles on the Internet that say moisture-wicking clothes are a necessity, but I disagree. I own a few shirts made from these materials and it is no doubt nice to have, especially on long runs (about 6+ miles or an hour). However, I run most of the time wearing plain cotton t-shirts and they are only bothersome are extremely hot and humid days.

Sunglasses – Glare is annoying anytime, but more so when running. However, it’s not unbearable. Only purchase nice running sunglasses once you know you’re serious. The Oakley brand is popular with many runners, but they do come at pretty steep cost.

Hydration packs – These devices allow you to carry water on your body so you always have liquids available. But, few runners will need to drink anything while running unless they’re pushing past an hour to hour and a half. Save this for when you’re marathon training.

Protein gels – Some swear by them, but these aren’t a magical run fast pill. Best during serious training – after hard workouts to maximize recovery.

Heart rate monitor - Great for stat junkies, but definitely an unneeded luxury for beginners.

All of these are optional and you likely won’t even understand why more experienced runners purchase them – until you become experienced yourself, of course.

The Plan

There are numerous running schedules available online. A popular one for beginning runners is the Couch to 5k program. It sounds just like what it is – it gets you from the couch to running 5 thousand kilometers. It does this in about 2 months and provides a very gradual guide.

If you’re not much for structure, you can make up your workouts as you go. Be careful though, many new and enthusiastic runners have dived into the deep end and tried to run 10 miles on their first day. Take it slow. Just like with personal finance, success will come with time.

Running is one of the best forms of exercise around – it’s healthy and fun to do. You’ll most likely even recoup what you do spend in the form of health and social benefits.

How to Pick Your First Credit Card in 4 Steps

While I hate debt, I like credit cards. While I’m still waiting on Citi to review my own application, I’ve put together some tips on how to pick out your very first credit card.

1 – No Annual Fee

Some cards charge you just for the privilege of having it in your wallet. This is unnecessary. Any good student credit card won’t have an annual fee.

2 – Rewards

A credit card issued to someone with a limited credit history isn’t going to have a great rewards program. But that doesn’t mean students lose out on all of the action. Check out Citi’s mtvUTM Platinum Select® Visa card to earn points for maintaining a certain GPA and purchasing books. Cash back, though, is usually better, simply because it’s cash.

3 – Widely Accepted

Your card is useless if the store won’t accept it. For your first card, stick with Visa or MasterCard if possible. Discover and American Express are still accepted most places, but you could be out of luck when you need gasoline in the middle of nowhere.

4 – Go With a Brand

If you’re nervous about having your own credit card, consider getting a branded one from your favorite gas station and only use it there. Most of these companies offer a discount on their product when you use their card. However, it’s probably not a good idea to get an American Eagle card or Apple card. Those are just going to tempt you to buy Stuff you don’t need. Once you’ve built up your credit rating, you can consider getting another card with better rewards to use for other purchases.

Bonus

You’ll notice that I didn’t say anything about interest rates. That’s because they don’t matter. You aren’t going to go do something stupid and carry a balance now are you? Good. Interest rates for someone with no credit history can easily reach 20%-30%. But guess what? As much as Citi Bank or Bank of America would like to, they can’t calculate interest on a balance of nothing.

How I Saved Up for My Own Car

Rusty Car by dandeluca on Flickr.

There are lot of theories on what’s the best way for a new driver to get a car. Some think the parents should pay for it all while others prefer a 50/50 split. Still others think the best way is for the child to save up all the money himself. I’ll admit I’m not sure which is the best policy. But I explain how my own came to be in my possession.

My state is the home of the 4-H program. If you haven’t heard of this before, I’d encourage you to check out the Wikipedia entry here. Basically, it’s a youth organization that for me, always had an agricultural center. Through this program and participating county fairs, you purchase and raise animals (dairy feeders, steers, pigs, goats, turkeys). At the end of the fair, you sell the animal through an auction style market.

I was able to buy a car through the selling of these 4-H “projects”. There are other projects that deal with other fields of agriculture like soil quality and crop growing along with science and civics. I took dairy feeders (what most people would call cows) and pigs during my 4-H career. At first glance, this might seem like I was just earning all this money by myself. But that’s not the case. You have to remember that:

Caring for livestock is not cheap. You have to buy the animal, feed it, shelter it, and transport it. All of this costs money. My dad covered most of these expenses. In later years, I was responbile for buying the animal. If my dad had not covered these costs, then 4-H would not have been nearly as financially lucrative as it was for me. But it was lucrative in another way…

It taught me that sometimes you have to do stuff you don’t want to.

I was never huge fan of 4-H. There were meetings to go to. I had to feed my animals. I had to walk my animals. Pulling a 400 pound dairy feeder around my yard was not fun. I never really wanted to play the role of farmer. The months of work were rewarded by one week of fair. But it was pretty much the only option I had to make enough money to buy a car someday. So I joined and participated for four years. After those four years, I quit because I didn’t want to do it anymore and I figured I had enough money for a semi-decent automobile.

Looking back now though, I realize my dad was a reward-child-for-hard-work genius. It was made clear in my family that if you didn’t participate in 4-H (or figure out another way of earning money), you would not be receiving a car as a gift. This motivated me during the few years I participated. Now I wish I would have continued with the program until at least the beginning of high school. I could have accumulated much more in savings and possibly even purchased a nicer car.

I sure didn’t realize the benefits of this type of system at the time. But I really think it did a great job of teaching me that “Stuff” requires work and thanks to my dad’s help, my work really paid off. I’d encourage you to try this type of deal with your parents. Maybe they could match your earnings from a part time job up to a certain amount. It might just be the motivation you need.

Leaving Facebook’s Privacy Settings Unchecked is Dangerous: Here’s How to Fix It

As I use Facebook more and more, I notice that a lot of people don’t have any restrictions on who can view their profile. Facebook itself doesn’t always help matters either. A few months back they changed the way privacy settings work. A lot of people were confused, and as a result, ended up leaving information exposed without realizing it.

This is dangerous.

The reason why this is so important is because the employers of today and the future will be checking out your page. Check out the story of this woman who was fired because of her status. Even more important, though, is your physical safety. You strong>do not want strange, random, or shady individuals commenting on your pictures or showing up at your house.

With that said, let’s dive into Facebook’s privacy features:

First, click on “Account“, located in the upper right hand corner. A menu will drop down. Select “Privacy Settings“.

A new page will load with four options, click “Profile Information“.

Once you’ve clicked “Profile Information“, you’ll be taken to a page with about a dozen separate privacy settings:

Click to enlarge

As you can see from the screenshot above, I’ve kept my settings ridiculously simple. All of them are set to “Only Friends“. I recommend you do the same. Allowing networks might be okay also, depending on how large your networks are.

Important: When Facebook says “Everyone”, they really do mean everyone. Anybody who goes on Facebook can access your data if you set it to “Everyone”. Bosses, exes, parents, stalkers, murderers, etc.

Now that we’ve got our profile information nice and secure, it’s time to lock down contact information. This is arguably even more important than the previous settings.

Go back to the previous page by clicking:

From there, select “Contact Information“. A new page will load:

Click to enlarge

This page controls how your accessible your sensitive information is. Things like your address, phone number, IM screen name, and email address. There’s no reason why anybody who I haven’t confirmed as a friend should be seeing any of those, so strangers are blocked.

I don’t even let all of my friends see my street address. There are some Facebook “friends” that I’m just not close to, so I don’t see a need for those people to know exactly where I live.

I do, however, let anybody request me as a friend or send a message. Changing this setting will make it harder for people to find you and add you as a friend.

There you have it! Some simple instructions on how to keep your Facebook information out of others’ hands.

One thing that’s important to keep in mind is that anything you allow your “friends” to see, can be printed out and shared with others offline. I have a friend on Facebook who recently posted a picture of his bong. Probably not the best picture to upload!

Be careful out there on the interwebs!

6 Awesome Resources Teens Can Use to Learn About Money

Finding good information about personal finance and money can be difficult. Parents are sometimes guarded and don’t always jump at the chance to teach good money management skills. The Internet is full of get rich quick schemes and scams, so it’s hard to find truly reputable information. Because of this, I’ve put together a list of some of the best financial resources.

1. Your Parents - Ask your parents how they manage a family budget (if they use one). Carefully, ask if they have credit card debt. Genuinely be interested in what they have to say. Realize that while your parents aren’t perfect, they can provide valuable insights into how to handle your finances. If they won’t budge, don’t bagger them.

2. Your Friends - Peers can be a great way to see both what you should be doing and what you should not be doing. For example, are you working a part-time job to save a bit of cash up? Are you going to a pricey college just because you want to impress your friends?

2. Blogs - There are literally thousands of blogs discussing personal finance and how to mange money. Here are some of my favorites:

• Get Rich Slowly is perfect for understanding the nuts and bolts of personal finance.
• The Simple Dollar has solid, truthful information on just about every financial topic imaginable.
• The Digerati Life is geared towards those comfortable with technology and no non-sense advice, so it’s perfect for young people.
• I Will Teach You To Be Rich is a fantastic blog for a younger generation. There’s funny jokes and even some swearing. You just can’t lose…
• Frugal Dad will provide you with some great insight into how parents handle money.

3. Bank Rate - This website has fantastic calculators that allow you see just how much credit card debt can cost you or how long it’ll take to pay back a car loan. Some of the charts can be pretty eye opening. My favorite is the retirement calculator.

4. Your Bank - Don’t be afraid to call your bank up if there’s something about your account you don’t quite understand. When you’re opening an account, ask questions and make sure any terms or fees are clear.

5. The Library - There are all kinds of personal finance books out there with great advice and information. Best of all, you don’t have to spend any money on them. Some titles geared towards teens and young adults include: I Will Teach You To Be Rich and The Money Book for the Young, Fabulous & Broke.

6. The Motley Fool - This website has tons of information on investing, along with some basic personal finance content. There’s even a specific part of the site designed just for beginning investors.

Just Turned 18? Don’t Forget to Register with the Selective Service System

Are you a male? 18 years of age? Younger than 26 years old?

If you answered yes to all of those questions, then you need to register with the Selective Service System.

What is the SSS

The Selective Service System is the government agency that keeps track of all the people eligible to be called up in the event the military draft is reinstated. Currently, that includes virtually all men between the ages of 18 and 25. By law, these individuals are required to register within 30 days of their 18th birthday.

How Does Registering Benefit Me Financially?

I’m glad you asked. For one, it prevents you from paying a hefty fine (currently $250,000). Yes, not registering is against the law. Specifically, you are violating the Military Selective Service Act. However, being prosecuted for this crime is extremely unlikely. You see, the government has to prove that you knew you were supposed to register, but chose not to. This is very hard for them to do.

But…the government knows this and has figured out other ways to make you register:

• In order to receive federal student aid (grants, student loans, and work study), you must register with the SSS. These benefits alone are worth thousands of dollars.
• If you’d ever like to work for the Executive branch of the federal government or the U.S. Postal Service, you need to register.
• Individual states can also set their own rules regarding registration. Here in Ohio, those who fail to register are charged out of state tuition rates at universities. In fact, I just received a letter from the community college I attend through PSEO alerting me to the fact that I will be charged the out of state rate unless I supply them with my registration number.

“But I’m not going to college and I don’t care about federal employment…”

OK. You got me. Except…

• Most states require you to register to receive a driver’s license! Some states also won’t let you renew your license if you haven’t registered. You can see the list here.
• Also, if you would like to become a U.S. citizen and you arrived in the U.S. before your 26th birthday, you must register with the Selective Service System.

As you can see, there are many reasons why it’s in your best interest to register. You don’t even have to be 18 to submit your information. If you are at least 17 years and 3 months of age, you can actually register right now and your information won’t be processed until you’re 18.

To do so, just head on over to www.sss.gov and click “Register Online”. You’ll be taken to a new page where all you have to type in is your:

1. Name
2. Address
3. Social Security Number

Once that’s done, just click “Submit Registration“. Within a few weeks, you’ll receive a letter in the mail with an identification card that serves as proof you are registered.

Final note: If you forget to register before you turn 26 years old, you are basically screwed. You will never receive federal (and most likely state) student aid or be hired for a job located in the executive branch. If you can show credible evidence that you did not know you were supposed to register, then you may be allowed benefits, but this appears to be extremely unlikely.

Go Register!

The Benefits of Direct Deposit

Are you running to the bank every time payday hits? Filling out deposit slips and signing checks every two weeks?

Stop.

There’s a better way. It’s called direct deposit.

Direct deposit uses the Automated Clearing House system to electronically deposit your paycheck into any checking or savings account you choose. This has a ton of benefits:

Faster- you will almost certainly receive your funds sooner through direct deposit. At my last job, I received my “paycheck” a whole 2 days before the paper checks would arrive.

Safer- it’s incredibly easy to lose a paycheck, especially if you don’t get to the bank immediately. Thefts happen. Wallets are pick-pocketed and cars get broken into. No petty thief is going to be able to steal your direct deposit.

Frugal-direct deposit means no more gas wasted on trips to the bank.

High tech- I think it’s just plain cool that technology can do this. Using paper for paychecks just seems old fashioned now.

I think the biggest benefit is just the simplicity of it. No more driving to the bank. No lost checks. The money is there automatically. And even more important: there’s no temptation to cash out part of the check.

I know what you’re saying.  “This is awesome, how do I set it up?”

It’s simple.

You Need:

• Your bank account number
• Your bank’s routing number
• Employment at a company that offers direct deposit

You can find this information on a check or in the paperwork you received when you opened the account.

Simply give a voided check (you void a check by writing “VOID” in big capital letters on the front of the check in pen)  to your boss or whoever manages your company’s payroll. If you work for a large corporation, you may be able to do all of this online.  If you don’t have any checks, you can just write down the two numbers and your place of employment will know what to do.

Once that’s completed, you’re done. No more work is necessary. You’ll start to receive your paycheck directly in your bank account within a pay period or two.

How to Do Your Taxes For Free, Even if You’re in High School

If you held a job during 2009 and received a funny looking piece of paper in the mail called a “W2″, you might just be able to get some money back from Uncle Sam. All you have to do is…file your taxes.

I know, it sounds scary. Taxes are something adults do right? Adults with fancy careers. Adults who make tens of thousands of dollars every year.

Nonsense.

Just because you’re a student or don’t make much money doesn’t mean you can’t get a tax refund.

According to this article from the Internal Revenue Service (they’re the people who take collect your money), if you made less than $57,000 during 2009 you can file your taxes for free. Even if you don’t have to file taxes because your income in low, it’s still not a bad idea because once you have a tax return, you can open a Roth IRA.

All you have to do is go this website. Once there, click either “I Will Choose a Free File Company” or “Choose Free File Fillable Forms” (try saying that 5 times fast!)

Click to enlarge

If you select “Choose Free File Fillable Forms” then the IRS will allow you to select a tax form to fill out and you’re basically responsible for knowing what you’re doing. It’s not exactly hard, but I like having a computer double check my work, so I click “I Will Choose a Free File Company”. Once you’re on that page, you’ll be given a list of a dozen or so companies who can do your taxes.

I used TaxACT last year and this year and haven’t had any problems. I’m guessing H&R Block would be a good choice also. TurboTax also allows you to file your federal taxes for free. I noticed this year that the IRS says you can use TaxAct if “you are between 19 and 55 years old”. I don’t know why they say this because I’m definitely not 19 and I’ve never had a single problem.

For TaxACT, you go to their website, www.taxact.com, and sign up with your email address. It’s pretty obvious where to click:

Simply sign up for an account (it’s completely free) and start filing your taxes. The website guides you through everything you need to know. If there something you don’t understand, you can probably just ignore it. A lot of the questions apply to people with kids or individuals with complicated tax situations, so just click “next” without filling in any numbers or “skip”. Mainly, you just need to input numbers from the W2 sheet you received in the mail.

It’ll probably only take you about 30 minutes to complete the forms. Once you’re done, you can go ahead and submit your taxes to the IRS! If you fill in your bank account information for your refund, you’ll get money faster than if you elect to receive a paper check.

How To: Track Every Penny You Spend

Before you can really get a grip on where your money is going, you have to track it. For a while, I would just check online banking or head over to Mint. The problem though is that all this automation wasn’t  helping me understand my spending habits. I would log in about once a week or so and look at my transactions and say “Oh, yeah, I spent $30 on fast food last week. I wish that was lower. Oh well. Maybe I’ll do better next week.”

Because I wasn’t the one actually writing down the expense, it felt like I wasn’t spending money.

Now, I’ve decided to use an Excel spreadsheet to track every cent I spend. I’ll still keep my Mint account for the awesome graphs and pie charts, but I need to be more hands on with my money. The follow screenshot is a picture of the spreadsheet I’m using. It’s dead simple and only took me about 5 minutes to set up. You can download it here.

My plan is to go through my receipts every few days and update the spreadsheet. Realistically, I can probably do this everyday because I don’t typically have a lot of transactions in any given month. Just by typing in the numbers myself, I felt like I was running my finances versus my finances running me.

While I like Excel, it’s not definitely not the only option you have to track all your expenses manually. Other options include:

• A trusty checkbook. Simply record every transaction as you make it.
• A spending journal. Just get a journal (lined if that makes it easier for you) and instead of writing your deepest feelings, write all of your expenses.
• Plain old paper. Step 1: Grab a blank sheet of paper. Step 2: Write down the crap you buy Step 3: There is no step 3, sorry.

I hope that I can get a much better insight into my spending activities with this method than by just using Mint or online banking. Eventually, I’d like to just not worry about every single expense, but I’m not quite there.

How to Open a Roth IRA (Do It Today!)

Now that we’ve talked about what a Roth IRA is, it’s time to set one up. To start an account, you have to first pick a broker (someone who buys and sells investments on your behalf). Luckily, it’s not hard decide if you’re young or broke or both.

Of the following companies that I researched, only one would allow me to open a Roth IRA with no minimum deposit or fees.

• T.Rowe Price
• Fidelity
• Scottrade
• Vanguard
• Zecco
• Charles Schwab
• TD Ameritrade
• E*Trade

The decision was pretty much made for me. While I liked Vanguard’s investment strategy (the company is built on index funds, which have low expenses with good returns), I didn’t want to wait to save up $1000 to go with Vanguard. (Other companies wanted at least $500)

Another plus was E*Trade has cool commercials like this one.

So, to setup the account, all you have to do is download this form. (If you’re over 18, you can open it online here.) It asks for the standard information that you’d give any bank when you open up a new account. Address, Social security number, blah blah blah.

There is one section where it asks what your “investment objective” is. I chose Growth, since I’m willing to take some risks (I have 40-50 years until retirement) but not complete chance like Speculation. For trading, I chose 0-3 per month, although I honestly have no idea how often I’ll trade.

In section 9, “Select Your Account Options”, I chose the E*Trade Financial Extended Insurance Retirement Sweep Deposit Account. This is basically just a saving account where your money hangs out until you invest it. Beside this section, you’ll notice you can choose to receive certain account information through the mail. DO NOT select any of these unless you want to pay a fee to E*Trade. (Hint: You don’t)

Once the form is filled out, put it in an envelope along with a check made out to E*Trade Clearing LLC for any amount. The address is listed on the 1st page, in the upper left hand corner. Mail it.

Seriously, that’s it.

Once E*Trade sets up the account, you’ll be ready to invest.