Wisdom of Rich Dad

The newest ways to manage your money don’t require expensive software. They are web-based—you can log into them anywhere—even on your phone. And, best of all, there are many free options to help keep your budget in check.

One of them is moneyStrands (moneyStrands.com).

moneyStrands.com is easy to use. You enter your account information and moneyStrands breaks every expense and deposit in each of your accounts into different categories (home, insurance, auto, shopping, groceries, etc).

Clicking on the details tab allows you to see your account broken up in a color-coded pie chart. Each “pie piece” is a different category and you can easily change the time period you are looking at (anywhere from the current month to “ever”).  If you feel that you are spending too much in one category you can set up budgets and have moneyStrands.com track your progress. You can also schedule alerts—no more overdraft surprises!

But what makes moneyStrands.com really stand out is the ability to anonymously compare your investing and spending habits to other people within your demographic, or with similar traits.

Answer a few easy questions and the program compares your income and spending habits with relevant sub-groups (e.g. students) within the community to see how your expenses match your peers. moneyStrands.com uses social recommendation technology to help you find the best ways to invest and save money and to recommend things for you to buy. You can view your comparisons by category in either a bar graph or bubble chart.

moneyStrands.com offers a variety of widgets that you can activate, including: recommend financial products, tips, favorites and what to buy.  Another neat widget is the “financial condition” widget.

It’s an easy-to-read graphical representation of your financial situation. If you hover over the graphic it offers an explanation: “Your financial condition is excellent when your average monthly expenses amount to less than 30% of your monthly income.”

Web-based means immediate access to all of your accounts: bank, credit cards, and investing accounts. You can log in at home, at work, or anywhere you have Internet access. moneyStrands promises that their site is just as secure at any other banking or investment site.

Their website promises that security is a top priority. moneyStrands.com is free. They also offer a free mobile app for the iPhone.

Can a couple where both participants have different attitudes towards money and different incomes survive in a relationship with combined finances? 

A differing philosophy or income is not an automatic problem. What’s really important is the goal. If two people agree on some basic principles, there is room for differences in habits.

In a partnership, there are ways each individual keeps the other in check and offers compromises.

Don’t go into the fusing of your finances with the intent on changing the other person’s philosophy. It’s true that he or she will have to be willing to compromise on some issues, but most likely, if you’re reading this, you will be leading the charge. In compromising, you may also have to be willing to loosen your grip, but just a little bit.

Consolidating your finances can be accomplished, but varying philosophies and major differences in income can make the transition difficult. Focus on these thoughts:

What are your goals? Are you looking towards retirement with each other? If so, then saving for retirement must be a priority for both of you. Do you plan on having children? The two of you may not be able to contribute equally towards these goals. Your investment actions, including asset allocation and risk tolerance, should support your goals.

Which accounts should be combined? Any accounts you pay bills from can be combined, with each contributing the amount or percentage of their income that you decide is fair together. Any savings accounts for future couple-related goals, like purchasing a house, can be combined. Do you want to keep separate accounts for some fun money? Some couples do this and use their fun money to “surprise” the other with gifts or spend on singular indulgences.

Who will manage the money? It’s best when only one individual in the couple tends to the details. The family money manager should keep the other periodically (and briefly) informed of the financial state of the union. Even with one money manager, major financial decisions should be discussed together.

Be prepared for sacrifices and compromises. That probably goes without saying, as any relationship requires this. Money tends to amplify the issue. How will you handle disagreements?

What are your obligations? Mortgages or rent, phone bills, cable, and insurance are only the start. Will you be expected to take care of an aging relative? Does your partner have outstanding student loan debt, or will you be supporting him through medical school?

Working together as a team towards shared goals can help to overcome other differences, allowing spenders to work together with savers and high-earners to work together with low-earners. Accept the other for whom he or she is, and everything is easier.

Allowance: do you give one, if so how much and why? There are so many questions regarding allowance it’s difficult to know what to do.

Do you give your teenager a credit card? Some parents do. Do you give your teenager an allowance based on the chores they do? Most do. Do you give your teenager an allowance even after they get an outside job? Some still do.

What’s right and what’s wrong? Well, if you ask me there is no right or wrong in this question, merely what serves your family and what will not.

How much? It’s hard to know how much to give your teen and there are many different philosophies. One common rule of thumb is to give them one dollar for every year of the child per week.

At that rate I’d be giving out $42 per week which is larger than my monthly gas and electric bill – I’d soon be broke myself! Some parent give a credit card to their children that the parent pay off – if this works for you fine. Some suggest to provide pre-loaded money cards so the amount is limited.

To read about different levels of allowance NewYorkMagazine.com has an article where teens themselves explain their personal situation. A very strong argument for giving an allowance to teens is they are at the stage of child development where they are struggling for their independence and identity. Giving them some financial independence may support this very normal development.

Why? What is it that determines whether or not we give an allowance to our teens? Money for chores: this is an age old argument. For every expert that touts giving money for chores to teach financial responsibility and management, there is one that will argue that point.

Robert Kiyosaki, author of “Rich Dad, Poor Dad” writes, “Allowance and chores are a dangerous combination. Gratitude in children doesn’t depend on whether kids have to do chores in order to get an allowance.” The trick with giving an allowance as a reward base for chores is you had better make sure that the reward is good enough, or the chores will never get done. And what happens when your kids “go on strike?”

Our children don’t generally learn from us (including money management) by those things we say to them. They learn from those things they see us doing and they learn from their own mistakes. What works for me and my family may not work your family.

The bottom line is giving an allowance is part of your own personal financial budget. Working this out with your children is showing them how to work with a budget and spend appropriately. So no matter what you decide to do regarding an allowance, make sure you share that decision making process with your children.

Investing may seem daunting for a lot of people. Maybe you have tried it once and failed, or maybe you are simply frightened of losing your money.

To avoid losing any capital, you simply need to be aware of the main pitfalls and always avoid them. The simple, reliable rules for investing are:

1. Have a plan. Always ensure that you or your financial advisor draws up an appropriate investment strategy for you that incorporates your risk profile, timeframes and financial goals. As foolish as it seems, many people plunge headfirst into investing without thoroughly working through these fundamental issues.

2. Don’t put all your eggs in one basket. Obvious advice, but many people fail to follow it. Many people think that they are on the right financial track by paying off the mortgage on their family home and then buying another property for investment purposes.

Think about it! You have put all of your financial eggs in one asset basket – property. What happens if the property market collapses? Despite common thinking that this is a safe way to invest, the outcome is very risky. You have invested all of your well-earned money into only one area.

3. Build in appropriate timeframes. There is an old saying, “When the tea lady starts to invest in the stock market, it’s time to get out.” What this means is, when the share market is so high that everyone starts to clamber on board, it has probably reached its peak.

There are two ways of successful investment timing. The first is to always pick the low-end of the market to buy and the high-end of the market to sell. This is extremely hard to do. Even the best-informed experts have trouble. The second way is to choose good investments and stay with them over the long-term (say 10 years or more) and ride the waves of the market.

For safe, easy investing, choose the second method. Do not buy into the top-end of the market and sell once it starts to fall. You will definitely lose money this way.

4. Avoid high-risk investments. These include risky business ventures, highly speculative stock, tax avoidance schemes or too-good-to-be-true propositions that promise unusually high returns.

5. Avoid borrowing for your investments. Although some financial advisors advocate ‘gearing your investments’, this can be fraught with danger. Gearing means to borrow. If borrowing for investments takes you over your 40% fixed costs margin, you will be cutting it too fine, particularly if you lose your current income level.

6. Stay with the traditional and known. The best and surest investments are fixed interest, property and shares. Although all asset classes will fluctuate over time.

Work out the optimum mix for your investment profile, have a safe plan to work with and you can’t go wrong.

NEW YORK (CNNMoney.com) — Rising unemployment is pushing strapped U.S. borrowers over the edge, with delinquencies and balances on delinquent credit cards surging — that’s according to an industry report. Here’s your step-by-step guide on what to do if you can’t afford your credit card payments.

1. Contact your lender

Let’s say you’ve lost your job, or are looking at a steep medical bill, and worried you won’t be able to make your credit card payment.

Make sure you call your lender and explain the situation. The sooner you contact them, the more willing they may be to work with you.

More and more credit card companies are willing to negotiate. Realize that they’re not being charitable — they’re just trying to get what they can out of you.

So, what can you ask for? If you can make some sort of monthly payment, ask your issuer to lower your rate and possibly waive your fees. Also ask to work out a payment plan.

If the first person you speak with can’t help lower your rate or make adjustments to your account, ask to speak with a supervisor. Persistence may be necessary to find the person who can or will help you.

Document all conversations, including the name and title of the person you spoke with, date, time and results.

Go to helpwithmycredit.org — a Web site operated by credit card companies for more information on dealing with debt issues.

2. Get your debt forgiven

Increasingly, credit card issuers are accepting dimes, if not pennies, on the dollar as payment in full. But if you’re striving to get a debt forgiven, don’t expect a sweetheart deal.

Generally you have to meet certain criteria. For example, most cardholders have to be delinquent for at least 90 days and — usually — your credit report needs to show that missing payments isn’t a common occurrence. But that doesn’t mean that once your debt is settled, there are no consequences.

Closing an account due to settlement is bad for your credit score and will affect your score for several years. If the forgiven debt is more than $600, you must pay income taxes on that amount.

If you’re looking for guidance on negotiating with your credit card company, go to the National Foundation for Credit Counselors at NFCC.org.

Don’t waste your time with third party debt settlement companies. These companies charge you fees for a service you can do yourself — for free.

3. Prioritize your payments

If you’re having trouble making your monthly bills, it’s time to prioritize.

First, look at your immediate needs. Pay your mortgage or rent bill, keep making payments to your utility company and keep food on your table.

Then start to think about paying down your credit card balances. Find out which card has the highest interest rate and pay that one off quickly while making modest payments to your other credit cards.

Remember that credit card debt is unsecured debt — meaning that there’s not much that the credit card company can take away from you if you’re delinquent. You should always strive to pay off your debts. And stop using your credit cards until you pay off your current balances.

– CNN’s Jen Haley contributed to this article.

Kim Kiyosaki (wife of Robert of Rich Dad Poor Dad fame) shares an interesting insight about what she calls: 4 kinds of people, grouping them by their mantras:

1. I must be right — people who love to be validated and proven correct.
2. I must be comfortable — people who like settling in their comfort zones and not push boundaries.
3. I must be liked — people who live to please others and patronize.
4. I must win — people who will do anything to succeed.

Although doubtless there are more archetypes than Kiyosaki claims (depending on whatever typology you subscribe to), the thing I find interesting about the 4 types above is how they would react and utilize critical thinking.

1. Critical thinking seeks to clarify, not simply validate.
2. It is often uncomfortable and involves challenging the status quo.
3. It is not patronizing, and is often deprecating.
4. It seeks to achieve its end goals.

Of the 4 types above, only those who seek to win would push criticism to its limit.

Kim says know who you’re dealing with and that will bring you success. In critical thinking it’s the same: it’s important to know who your talking to, who your audience is, and who you’re criticizing.