The Finance Castle

 I’ll be the first to admit I’m guilty as anyone when it comes to hiring someone else or paying a service for something as opposed to fixing it myself. I think that falls into one of the benefits of apartment/rental living is that when something breaks, you call your landlord and tell him/her that he needs to get it repaired ASAP. Those who have their own house of course, don’t have this luxury. Still, there are places I like to test my own hands-on waters to help save money and have fun in the process!

One such area is electronics. I’ve been building my own computers for just over 5 years, and I wouldn’t have it any other way. I’ve saved hundreds of dollars purchasing my own parts piece by piece and building it up from scratch. The process is actually surprisingly easy and fun if you take the necessary precautions (static is a huge danger to motherboards and the like, for example).

If you want to build your own PC but don’t want to have to research each individual component, there are options available for you here, as well! You can buy computer kits that have all the components you’ll need, just not yet assembled. Everything from standard, low-end units to high performance gaming computers.

I’ve really started looking into the do it yourself mentality and hope to expand my proficiency in a variety of areas. I’m hoping to build my next laptop myself, and I’ve started dabbling in other areas as well. The more you are able to do on your own, the larger your potential for saving is.

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Inflation has to be one of the worst things you can hear as a personal finance connoisseur. It means the constant degrading of your purchasing power. Everything you’ve worked so hard to save and put away is losing value with each passing year, and there are a number of steps you take to prevent it from draining away to nothing (seeking higher rates of return, in particular). But there’s another kind of inflation that threatens to have a similar effect on your finances: lifestyle inflation.

Lifestyle inflation, put simply, is when you constantly increase your spending to meet a rising income. Let’s say, for example, you’re pulling in a respectable $35,000 a year. On $35k you can get by pretty well with a modest apartment and vehicle. Then you get a promotion and you’re at $45k per year. At this point you have two options:

• Live exactly as you do now and bank the difference, investing it with a proper allocation strategy so that you can one day buy things like a house or a car in full, without debt. OR
• Get a new, larger car with not-so-great mileage and a 2 bedroom apartment despite the fact that you have no idea what you’ll do with the extra bed room.

The pull for more stuff is strong, even with seasoned veterans of lifestyle design like myself. I often come to the middle of a crossroads when I hit a windfall. On one side there are things I’d like…the new Dawn of War game, an Ipod, etc. On the other I see my remaining debt…happily collecting interest each month and sucking away a portion of my check with each passing day. This imagery is usually enough to convince me that I want to pay off any debt I have as soon as possible. This strategy has led to our car being paid off in full by August, and my student loan removed in the following year. At that point I will be, for all intents and purposes, debt free. No mortgage, no car, no loans, no interest…nothing.

It will be glorious.

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What’s a personal loan, exactly? Technically, it is “a loan that establishes consumer credit that is granted for personal use; usually unsecured and based on the borrower’s integrity and ability to pay.” But what does this mean for the average consumer? Can it be used for benefit, or is it something else to put in the debt instrument graveyard (like credit cards, for many people).

For some events, your emergency fund may not be enough (you do have an emergency fund, right?!), and a short-term loan may be warranted. As per a recent article at Bankrate.com, these loans can carry more favorable terms than credit cards, but the interest rates can become dangerously high. Bankrate suggests taking a look at local credit unions:

“Ninety-six percent of credit unions offer short-term unsecured loans — and more than half (60 percent) will make loans for amounts less than $500, according to figures from CUNA. The average amount borrowed is roughly $2,300. In addition, at least one-fifth of credit unions will make loans under $500 with just “a limited credit check,” says Schenk.”

Terms do vary quite a bit, so as always be sure to look around and do your homework.  It is possible to get personal loans for bad credit as well, so check out sites like this and snoop around for the best terms you can get a hold of.

Be wary of lenders trying to sell you more credit than you really need. Due to the usually high interest rates associated with these loans, only borrow as much as you absolutely need to. Personal loans can serve as a short term bailout with more favorable rates than a credit card, but like any debt instrument they can be dangerous and so handle them with care and utilize them only when necessary.

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It seems I’ve been on a tear with writing recently. Hopefully I’m not overloading you guys, I’ve just been having a total blast exploring things both finance related as well as sources of alternate income. I’ve recently met a goal of making 10$ per day in income this month outside my job through both blogging, adsense, and investments. This nets me about $300 per month, or the equivalent of a $3,600 per year raise. Here’s how it’s broken down so far:

• Income from Blogs (TFC, Got2wow, Dividend Days): Average of $7.00 per day.
• Income from Niche sites via Adsense: Average of $2.00 per day.
• Investment Income: Average of $1.10 per day.

And there you have it! I’m very excited to have hit this milestone already, and I hope to continue to expand that in the weeks to come. If you’re interested in setting up niche sites of your own, Kirsty at Nerdy Nomad had a great post recently giving some analysis on what sites should focus on and how to pick a proper niche.

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I’ve been giving some thought to a new brokerage account, and wanted to get some reader feedback. I’ve been using Sharebuilder for well over a year now and I’ve been very happy with their service. Better still since they were recently acquired by ING, transaction costs have been lowered. I like them most because I’m a dividend-oriented investor and they allow easy, painless automatic reinvestment of dividends.

Now that my brokerage account balance continues to grow, I’ve toyed with the idea of making the switch. I’m not a bells and whistles kinda guy, I just need cheap, accurate trades a few times a month for as little in transaction costs as I can get. I already have an empty account over at Zecco, but I’ve been weary due to things I’ve heard and read about their dividend reinvestment options or lack there of. Has anyone used Zecco? Were you able to easily reinvest dividends? The free trades per month do sound very nice, but it doesn’t do me much good if I can’t automatically reinvest.

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