The 100 Most Inspirational Personal Finance Turnaround Stories Online

If you’re like many Americans, you probably have some concerns about your personal finances. You may be worried about credit card payments, high interest loans or whether your retirement plan is going to provide you and your spouse with enough money to sustain you. The bloggers highlighted in this article used to have similar problems, but they’ve all decided to make a change for the better. Although many of them haven’t yet achieved what they set out to do, they can all be considered successful. They’ve changed the way they think about money, and that’s the most important step you can take. In this article we have collected 100 of the most inspirational stories of financial turnaround from around the web in order to provide you with the inspiration you need to make a change in your own life.

Saving

This group is made up of serious savers. Some of them are figuring out what to do with the money they used to send to credit card companies, while others are trying to play catch-up on nest eggs. All of them are taking great steps to improve their financial futures.

1. Ima Saver: Ima Saver started a saving challenge with $20. She saves her change, profit from odd jobs and any other money she comes across. To date, she’s saved over $11,000.
2. Grad Money Matters: The writer behind Grad Money Matters is a self-professed “poster child for why not to delay starting a nest egg.” After missing out on lots of time, this blogger is working even harder, trying to develop means of passive income.

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102 Personal Finance Tips Your Professor Never Taught You

Investing

65. Be wary of mutual funds. Few mutual fund managers can beat both the market and the expense fee that they charge.
66. Don't try to pick stocks. Picking stocks can be a very dangerous game, unless you know what you're doing.
67. Avoid fees. With long term investing, fees are a primary factor in total return. Avoid brokers who take high commissions and avoid funds with high management costs.
68. Stocks are high risk, high reward. Over the long term, stocks have historically outperformed all other investments. But over the short term, they can be risky if they lose a lot of value in a short period of time. So, do invest with stocks, but only with funds you won't need to withdraw over the short term.
69. Stocks first, bonds later. Invest in stocks when you're young, and then move into bonds are you grow older. Stocks are a good long-term investment strategy. If you're still young when the market turns south, you'll have plenty of years left ahead of you to make it up. As you get older, invest in bonds. They're less risky.
70. Past performance is not a guarantee of future success. Just because a stock has been up for the last six months does not mean it will continue to go up tomorrow.
71. Diversify your portfolio. Never invest more than 10% of your portfolio in any one company. Even if it's a "sure thing".
72. Build a nest egg that is 25 times the annual investment income you need. Don't think you can rely solely on social security.
73. If you don't understand how an investment works, don't buy it. Research an investment vehicle thoroughly before you get into it.
74. Don't borrow from your 401(k). Think of it as robbing yourself. You'll get hit with high fees and taxes, too.
75. Invest for the long term. There is no such thing as a guaranteed get rich quick scheme. And in investing, there is no high reward without a high risk. Use caution and diversify your portfolio for the long run.
76. Seek professional help. Don't feel the need to turn yourself into a day trader. Hire a personal financial advisor if you can afford to.
77. "Fee-only" is your friend. Go with a fee-only financial advisor, not a fee-based or a commission-based. Only fee-only advisors are legally obligated to act in your best interests.
78. Index funds are your friend. Index funds are passively managed and are generally cheaper and more tax-efficient than actively managed funds.

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The 7 Money Mistakes to Avoid

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WE ALL MAKE FINANCIAL mistakes, and they add up.

Consider: From 1986 to 2005, the Standard & Poor's 500 returned 12% annually, but thanks to overzealous trading, the average investor in stock mutual funds made just 4%, according to Dalbar, a Boston-based financial-services research firm. Homeowners pay high insurance premiums to keep deductibles low, but only 7% report claims each year. And 74% of Americans overpaid their taxes in 2005 — essentially giving the government an interest-free loan.

Also See Take our quiz and find out how mistake-prone you are with your money.

Why? A developing discipline known as behavioral economics seeks to answer that question, but it boils down to this: Academic research tells us that emotions and experiences can distort our financial decisions. While our mistakes are rarely the result of a single mental error, our feelings can make us fumble. Below, seven big financial mistakes and the psychology behind them.

#1 Saving with the right hand and spending with the left

DIAGNOSIS: Mental accounting
SYMPTOMS: Keeping a savings account that pays 5% interest while paying Visa 15%; thinking a tax refund equals mad money; obsessing over the price of a new car, but failing to monitor the weekly grocery bill.

Another way to think of "mental accounting" is separating money into buckets, each with a different purpose. It's not always a mistake — it is the premise behind budgeting, for example — but looking at your finances in parts without seeing the whole picture can hide costs and charges you could otherwise avoid. Consider a $5,000 tax refund. Woo-hoo! Right? Wrong. If you put your overpayments in a high-interest savings account throughout the year, you would net about $135 in interest instead of giving an interest-free loan to Uncle Sam.

#2 Playing it too safe

DIAGNOSIS: Loss aversion
SYMPTOMS: Quick to sell winning stocks but slow to sell losing ones; putting too much cash in money-market funds and not enough in stocks; reluctance to trade away what you already have, even for something more valuable.

No one likes losing money — a truism that economists call "loss aversion." Because we can avoid only losses that we recognize, we tend to focus on immediate costs, while ignoring more subtle costs and even savings. For example, we should recognize that getting a $4 discount is worth as much as avoiding a $4 surcharge. But most of us would rather avoid that surcharge. By being "loss averse," investors open the door to a more insidious cost, the toll that inflation will take on their savings.

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