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I’m an independent consultant, and sometimes I have to be out of town for a week or two at a time. Whenever it’s for more than a week I always stay at an extended stay hotel of some type so I have the option of preparing some of my own meals.

Supposedly chicken & dumplings; see any chicken?

This isn’t the easiest thing to do believe it or not. It takes discipline and control and a recognition that you’re not working with your own stuff and thus there are many things to get used to in all ways. I could easily talk about more than 5 things, but I think these 5 will get you thinking about food and money in a different light.

1. Every extended stay hotel offers some kind of meals here and there. Often they’ll have some kind of breakfast, full or continental, every day, and offer some kind of meal Mondays through Thursdays. If your stomach and palate can handle it you can save money by eating in the hotel and only having to worry about lunch. However, unless the hotel also has a restaurant, which is rare, the food you’re eating is mainly frozen foods that are thawed out and you’re not getting the most nutritious stuff, let alone the tastiest fare. Still, if you can deal with it you can use most of your money for other things.

2. Your kitchen isn’t going to be like at home. Saying you have a full kitchen is a major misnomer. If you’re lucky you’ll get a stove top with 2 electric coil burners, a small frying pan and a sauce pan. No big pots, which means you can’t make a big meal and save it for the week unless you bring your own stuff. If you’re working or on the go every day it’s more tiring than being used to a routine at home, and having to cook every night can feel like a major chore. If you still want to prepare easy and relatively inexpensive meals go for sandwich foods and possibly frozen vegetables. Don’t forget that you’ll have to buy condiments and butter if you go this route, though they’ll last for awhile.

3. Eating out all the time can be expensive and dicey to your diet. Unless you want to eat at fast food places all the time, realize that almost every restaurant you go to is going to cost you at least $20 a meal, maybe not including tip. Even local diners can end up pricey depending on what you’re ordering, although sometimes you can get a great deal here and there.

Something else to consider is how far from home you are when eating out. I live in the northeast and I’ve found that when I go to restaurants in that area of the country I do well, whereas when I eat in the south I’ll often have a burning in my stomach for awhile because food is spicier, even though the locals will tell you stuff isn’t; they’re used to it. If you’re used to a diversity of flavors and spices in your regular diet then you might do better in this regard, but be careful just in case.

4. Grocery foods might be different than what you get at home. Why did I recommend sandwich foods? Because I have found that in other parts of the country from what you’re used to things are often done differently. Those hamburger patties you buy might not only contain hamburger meat in them; that rotisserie chicken might have seasonings you aren’t prepared for or don’t like. I have found that I always end up throwing away 30% of what I buy at grocery stores because I keep thinking things I buy such as potato salad or baked beans are going to taste like I’m used to them tasting. That can get expensive as well; it’s always expensive when you don’t eat what you still have to pay for.

5. Ask questions about everything, even if you think you know what it is. I’m not a major sushi eater but I like other Japanese foods, as well as Chinese food. However, I have learned that things like Mongolian Beef, Four Seasons and Volcano Sushi, common names in these types of restaurants, aren’t necessarily the same food you get in your hometown.

Unless the restaurant is very forgiving if you order it, you’re paying for it, and you either have to order something else or go someplace else to get something else to eat; either way it’ll cost you more money. Even foods like fried shrimp can be different, because in some restaurants in the south they serve them with the heads and legs; you don’t see that much in the northeast. Is it worth ordering something, having to still pay for it, and ending up spending $40 on dinner which includes the Whopper you picked up after leaving the restaurant?

The one recommendation I’ll also make which is more about your health than your money? Make sure you’re stocked up with something that can help relieve your stomach issues; you just never know.
 

Copyright secured by Digiprove © 2013 Mitch Mitchell

During the recession, the phrase “too big to fail” became part of the cultural lexicon. It was on the news every night, on the front page of newspapers, and part of the general discussion both in Washington D.C. and on Wall Street. But what exactly does the government or the media mean when they suggest a company may be too big to fail?

In capitalism, the natural order of things is that some businesses succeed and other ones fail. But when a business such as a major bank is too essential to the economy as a whole to be allowed to fail, it can be designated as too big.

The debate rages on as to what constitutes too big to fail, as well as what should be done about it. Should the government bail out these businesses, effectively intruding on the free market? Or should capitalism be allowed to run its course, no matter what the risks are to the economy as a whole?

1. How Banks Got So Big

Mother Jones reports that the nation’s 10 largest banks hold 54 percent of the country’s financial assets, up from only 20 percent in 1990. Increased mergers and acquisitions, freer reign, and the rise of interstate banking have all contributed to this growth. Many proponents of the too-big-to-fail theory suggest that the government has created the problem by refusing to impose stricter regulations on banks in the first place.

In 1999, the Graham-Leach-Bliley Act permitted banks to intermingle their commercial and investment activities, meaning that customers could now get their savings account, checking account, and insurance from the same institution without much in the way of restrictions.

This kind of banking had been banned since the Great Depression, and many think it directly caused these companies to balloon and contributed to the 2007 subprime mortgage financial crisis.

2. The Debate Over Too Big to Fail

You probably already know that in 2008, President Obama signed a $700 billion deal to bailout the major banks. The debate over whether or not this was the right decision continues, as does the debate over what to do about this problem in the future. Too big to fail isn’t going away anytime soon, and NPR reports that several Congressmen have touted the benefits of banks being so large.

Larger banks can service large firms on a global scale and handle finances that smaller, independent banks could never manage. U.S. Banks also lend to small firms in developing markets, allowing for the spread of capitalism. But other members of Congress argue that too big to fail is simply too big, and that nobody outside of Wall Street envisions the major banks as anything less than corrupt, unchecked institutions. There have been arguments that banks should be limited to $100 billion in assets or even forcibly broken up.

3. The Pros and Cons of Bailouts

According to Debate.org, the country is pretty much evenly split between those in favor of government bailouts and those opposed. Though nobody, including President Obama, wanted the bailouts to be necessary, many people believe they diverted an even greater financial crisis and preserved or even created jobs.

Many others think the bailouts only benefited rich CEOs who ought to have been held accountable in the first place, and that banks will be more likely to take risks in the future and believe the government will always rescue them. In reality, some bailouts were profitable and some weren’t. But either way you slice it, the little guy is at a disadvantage.

The phrase “too big to fail” is easily identified with the financial crisis of 2007-2009, but it’s just as relevant now as ever before. The next time you turn on the news and hear the debate raging on about enormous banks, auto companies, and insurance firms who hold the future of the economy in their power, you can remember both sides of this important issue hold weight. It’s directly related to how America defines capitalism and the freedom to make money, and how much the risk of losing that money matters.

Blogger Stacy Hilliard writes articles for Northeastern University and several other schools that offer online MBA degrees.
 

Copyright secured by Digiprove © 2013 Mitch Mitchell

While most people are reconsidering the issue of debt, many do not know the difference between good debt and bad debt. Debt has a negative connotation to it – most personal finance bloggers boast that they are debt-free. However, it is common knowledge that sophisticated investors welcome a healthy debt ratio. After all, leveraging a small amount of cash to make a large, calculated investment will deliver outsized returns relative to your initial equity input.

As a rule, good debt is money that is borrowed for investments that will offer a return, create additional income, or generally increase your net worth and financial security. Bad debt is money that is borrowed for things like material goods that are desired rather than things that are necessary. Often the interest rates on bad debt are higher than the rates on good debt, which in itself should deter Americans from pursuing access to them.

Examples of Good Debt

1. Student Loans

Student loans are often the first debt that people incur and are an investment in yourself and your future earnings. A college or graduate degree, even a prestigious license or certification, can raise your earning power by tens of thousands of dollars per year, resulting in millions over a lifetime. Many low interest college loans are available and some may offer loan “forgiveness” in return for working in certain professions, like teaching, nursing or the military, or working in the public sector for a specified number of years.

The interest on student loans is also tax deductible and those who choose to continue their education after they begin working may be eligible for a lifetime learning tax credit or tuition assistance from their employer. Tax deductible loan interest is one of the hallmarks of good debt. It is a government incentive to borrow money for worthwhile purposes that will offer financial rewards after the loan has been paid.

2. Mortgages

Regardless of where you live, you have to pay for your accommodations. Buying a house is a long term investment that helps people build wealth. Mortgage interest rates are usually low compared to other types of debt and, like student loans, mortgage interest on a primary home is tax deductible. Unlike other purchases, real estate tends to appreciate in value and a home can be sold to help finance retirement. Certain home improvements also net homeowners tax credits which can save a bundle on income taxes.

It is important to have a reasonable down payment and to buy a home that is affordable. Generally the best mortgages are 30 year fixed rate loans, but if you can afford a 15 year mortgage comfortably, consider it. Adjustable rate mortgages often have higher interest rates, balloon payments and homeowners may have to refinance within 2 to 3 years, paying additional points for the new loan. Borrowing too much with too small a down payment or high interest rates can result in an upside down loan where the borrower owes more than the property is worth.

3. Car Loans

Car loans are hard to classify as good or bad debt. If an old car needs constant repairs to keep it running, a new car may actually save you money. If you have to borrow money for a car, consider buying a late model used car instead of a new car, since the initial depreciation on a new car can put car buyers in an upside down loan. A late model used car also usually has lower insurance payments for collision and comprehensive coverage than a brand new car.

Extended warranties are usually not the best investment, but depending on the cost of the warranty, they can save money on major auto repairs. Some dealerships offer extended warranties on certified pre owned cars and they are also available through private companies. Make a reasonable down payment when financing a car to avoid owing more than the car is worth if it is totaled in a loss covered by collision or comprehensive insurance. The insurance company only pays the value of the car, not the amount of the loan.

Finally, the absolute best way to buy a new car is if you take advantage of 0% of .9% interest rates offered by car manufacturers. If you can buy a car without paying any interest for the next 5 years, make sure to include your interest cost savings when considering which make and model to purchase.

4. Medical Bills

Another gray area, loans to cover medical bills are not really a choice. While medical debt is responsible for more than half of all personal bankruptcies, providing life-saving treatment for a loved one is more important than money. Although medical bills, not covered by insurance, that exceed 7% of your yearly income may be tax deductible, the interest on loans to pay these bills is not. Medical care for loved ones is a priority and medical debt is always acceptable.

5. Business Loans

If a business loan is likely to grow your business, it should be considered good debt. Starting a new business or expanding an existing one is always risky, so before taking out a loan be sure to do your homework to insure your plan for your business is likely to be successful. The amount of interest on business loans varies and depends on how good your credit score is, the debt to income ratio, and your company’s cashflow. Interest on business loans may be tax deductible as a business expense, but this depends on the structure of your business. To start off small, you may want to consider the best ways to make money from home before diving into a full-scale commercial venture.

Examples of Bad Debt

1. Payday Loans

Some states have taken steps to outlaw or severely restrict payday loans because these short term loans have extremely high interest. Borrowing money on a payday loan often leads to borrowing more money each pay period. This can mean chronic high interest debt and may meaningfully reduce your disposable income. Payday loans are a bad idea unless you are certain you can pay off the loan in full on the due date without having to borrow more money to get through the next pay period.

2. Credit Card Debt

Another type of high interest debt, credit card debt is usually considered bad debt, at least if you are carrying a long-term balance. If you use a credit card and pay the full amount every month, or if you only use the credit card for specific, necessary purchases with a plan to pay it off in a limited time period, this debt can be acceptable. Using credit cards to pay for things you do not need like electronics, jewelry or a vacation will almost always lead you to overpay for your purchases. The average American has more than $10,000 in credit card debt, with interest rates of between 10% and 29.99% and making minimum payments often only covers the interest on these loans.

3. Borrowing From Retirement Plans

Borrowing from retirement plans is expensive since you may face substantial tax penalties for early withdrawal. You may also face penalties, like a loss of quarterly interest, from savings institutions. You can withdraw money to make a down payment on a home, but it must be paid back within five years or penalties apply. Not only that, but you have to pay income taxes on the money when it is withdrawn early and pay taxes again when the money is withdrawn during retirement. Since you will not be able to borrow to fund your retirement, it is best not to take money from retirement accounts unless absolutely necessary. Tax penalties may not apply to Roth IRAs and 401(k)s since they are paid from after tax income.

Having manageable debt is a fact of life, but if your debt becomes unmanageable and burdensome to your comfortable lifestyle, it can affect everything from your personal relationships to your health. Avoiding bad debt altogether and paying off good debt as quickly as possible can help anyone build financial stability and a secure future. Next time you are considering taking on any type of debt, ask yourself if this financial transaction will further your financial goals and provide you and your family with a better life?

This article is a guest post from Gary Dek, a finance blogger who writes about investing, making money, saving, credit/debt, real estate, and career and education advice at Gajizmo.com. Gary has worked at an internet company on their M&A team, as well as investment banking and private equity firms in California. He graduated with a degree in financial analysis and valuation and entrepreneurship.
 

Copyright secured by Digiprove © 2013 Mitch Mitchell

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