My family has a very old Toyota Previa at home. This van is so old that they don’t even make it anymore. I remember taking many family trips to Toronto in it. Now that the van has served its purpose, it seems to be more trouble maintaining it than it is worth. There is no point in repairing the van anymore. Thankfully, with the Cash for Clunkers program now there is something we can do with it. Starting July 1st, if you are looking to buy a new car, you can trade in your “clunker” and get a $3500 – $4500 credit toward purchasing a fuel efficient vehicle. The program is actually officially called the Cars Allowance Rebate System (CARS) Act. More information can be found on its website. Of course, we might not want to take advantage of this since we don’t really need another car. I guess we’ll have to think about it.

Here are some important points straight from the website:

• Your vehicle must be less than 25 years old on the trade-in date
• Only purchase or lease of new vehicles qualify
• Generally, trade-in vehicles must get 18 or less MPG (some very large pick-up trucks and cargo vans have different requirements)
• Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in
• You don’t need a voucher, dealers will apply a credit at purchase
• Program runs through Nov 1, 2009 or when the funds are exhausted, whichever comes first.
• The vehicle that you are trading in is required to be destroyed. Therefore, the value you negotiate with the dealer for your trade in is not likely to exceed its scrap value. The law requires the dealer to disclose to you and estimate of the scrap value of your trade-in vehicle.

To see where your vehicle lies in MPG the website gives you this resource: Fueleconomy.gov

If someone is going try this, please leave a comment or shoot me an email to let us know if it worked for you.

Beginning July 1, 2009, Federal Education Loan interest rates will drop. What does this mean? If you have a variable interest rate on your federal student loans, you can consolidate them after July 1st at a lower rate! Believe me, if you have federal student loans, you will want to look into this. These are the lowest rates in the history of the federal student loan program. New interest rates:

• Stafford Loan Consolidation (In-School/Grace Period): 2.00%
• Stafford Loan Consolidation (Repayment Period): 2.50%
• PLUS Loan Consolidation: 3.38%

Make sure to read this article if you have student loans and want to save a lot of money with a lower interest rate.

Unfortunately, this doesn’t apply to me as my loans were originated after July 1, 2006, but hopefully, this is helpful for some of you! Please comment below to let me know if this was helpful to you and you were able to lock in a lower rate and save money!

I was talking to a friend recently and she started asking me about what to do with her savings. She just recently finished graduate school and mentioned to me that she keeps all her money in her checking account. She also borrowed more in student loans than she needed, but the loan was subsidized by the government so it was basically an interest free loan. Unfortunately, she did not do anything with this money. I proceeded to scold her for managing her money poorly.

Given that my friend is not very financially savvy (rather she doesn’t know the first thing about personal finance) I thought it would be good to write about the advice I gave her in case there is anyone else out there who is in a similar situation.

The first piece of advice that I had for her was to move her money out of her checking account and into a savings account. I told her to open a high yield online savings account with a bank like ING Direct or HSBC (there are a number of other online banks that offer slightly higher interest rates than traditional banks). At least her money would be making some return in that account instead of just sitting in her checking account.

Next, I told her to put half her money in a certificate of deposit (CD) and the rest in the savings account. A CD pays a higher rate than a savings account and has very low risk. You essentially lock your money into a CD for a certain amount of time. Rates for different CDs can be looked up at bankrate.com. I told her to put in half her money because: 1. she doesn’t have much and 2. she is looking for a job and might need her savings in the near future. I instructed her to open a CD since it is an easy and safer investment option for beginners who do not know much about managing their money.

I also discussed my saving mentality with her. This might help some people who struggle with saving. I made a rule for my savings account – it is a one way street. Money can only go in, but cannot come out. This has worked well for me since I have yet to tap into it.

Another issue was my friend’s interest free loan that she just allowed to sit in an account. At the very least, she should have put that money in a CD for a year so that it could collect interest. If she had done that, she would probably be better off by a couple hundred dollars.

Does anyone else have any suggestions for beginners who are learning to manage their money?

I recently posted about Groupon and that it has some great deals on it. I also mentioned that I try not to purchase anything that I don’t need. Well I finally made my first purchase on Groupon and it was a great deal!

I’ve been thinking about getting a gym membership for the longest time. The problem for me is that it wouldn’t be worthwhile for me to get one since I would only be able to go a few times a month due to long work hours. The membership would cost $65/month.

Groupon came out with a coupon for the gym I was considering – 20 day passes for $30, good for 3 months. This was ideal for me since I could choose when I wanted to go and it would only cost me $1.50 per use. I just wanted to share my happy purchase.

Does anyone know of any other services/websites like Groupon?

As a college graduate in recent years, I have some advice for those who have just graduated and are starting their “real lives.” Personally, I found it somewhat stressful to join the “real world” and take on actual responsibilities. I had to move to a city that was 300 miles away from my home town, pay bills that I never had before, learn about benefits at my job, feed and take care of myself, and develop a work-life balance. I am sure many young professionals can relate as they look back on their college days and realize how easy they had it and how little responsibilities they had compared to the ones they had now. Here are some of my thoughts on the transition from college to the real world:

1. Live a frugal life – Even though you are no longer a college student, live like one for at least one year. When you first exit school, you are probably not very financially stable and have a lot of student debt. Instead of living in a studio, find a roommate and live in a cheaper 2 bedroom or better yet, live in a large house and share the rent with many roommates. Instead of dining out multiple times a week, cook at home. Go out one less night of the week (you’ll find that it gets harder to go out as much as you used to as recovery time increases) and look for deals on everything. Understand that you are not yet financially stable and should make every effort to save. You were used to this lifestyle in college; why not extend that another year?

I live currently live with four of my friends from college. We all stayed in the same city and found a very inexpensive house to live in. Not only has it provided me with a way to ease into post-college life, but it has allowed me to save much more each month.

2. Be organized – This is even something I need to work on. My roommate and one of my best friends from college said I operate in organized chaos – meaning it appears that everything is in disarray, but I still know where everything is. I am going to work on making sure I know where everything is in a neat and tidy way.

The more organized you are, the easier your life will be. Make sure you have a filing cabinet or box to put all your important bills, records, and documents. Keep track of your tax information throughout the year so tax season is just a breeze and not a dreaded chore. Document what bills need to be paid at what time so you do not forget or miss any payments. I keep an excel file of all my bills that I use each month to track which bills I pay and how much I have paid.

3. Learn to be financially responsible and savvy – Educate yourself on personal finance. There are so many people out there who wish they had known more about personal finance at a younger age. There is so much you can do by empowering yourself with this knowledge. Read publications and different personal finance blogs (like this one =P) and educate yourself on how to save money, how to invest, how to manage your finances, and etc. The more your know early on, the easier your financial life will be in later years.

4. Start saving for retirement early – I have yet to post about the time value of money or the power of compounding, but these are critical concepts. Basically, the earlier you start investing the greater the potential you have for your retirement savings. Max out your 401k if possible. Start a Roth IRA or traditional IRA soon (I have not been able to do this yet, but am going to in the next few months).

5. Excel at work – If you have a job right now, it is your greatest asset. You don’t own a house, you don’t have a huge savings, and you don’t have a retirement nest egg. Put all your effort into excelling at work to get to a promotion or a raise or just to develop your skills. The more you learn and the more responsibility you have, the more valuable you are to a company. Eventually, this all equates to more earning potential and a better financial position.

6. Pursue your hobbies – Don’t forget to enjoy yourself. Do the things you enjoy. Who knows, maybe one day, you can make some money off of these hobbies. In the mean time, have fun doing those hobbies and pursue what is important to you. Financial stability is important, but so are your interests and happiness.