Spoiler alert… despite your enthusiasm, scooping up Facebook shares may not be so easy for the general public to acquire at the offer price. Associated Press writer Dave Carpenter sums it up best, but the gist is simple – it’s who you know or how much money you have. In other words, if you’re not friends with Mark Zuckerberg, one of his early investors or one of their preferred clients, you better have a brokerage account with anywhere from $100,000 to $250,000 already deposited and host of recent trades to go with that portfolio.

How an IPO works…
Bummer right? This kind of exclusivity seems to fly in the face of what is inherent in the phrase ‘initial public offering’. So how does it actually work? IPO’s are offered by private companies for a number of different reasons, the most popular of which are raising capital for expansion or resolving a poor cash flow issue. In Facebook’s case, they have neither of these problems. Instead Mr. Zuckerberg’s purported motivation is to bring about a long awaited payoff for many Facebook employees. After the IPO is finalized, many of them will become millionaires.

So before the actual first day of trading occurs for the newly dubbed FB stock, Facebook and its underwriters (the investment banks that have been hired and charged with evaluating, pricing and marketing the Facebook stock) go on a presentation roadshow to help attract big investors. This is why ‘Johnny Investor’ is rarely invited to this part of the initial sale of the stock, which is conducted via auction prior to the first day of actual trading.

Do I want Facebook shares and if so… how do I get them?
This is complicated so we will take the second part first. To buy shares of Facebook you have to open an account with a brokerage firm, wait for trading to begin and then instruct your account manager to buy the shares. You can do this yourself with popular self-made investor tools like ETrade.

The question of whether or not Facebook is a good investment is up for serious debate. Carpenter lays out some of the pros and cons in his piece and the video we included should shed a little light on the subject. At first glance you may think to yourself how could I go wrong buying stock in such a profitable company. However, the question isn’t about profit, it’s about growth potential. How much will Facebook grow after I buy my shares? This is a more challenging question. Facebook revenue is largely generated by Facebook ads, which recently have come under fire for not being as effective as advertised. Furthermore, while Facebook users account for nearly 15 percent of the global population, new user acquisition has slowed considerably.

It’s not all bad news. It is a safe bet to say that Facebook will continue growing. This writer has incredible faith in their ability to continue driving social media innovation and creativity – never a bad investment in any industry. Talk to a broker, a friend who is in investment banking and see what they think, but my final piece of advice would be to wait for the IPO to launch and the rollercoaster of initial expectations and frenzied trading to die down before jumping in feet first.

Facebook IPO – Not as Public as You Think was originally featured on Quizzle Wire

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It seems that for the time being Americans are content with continuing their penny-pinching ways. With the summer months approaching gas prices are certain to rise and unemployment continues to hover over eight percent, we would all do well with a little belt-tightening. At Quizzle, we don’t point fingers, we just state the facts, and while the economy is looking up from a year or two ago the future remains uncertain.

Now is the best time to pay down debt and save a little cash for that rainy day fund. Your credit score is vital to this process. If you haven’t already, I highly suggest you avail yourself of the simple to use and almost instant free credit report and score from Quizzle.com. They won’t ask for a credit card or social security number and you still get a full, detailed credit report and advice on how to improve your credit score. Understanding your credit is paramount to righting your personal finances, and as a child of the 80’s I hope you all know what I mean when I say ‘knowing is half the battle’.

Reality and Humor Collide at White House Correspondents’ Dinner was originally featured on Quizzle Wire

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If you have acquired a decent stash of emergency savings, you’ll be better prepared for whatever challenges life sends your way.

Here are a few of our favorite Quizzle personal finance articles on how to build up your emergency savings fund:

• 6 Weird Ways to Boost Your Emergency Fund
• How to Prioritize Your Personal Financial Life
• Building a Financial Foundation to Help Weather Life’s Storms
• What You Can Learn from Unemployment

Quizzle Weekend Round-up: Emergency Savings Fund was originally featured on Quizzle Wire

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Most of the articles we write here at the Quizzle Wire are focused on helping people save money – but have you ever wondered if there are times in your life when you’re better off not trying to save so much money?

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There’s such a thing as saving too much. As Harford asks, “”How much do you want to sacrifice your income now for income later when you’re richer?”

While it’s always a good idea to save money, especially for “big-ticket” goals like retirement, college and emergency expenses, there are some times in life when you might not want to save as much. Is it ever okay not to save money at all? Perhaps, if you consider the long-term perspective of borrowing (or giving) to your future self – in some situations your future self might be happy to let you keep more money to spend today.

Here are three life stages where you might not want to save more money:

When you’re a college student. 

If you’re a poor college student with just a few thousand dollars (or even less) in a savings account, you might be tempted to skip going out with friends in favor of saving more money from your $8 an hour campus job. But the fact is, over the course of your life, you’re going to be making a lot more money than you make today.

So when you’re young, maybe it’s OK to splurge a little – e.g. don’t miss a chance to go out for dinner with friends. Enjoy your life. In the NPR interview, Tim Harford talks about how when he was a college student, there were so many times where he decided not to go out with friends because he wanted to save the $20. Well, today Tim Harford is much richer than he was during his student days, and if he could, he would go back and time and tell his younger self, “Spend the $20. Have fun.”

When you’re a parent of young children.

Having kids changes everything in your life and your personal finances are no exception. If you’re a parent of young children, especially when one parent is home full-time with the kids, don’t feel like you have to save for the rest of your life during this rather stressful (and expensive) time. You’re going to have many more years to work and save, but your kids are only young once.

So don’t scrimp on holiday trips to grandma’s house just so you can try to save more for retirement. Invest in your relationship with your spouse – don’t give up hiring babysitters for date night because you’d rather save an extra $100 a month. Raising small children is hard, emotionally demanding work and moms and dads need to take time to recharge, rejuvenate, and remind each other of why you decided to do this. Splurging on some extra couple time can also help you avoid the huge financial costs of divorce.

When you lose your job.

We’ve written before about what to do with your money when you lose your job. Hopefully you have a decent amount of emergency savings in the bank to help tide you over until your next paycheck. When you find yourself unemployed, this is where those savings come into play. There’s no shame in not saving any money when you don’t have any income. There are times of life where you need to dip into the rainy day fund – and if you’re going through a rainy day, now is the time. Your future self won’t begrudge you a few months (or more) of living off of savings.

If you love to save money and be frugal with your finances, there’s nothing scarier than the prospect of not saving enough money. But sometimes in life, you need to let go of your ideal savings goals and be willing to live a bit closer to the edge of your means.  As long as you and your future self are both happy with how you’re spending and saving money today, you have nothing to worry about.

Related articles:

• 6 Common Credit Mistakes to Avoid
• How Did the Top 1 Percent Get So Rich?
• Your Finances and Giving Thanks
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• 6 Tips to Dating a Better Credit Score

3 Times in Life When It’s Okay NOT to Save Money was originally featured on Quizzle Wire

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By: Kyle Taylor

When I left home for college a few years ago, I left with a small savings account for emergencies. I had built the fund up with years of birthday money, graduation presents and extra money from my high school job. However, after six short months in college, I soon realized just how frequent “emergencies” can happen. During that time, my car’s transmission died, a roommate skipped out on an electric bill and I was charged for a doctor’s visit after coming down with pneumonia.

Thankfully, I was able to handle those expenses, but afterward, my emergency fund needed a serious boost. If you find yourself in the same position, here are six weird ways you might not have thought of to boost your emergency fund:

1. Audit a Liquor Store

Liquor stores are constantly looking for adults, under the age of 30, to go undercover and audit their stores. The job requires that you attempt to buy beer and note whether the cashier asks you for your ID.

Liquor stores do not hire directly for this position, but instead go through auditing companies like TrendSource and Corporate Research. You can sign up as independent contractor and then choose the locations that you want to audit. Once you’ve finished, you are required to submit a receipt and a short report on your interaction with the cashier.

Potential Boost: $50 to $250 for auditing five locations.

2. Sell Your Moving Boxes

After moving into and unpacking my first apartment, my living room looked like a cardboard box graveyard. Most folks throw away their moving boxes, but you should save them because you can sell them to other movers on sites like BoxQuest.com and BoxCycle.com.

Potential Boost: $15 to $60 for 30 boxes.

3. Attend a Movie Premiere

I’ve always enjoyed going to the movies so the first time I got hired to attend one, my face lit up with glee. Often times advertisers will want to verify that previews or commercials they’ve paid for are being shown on premiere night. The verification is done by independent contractors hired to attend movie premieres and make a note of the previews shown.

You can score a job as a preview watcher with companies like Certified Field Associates, that will pay for your ticket and pay you for completing a short report on what you observed.

Potential Boost: $50 to $100 for attending five showtimes.

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4. Go Used Book Hunting

If you like going to garage sales and flea markets, you should give used book hunting a try. Book hunting involves looking through the sales bin for cheap books and then reselling them to online book buy-back companies. There is a great iPhone App called “Book Scouter” that allows you to scan the book while you’re at the garage sale and get an instant quote from more than 20 online book buyers.

For example, last weekend I was at a library sale and bought an Ina Garten cookbook for $1. A few days later, I resold it to Moola4Books.com for nearly $8. Woot!

Potential Boost: $100 or more per day.

5. Sell Your Trash

Americans throw away more than 266 million tons of trash every year. Even more startling is the fact that a lot of this trash can be resold for extra cash – things like used golf balls, cooking oil, ink cartridges and wine bottles can be resold on sites like eBay and Craigslist for a profit. To get some ideas of the kinds of trash you can sell, check out my list of “7 Wacky Things in Your Trash Worth Cash.”

Potential Boost: Depends on how much trash you have, but $20 to $50 per month is not out of the ordinary.

6. Open a 2nd Checking Account

Keep your eye out for bank bonuses that will reward you with cash for opening a checking account at their branch. It only takes a few minutes to open the account and once you’ve received your bonus, it is up to you whether to keep the account open or continue to use it. Personally I like having an account at a separate institution for my savings and travel fund, because I’m less likely to spend it.

Potential Boost: $50 to $100.

Kyle Taylor is a personal finance blogger that blogs about weird ways to make money at The Penny Hoarder. Join the TPH newsletter and get his “5 Wackiest Ways to Make Extra Money.”

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6 Weird Ways to Boost Your Emergency Fund was originally featured on Quizzle Wire

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By: Heidi Davis, CFP®

What Are Individual Retirement Accounts?

An Individual Retirement Account, or “IRA”, is a personal savings plan that gives you tax advantages for your retirement savings.

Social Security is not designed to fund all of your retirement income. So, the IRA is an incentive by our government to help you save and control your own funds for retirement.

How Would an IRA Benefit You?

The main benefit of an IRA is that it gives your retirement savings a “boost” in its long-term growth. And the growth of your IRA is generally not taxed until after you retire. So, this may increase the value of your savings compared to savings in an account that is subject to taxes.

Contributions into an IRA may also fully or partially reduce your income, which may provide you with lower income taxes. In addition, you may be able to receive a “Retirement Savings Contribution Credit” if your income is not more than $55,500.*

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An IRA allows you to save up to $5,000 per year for retirement. If you are age 50 or older, you can save $6,000 per year.

What If My Company “Matches” Retirement Savings?

If your employer offers a retirement savings plan like a 401(k) with a company match, it’s hard to beat that benefit. So after you have saved up to your company’s match amount, consider an IRA to save even more.

What Kinds of IRAs Are There?

There are three different kinds of IRAs:

Roth IRA

With a Roth IRA, you pay taxes up front on your contributions. The main benefit is that your savings and growth in this IRA are not taxed when withdrawn at retirement, which may be a substantial benefit to those starting out or in mid-career.

As an investor, you should maintain the belief that you with save the funds for at least 10 years and, in general, use the money for retirement.

Deductible IRA

This type of IRA reduces your income, generally resulting in a reduction in your taxes. The two other types of IRAs do not provide this “up front tax savings” benefit.

To qualify for this IRA, your income must be under certain “limits” if you are covered by a retirement plan at work. If you are covered by a retirement plan, then maximum income limits are $110,000 for couples. If one spouse is covered and the other is not, then the maximum income allowed is under $179,000.*

Non-Deductible IRA

A Non-Deductible IRA is helpful for taxpayers with “higher income” of $179,000 or more.

Contributions into this fund does not technically reduce your income, but you can still benefit from tax-deferred savings on the growth of your investments. Also, you may gain the flexibility to “convert” this IRA to a Roth IRA.*

To keep track of your taxed contributions into this fund, be sure to fill out the Tax Form 8606.

What Are the Drawbacks of IRAs?

IRAs are primarily meant for long-term retirement savings. If you take your money out before age 59 ½, along with some other rules*, there are penalty fees which can drastically reduce your savings.

*For further details, see IRS Publication 590 for Individual Retirement Accounts.

Heidi Davis is a Certified Financial Planner™ professional licensed with a registered investment adviser that provides personal financial advice online for a fee. A former commercial lender, she helps her clients with investment reviews, financial and retirement planning  issues. Contact Heidi for help with virtually any financial need.

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Boost Your Retirement Savings with Individual Retirement Accounts was originally featured on Quizzle Wire

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By: Jessica Drew

If you’re expecting a baby or have a young child, and have very little extra money, you’re not alone. Many young couples have children while they are trying to establish themselves financially.

At the same time, perhaps you or your spouse, close friends or family are suffering from private student loan debt. Many young professionals have variable rate, private student loans that they can barely afford, or cannot afford, to make monthly payments on. You certainly do not want your children to start their professional lives out this way.

Even though you may have very little money, you can start a college fund for your kids with a little planning and a few good ideas, like these:

1. Start early.

The earlier you start, the better. Time is on your side this way. If you begin putting $10 a week away on your child’s first birthday, by the time he or she is ready to graduate high school and go to college, you’ll have almost a $10,000 nest egg! This strategy will not work nearly as effectively as more years pass. Plus, $10 a week only adds up to about eating out once a month, which you can easily forego.

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Take advantage of all holidays, birthdays and other special occasions. Set up a fund that family and friends can contribute money to in place of a gift. If you have kids and are reading this, then you already know that family and friends will give you way more toys than you could ever want and most will be broken or forgotten about within a month’s time. A contribution to a college fund would go much further than the latest and greatest toy ever will.

3. Put your money somewhere it will grow and be safe.

Although the stock market can yield high returns, this investment arena is far too risky for your child’s college fund. Choose a high interest bearing savings account or better yet a 529 Plan. Each state offers a 529 Plan, and as long as you use the money for educational purposes, you will not be taxed on your college savings. This can add up to thousands of dollars!

4. Get out of debt.

Make a plan to get out of debt yourself by the time your child enters college. This of course includes credit card debt, but also your home loan. Think about how much extra money you’d have every month if you were able to pay off your house by the time your child goes to college. If you have a traditional 30-year mortgage, you could actually pay it off in 18 years just by putting a hundred dollars extra each month or so to the principle amount owed, but only if you start now.

5. Don’t touch the college fund.

As tempting as it may be when you need money for that car repair, do everything else possible before tapping into your child’s college fund. It’s easy to do, but will set you way back in regard to your savings’ goals.

Jessica Drew is a freelance writer and editor who blogs about a variety of money making and finance topics such as private student loans.

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5 Ways to Save for Your Kid’s College without a Lot of Money was originally featured on Quizzle Wire

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It’s best to start saving for retirement as soon as you start working. Even if you’re only part-time, you should put away what you can from each paycheck. Every little bit helps and will add up over time.

If you weren’t able to start saving early like this, however, it’s not too late to get back on track and begin saving now. You may need to make some adjustments in your lifestyle today to accommodate for tomorrow, but there’s still time.

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Even if you are reaching 40 and you have not started saving for retirement, you still have about 20 years worth of time on your side. You may have to proactively save more money on a monthly basis than you would have if you had started saving in your early 20s, but you can still reach your retirement goals. As a bonus, when contributing to a tax-deferred retirement account, it doesn’t hurt as much to have to come up with the extra cash to save for retirement.

In fact, if you save $1,000 a month for 20 years and assume a 5 percent return, this money will grow to approximately $400,000 by the time you are ready to retire, according to USAA. Assuming you are in a 25 percent tax bracket, putting $1,000 a month in a retirement savings plan may only require you to come up with $500 in additional money, if your employer matches contributions.

Be a Smart Spender

To come up with the extra cash you need to make contributions to your retirement fund, one big step you can take is to cut back on unnecessary spending. Cutting back on your regular expenses does not necessarily mean you need to do a total lifestyle makeover, but simply cut costs when and where you can.

Money-saving suggestions include:

• Cut back on cable expenses
• Bring lunch to work
• Borrow DVDs from the library instead of going to the movies or pay-per-view
• Eat dinner in instead of going out

USAA shares that cutting these costs alone could grow to $200,000 over time, making the same assumptions as those in the previous example.

While trimming small expenses can make an impact on your bottom line, cutting large expenses can make an even bigger dent in your savings goals. Take a look at your biggest bills, like your monthly mortgage payment, car payment and educational expenses, to see if there are ways, like refinancing or consolidating your loans, to come up with the money you need for your retirement goals.

Increase Income

Either in place of or in conjunction with cutting back on your spending, you should also consider ways that you can increase your income. It’s never too late to go back to school and earn your degree, which can land you a better job. If you already have your degree or the equivalent experience to land a better job, then start applying and interviewing to do so.

Even if you start a home business on the side or take on a part-time job for a short period of time, where you funnel all of the money you earn into the retirement savings account, it helps in making the contributions you need to reach your retirement goals.

Retirement may be sneaking up on you, but it’s never too late to start saving. Work out a plan now, so you’re prepared for tomorrow.

To find out if you can save money on your biggest expenses so you can start socking away more money for retirement, visit Quizzle.com. At Quizzle, you’ll learn how to lower your mortgage payment, get out of debt faster and create a more secure financial future.

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3 Ways to Catch Up on Your Retirement Savings was originally featured on Quizzle Wire

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It’s typically a joke you hear your parents say: “We’re spending your inheritance, but we’re having fun while doing it!” Couples and individuals of all ages contemplate whether they should focus on putting away money for their retirement years or spending the money now on things they love doing, like traveling, charity or buying a dream home.

Finding the Balance

It’s important to find the right balance between how much of your money you should be spending now to live your life and how much you should be putting away to live out your retirement years. This requires you to do some analyses, which includes reviewing the amount of money you make, how much you need to live post-retirement and what you envision your retirement years will look like in the near or far off future.

While there are certainly ways to both enjoy your life now and ensure a secure tomorrow, the bottom line is that you have to save for your retirement years. Otherwise, how will you pay for the food on your table and the roof over your head when you are no longer able to work?

Calculating Your Retirement Needs

To figure out how much you need to put away for the future (so you know how much you can spend now), start with an online retirement calculator. Almost every personal financial website offers retirement calculators to help you estimate this amount of money. The calculator takes your income, future income requirements and the possible rate of return on funds invested to help you determine how much money you need to deposit today and ongoing into the future.

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Once you know how much money you will need for the future, you can calculate what kind of money you have left to spend now. This is, of course, the money you have left after covering your basic living expenses for today. If you have $100 extra month to splurge, then spend it. You can also take that extra $100 that is left and sock it away in a savings account until in grows to the $1,200 or $2,500 you need to do the things you most want to do now, like taking that vacation of your dreams or buying that luxury item you’ve been coveting.

There is a balance between living life to the fullest and making sure that you can still live the lifestyle you are accustomed to as you head into your retirement years. Creating a personal budget can help you find this balance. If you don’t feel like this is a challenge you can tackle on your own, then you also have the option to work with an accountant, financial planner or even an estate attorney to help you get your plan in order.

To learn how to free up cash to save more for retirement, including lowering your monthly mortgage payment and improving your credit score so you can save money on life’s biggest purchases, visit Quizzle.com.

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Save for Retirement or Enjoy Life Now? was originally featured on Quizzle Wire

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By: Kevin R. Worthley, CFP®

As a Certified Financial Planner™, I’ve been privy to a higher-than-normal amount of discussion and advertising about insurance annuities lately. Marketing materials and wholesaler calls have increased at my office and even the venerable financial news-magazine, Barron’s, chose to make annuities their featured article in a recent issue. It seems there is a lot of interest on all sides to give annuities a closer look these days.

What’s the Attraction of Annuities?

Annuities have many features to consider in constructing a retirement plan. These may include tax-deferral, more stable returns, and interest rates that exceed other options. In times such as these when financial markets are volatile and other product interest rates are paltry, annuities may look particularly attractive. Today’s financial fears may be driving consumers to annuities and these fears are utilized very creatively by insurance companies and their agents to push sales.

Thinking Long-Term

As with any other financial decision, purchasers of annuity products need to keep the longer-term perspective in mind. Specifically, though interest rates are very low now, they may not always be so.  When the economy eventually recovers, interest rates may rise and generally, bank CD rates and bond rates follow suit. What is not being discussed very much is the underlying (low) interest rate or “rate of return” a current purchaser may be locking themselves into.

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Or how about the fixed lifetime immediate annuity for a 60 year old purchaser to age 85? The monthly income offered by an annuity in Barron’s was listed as $1,124 for 25 years, which works out to a rate of return of 4.6 percent over 25 years. Sounds fine now, but you might recall that general interest rates for bank CDs were well above 5 percent just five years ago. So, over 10 or 25 years, do you think that interest rates might rise again to these levels, once the economy improves? Being locked into an annuity with a 2.3 percent return or even a 4.6 percent return may not look so comparatively appealing then.

Gambling with Interest Rates

I want to be clear; I am not trashing annuities. They are certainly viable and worthwhile financial products when utilized in a retirement plan where the purchaser’s interests are the focus of the recommendation. What has to be realized is the consequence or trade-off of committing one’s money to a long-term and/or irrevocable investment decision at today’s ultra-low interest rates. Insurance companies are all too happy to enter into this bargain; if rates rise during the contract period, the company has the principal to invest in other venues that may earn the company a higher ‘spread’ over what’s committed to the policy-holder.

If you are considering an annuity purchase, make sure you understand all the implications and alternatives available to you before committing to the decision.  Even then, you might be better off selecting shorter-term contracts or not committing too much of your savings in these unusual times. At the very least, don’t be pressured to commit until you are truly ready and comfortable with the decision.

Kevin Worthley is a Certified Financial Planner™ professional licensed with a registered investment adviser that provides personal financial advice online for a fee. He enjoys fly fishing, other outdoor activities and is a dedicated yoga practitioner. Contact Kevin for help with virtually any financial advice need.

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Is an Annuity a Good Investment? was originally featured on Quizzle Wire

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