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	<title>Business &#38; Money &#187; J.D. Roth &#124; TIME.com</title>
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		<title>Business &#38; Money &#187; J.D. Roth &#124; TIME.com</title>
		<link>http://business.time.com</link>
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		<title>Why Financial Literacy Fails</title>
		<link>http://business.time.com/2013/03/11/why-financial-literacy-fails/</link>
		<comments>http://business.time.com/2013/03/11/why-financial-literacy-fails/#comments</comments>
		<pubDate>Mon, 11 Mar 2013 14:00:21 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Psychology of Money]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=73727</guid>
		<description><![CDATA[I&#8217;m often asked what I&#8217;d do to improve financial literacy in the United States. The premise seems to be that if we teach young people about compound interest and two-cycle billing, this information will lead them to make better financial choices. I&#8217;m not convinced. When I was in high school, every senior was required to take a class in personal finance. We learned how to write checks, how to prepare a budget, and the history of the Federal Reserve. After learning some basic financial literacy, you might think my classmates and I were better prepared to make and save money. You&#8217;d be wrong. Now, 25 years later, we&#8217;re no better with money than those who were never given this sort of instruction. Personal finance is simple. Fundamentally, you only need to know one thing: To build wealth, you must spend less than you earn. Why, then, is it so hard for everyone to get ahead? (MORE: Economy Gains Steam Adding 236,000 Jobs) For some people, it&#8217;s systemic. There&#8217;s no doubt that some people are trapped in a cycle of poverty, and they truly need outside help to overcome the obstacles they face. But for most of us, the issue is internal: The problem is us. In other words, I am the reason that I can&#8217;t get ahead. And you are the reason that you can&#8217;t get ahead. It&#8217;s not a lack of financial literacy that holds us back, but a chain of bad behavior. One of the key tenets of my financial philosophy is that money is more about mind than it is about math. That is, our financial success isn&#8217;t determined by how smart we are with numbers, but how well we&#8217;re able to control our emotions — our wants and desires. There’s actually a branch of economics called behavioral finance devoted exclusively to this phenomenon, exploring the interplay between economic theory and psychological reality. And there&#8217;s a new wave of folks who are exploring the gamification of personal finance; they&#8217;re trying to turn money management into a game.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=73727&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Personal Finance</primary_category><primary_category_link>http://business.time.com/category/personal-finance-2/</primary_category_link>
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			<media:title type="html">jdroth</media:title>
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		<item>
		<title>Fuel Your 401(k) with the Secrets of Behavioral Finance</title>
		<link>http://business.time.com/2013/02/13/fuel-your-401k-with-the-secrets-of-behavioral-finance/</link>
		<comments>http://business.time.com/2013/02/13/fuel-your-401k-with-the-secrets-of-behavioral-finance/#comments</comments>
		<pubDate>Wed, 13 Feb 2013 15:00:38 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[401k]]></category>
		<category><![CDATA[401k Savings]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=70105</guid>
		<description><![CDATA[I used to be the prototypical bad investor. I paid far too much attention to financial news. I bought and sold on a weekly basis (sometimes daily). I chased hot stocks. I panicked and sold when the market dropped. Perhaps unsurprisingly, I also lost a lot of money. Eventually, I grew wiser. As I became better educated about money (and about investing), I began to make smarter choices. And once I started to read and apply the lessons of behavioral finance — that fun branch of financial philosophy that combines investing with psychology — the returns in my retirement accounts really started to improve. One of my favorite books on behavioral finance is Why Smart People Make Big Money Mistakes (and How to Correct Them) by Gary Belsky and Thomas Gilovich. (Disclosure: Belsky regularly contributes articles to Time.com.) The authors boil down the lessons of behavioral finance into easy-to-follow advice. They write, for instance: Any individual who is not professionally occupied in the financial services industry (and even most of those who are) and who in any way attempts to actively manage an investment portfolio is probably suffering from overconfidence. [...] Such people — again, probably you — should simply divide their money among several index mutual funds and turn off CNBC. Here&#8217;s how you can put the theories of behavioral finance into practice with your 401(k) and other retirement accounts. (MORE: Why Parking in Cities Should Be Way More Expensive) Have a Plan Why you&#8217;re investing should inform how you&#8217;re investing. If you&#8217;re investing to save money to buy a home in five years, you&#8217;ll make different choices than if you&#8217;re a 23-year-old funding a 401(k) for the first time. To start, create an investment policy statement, which is like a blueprint for your investments. An IPS will help you decide how much to invest in stocks and how much to invest in bonds. It&#8217;ll also help you stay on course instead of trying to take shortcuts (by doing things like chasing hot stocks) or panicking when things fall<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=70105&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Planning</primary_category><primary_category_link>http://business.time.com/category/planning/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/02/gs1363978.jpg?w=240</featured_image>
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			<media:title type="html">Overhead shot of one dollar bills sitting on a leather background with a red rubber band.</media:title>
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			<media:title type="html">jdroth</media:title>
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		<item>
		<title>Managing Mom&#8217;s Money</title>
		<link>http://business.time.com/2013/02/04/managing-moms-money/</link>
		<comments>http://business.time.com/2013/02/04/managing-moms-money/#comments</comments>
		<pubDate>Mon, 04 Feb 2013 16:00:21 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Retirement]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=68765</guid>
		<description><![CDATA[My mother is 64. She&#8217;s struggled with mental illness for over a decade. About 18 months ago, my family came to the tough conclusion that Mom needs constant care. Though she&#8217;s relatively young, we found help for her at a nearby assisted-living facility. Mom is doing better now that she has round-the-clock professional care. In the meantime, her three boys have been watching the home front. We each have our own responsibilities. Every month, for instance, I pay Mom&#8217;s bills. You&#8217;d be surprised at how much it costs to keep a house, even when nobody&#8217;s living in it. It costs $250 every month for electricity, maintenance and more. Plus, it costs $4,118 per month for the assisted-living facility and there are a host of medical expenses (even after health insurance). It&#8217;s not the big expenses that worry me, though — it&#8217;s the little things that have a tendency to slip through the cracks. (MORE: Home Prices Jump 5.5% as Spring Season Nears) When I took over Mom&#8217;s finances 18 months ago, I found a number of odd recurring charges, both to her credit cards and her checking account. When I began calling the phone numbers listed on the statements, I discovered that most of these charges were different types of credit and life insurance. I was able to cancel a couple of these charges by phone, but most required more effort and more detective work. In other words, they needed more time. Because time is scarce in my life, I put off the problem until the next month. And the next. And the next. Eventually, a year slipped by, during which time I continued to diligently pay these miscellaneous fees. Finally, last Tuesday I took action. I spent an entire morning calling around in an attempt to cancel these charges. I didn&#8217;t have much luck. While companies make it easy to obtain services, it&#8217;s much more difficult to quit. I&#8217;m certain they didn&#8217;t ask Mom for any sort of ID verification when she signed up, but in order for me to<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=68765&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Retirement</primary_category><primary_category_link>http://business.time.com/category/retirement-2/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/02/nursing-home.jpg?w=240</featured_image>
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			<media:title type="html">Empty Bed in Nursing Home</media:title>
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			<media:title type="html">jdroth</media:title>
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		<item>
		<title>How to Make the Most of Your 401(k) in 2013</title>
		<link>http://business.time.com/2013/01/08/how-to-rock-your-401k-in-2013/</link>
		<comments>http://business.time.com/2013/01/08/how-to-rock-your-401k-in-2013/#comments</comments>
		<pubDate>Tue, 08 Jan 2013 14:00:32 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[401k]]></category>
		<category><![CDATA[401k Savings]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=65593</guid>
		<description><![CDATA[Ah, the new year: a time for us all to make grand plans. We&#8217;ll quit smoking, lose ten pounds, be nicer to the neighbors, and finally start saving for retirement. Alas, studies show that one-quarter of all New Year&#8217;s resolutions are broken in the first week — and the rest usually fall by the wayside in the days that follow. This year, though, why not choose to follow through on at least one of your resolutions? Make this the year you finally figure out your retirement savings. According to the most recent report from the Congressional Research Service, nearly half of American workers participate in retirement plans offered by their employers. About two-thirds of these folks have defined-contribution plans, such as a 401(k). (Some folks have access to a 403(b) plan or the Thrift Savings Plan. Though these aren&#8217;t identical to 401(k) plans, advice for each is generally the same.) For many, making the most of a 401(k) is the key to saving for retirement. Advantage of a 401(k) There are a lot of reasons to love the 401(k). For one, your 401(k) makes contributing to retirement automatic. Once you sign up for your company&#8217;s plan, your retirement saving comes directly out of your paycheck. You can &#8220;set it and forget it,&#8221; only making changes when you want to increase (or decrease) your contributions. This takes the human element out of the investing equation, which is one of the best ways to increase investment performance. Even better, 401(k) contributions and earnings are tax-deferred. In plain English, that means you don&#8217;t have to pay taxes on the money you put into a 401(k) until you withdraw it. You&#8217;re not taxed on the profits (the returns in the account) until then, either. This is a big advantage over a traditional investment account. (MORE: Why More Americans Will Fall Behind on Credit Card Bills This Year) For instance, if you earn $50,000 per year and you put $5,000 into your 401(k), your taxable income drops to $45,000; if your marginal income-tax rate is<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=65593&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
		<wfw:commentRss>http://business.time.com/2013/01/08/how-to-rock-your-401k-in-2013/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
	<primary_category>Planning</primary_category><primary_category_link>http://business.time.com/category/planning/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/01/146341065.jpg?w=240</featured_image>
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			<media:title type="html">146341065</media:title>
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		<title>9 Handy Financial Rules of Thumb</title>
		<link>http://business.time.com/2012/12/28/9-handy-financial-rules-of-thumb/</link>
		<comments>http://business.time.com/2012/12/28/9-handy-financial-rules-of-thumb/#comments</comments>
		<pubDate>Fri, 28 Dec 2012 10:45:59 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Budgeting]]></category>
		<category><![CDATA[Decision Making]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[Saving & Spending]]></category>
		<category><![CDATA[Smart Spending]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=64335</guid>
		<description><![CDATA[Lately I&#8217;ve found myself using more and more financial rules of thumb. A rule of thumb is a general guideline, an easy way to approximate a value quickly. But it&#8217;s not meant to be completely accurate. For instance, one standard financial rule of thumb is to save at least 10% of your income. A better goal is to aim for 20%. At MSN Money, Liz Weston once suggested that if you&#8217;re young, you can follow this rule of thumb: &#8220;Save 10% for basics, 15% for comfort, 20% to escape.&#8221; Sometimes experts will agree on a general rule of thumb, but not on specifics. For instance, nobody agrees how much you should set aside for an emergency fund. Financial gurus offer advice ranging from $1,000 up to 12 months of expenses. (The most common suggestions range from three to six months of expenses.) However, one clever guideline is that your emergency fund should cover X months of expenses, where X is the current unemployment rate. (In other words, because the U.S. unemployment is at 7.9% right now, you should aim to have enough money in the bank to cover eight months of expenses.) Another rule of thumb is that over the long term, the stock market averages about a 10% annual return. But remember: average is not normal. Also, many experts (including Warren Buffett) expect stock returns to be lower over the next few decades. For years, another rule of thumb was to have X% of your portfolio invested in stocks, where X is equal to 100 minus your age — with the rest invested in lower-risk investments like bonds. (Thus, if you&#8217;re 30, you should have 70% invested in stocks and 30% in bonds.) During the 1990s and 2000s, &#8220;experts&#8221; began to play with that formula, with some gurus recommending as much as 140 minus your age invested in stocks. With this guideline, I&#8217;d be 100% invested in stocks right now. That&#8217;s dumb. With the market turmoil over the past few years, the more traditional &#8220;100 minus your age&#8221; rule has once<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=64335&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Budgeting</primary_category><primary_category_link>http://business.time.com/category/saving-spending/budgeting-saving-spending/</primary_category_link>
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			<media:title type="html">jdroth</media:title>
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		<item>
		<title>How Much Should You Save for Retirement?</title>
		<link>http://business.time.com/2012/12/05/how-much-should-you-save-for-retirement/</link>
		<comments>http://business.time.com/2012/12/05/how-much-should-you-save-for-retirement/#comments</comments>
		<pubDate>Wed, 05 Dec 2012 17:01:38 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[Retirement]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=62668</guid>
		<description><![CDATA[It&#8217;s one of the toughest financial questions to answer: How much do you need to save for retirement? Save too little and you might find yourself working at McDonald&#039;s during &#8220;retirement&#8221; &#8212; or living with your son-in-law. Save too much, though, and you&#8217;ll end up sacrificing the good life today for an uncertain tomorrow. If you listen to many financial planners (or trust most online retirement calculators), you need to replace 70% or more of your pre-retirement income in order to maintain your current lifestyle. But basing your retirement needs on income is like basing your fuel needs on the size of your car&#8217;s gas tank. What really matters is how far you have to go and what kind of gas mileage you get. To get a better idea of how much you should save, base your projections on your current spending patterns. Your spending reflects your lifestyle; your income doesn&#8217;t. (MORE: Birth Rate Plunges During Recession) How much should you save? According to the 2012 Retirement Confidence Survey from the Employee Benefit Research Institute, only 14% of Americans are &#8220;very confident&#8221; that they&#8217;ll have enough cash to live comfortably in retirement. And no wonder: 60% of workers have less than $25,000 saved for old age (not counting home equity). Which helps explain why the retirement confidence survey shows that 37% of workers expect to retire after age 65. (That number was 11% in 1991.) That $25,000 in retirement savings won&#8217;t get you far no matter how low your spending is. But things aren&#8217;t as grim as you might think. According to the survey, 70% of workers expect that they&#8217;ll have to work for pay in retirement. In reality, only 27% of retirees report having to do so. What&#8217;s more, &#8220;almost all retirees who worked for pay in retirement&#8230;gave a positive reason for doing so.&#8221; In other words, even when retirees have to work, they don&#8217;t necessarily hate it. The 2010 iteration of the Retirement Confidence Survey shows something else that might surprise you. Just about half of retirees spend<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=62668&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>1</slash:comments>
	<primary_category>Retirement</primary_category><primary_category_link>http://business.time.com/category/retirement-2/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2011/11/a93522701.jpg?w=240</featured_image>
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			<media:title type="html">Working past Retirement</media:title>
		</media:content>

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			<media:title type="html">jdroth</media:title>
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		<title>Is It Better to Rent or to Buy?</title>
		<link>http://business.time.com/2012/12/03/is-it-better-to-rent-or-to-buy/</link>
		<comments>http://business.time.com/2012/12/03/is-it-better-to-rent-or-to-buy/#comments</comments>
		<pubDate>Mon, 03 Dec 2012 17:01:39 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Real Estate & Homes]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=62364</guid>
		<description><![CDATA[After nearly twenty years of homeownership, I&#8217;ve spent the past ten months renting an apartment. I like it. And I don&#8217;t. There are pros and cons to renting a place, just as there are pros and cons to owning a home. For me, one of the biggest cons is the close proximity to my neighbors &#8212; especially the guy upstairs, who stomps around like an 800-pound gorilla. At first I thought that buying a home would also be a smart financial decision. The more research I do, however, the more I realize that the notion of homeownership as a magical path to wealth is a marketing ploy of the real estate industry. In fact, home prices (like gold prices) generally barely keep pace with inflation. There&#8217;s no question that buying a house makes sense for some folks, but mainly for non-financial reasons. Owning a home gives you stability (you&#8217;re not at the mercy of a landlord) and freedom (you can do what you want with the place). But financially, it&#8217;s not always the best bet. (MORE: Are We Watching Another North American Financial Crisis Unfold?) Here in the Pacific Northwest, I&#8217;m finding that the annual cost of owning a home &#8212; taxes, interest, insurance, maintenance, HOA fees &#8212; is often greater than the cost of renting. Sometimes significantly greater. Assuming you want to make a purely financial decision whether to rent or buy, how do you begin? There are a couple of ways to stay objective. One way to tell whether it’s better to rent or buy is by checking the price-to-rent ratio (or P/R ratio). This number gives you a rough idea whether homes in your area are fairly priced. Figuring a P/R ratio isn&#8217;t tough. All you do is: Find two similar houses (or condos or apartments), one for sale and one for rent. Divide the sale price of the one place by the annual rent for the other. The resulting number is the P/R ratio. Say, for example, you find a $200,000 house for sale in a<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=62364&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
		<wfw:commentRss>http://business.time.com/2012/12/03/is-it-better-to-rent-or-to-buy/feed/</wfw:commentRss>
		<slash:comments>1</slash:comments>
	<primary_category>Real Estate &amp; Homes</primary_category><primary_category_link>http://business.time.com/category/personal-finance-2/real-estate-homes/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2012/12/for-rent.jpg?w=240</featured_image>
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			<media:title type="html">To rent or buy?</media:title>
		</media:content>

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			<media:title type="html">jdroth</media:title>
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		<title>Taking a Peek at Peer-to-Peer Lending</title>
		<link>http://business.time.com/2012/11/15/taking-a-peek-at-peer-to-peer-lending/</link>
		<comments>http://business.time.com/2012/11/15/taking-a-peek-at-peer-to-peer-lending/#comments</comments>
		<pubDate>Thu, 15 Nov 2012 15:00:57 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Investing]]></category>
		<category><![CDATA[Personal Finance]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=60539</guid>
		<description><![CDATA[I&#8217;m not much of a risk-taker when it comes to investing. I live by the old adage, &#8220;Be wary of investments you don&#8217;t understand.&#8221; That limits a lot of my options. Plus, I&#8217;ve been writing about personal finance for almost seven years now. I&#8217;ve learned how the markets work. And for the most part, they seem to work by milking average investors like you and me of our hard-earned money. (Don&#8217;t believe me? Read the Pulitzer-prize winning Den of Thieves; it&#8217;ll make you never trust a banker or broker again.) For the past few years, all of my investments have been in two things: municipal bonds and index funds. These are investments I understand. They&#8217;re investments with very little &#8220;drag&#8221; &#8212; there aren&#8217;t a lot of brokerage fees being skimmed off the top before I get my share. I&#8217;ll never earn spectacular returns, but I feel confident that I&#8217;m never going to suffer catastrophic losses either. Lately, though, another investment option has caught my eye: peer-to-peer (P2P) lending. P2P lending basically works like this: Somebody who needs to borrow money goes to a company like Prosper or Lending Club and applies for credit. Once approved, the borrower is assigned to a risk category, which determines the interest rate of the loan(s) he or she receives. Then, that loan is funded by an individual investor (or group of investors) who acts as the lender. (MORE: Will Obama Make Wall Street Pay for Its Support of Romney?) This turns out to be a good deal for borrowers because they get a better interest rate than they might through a traditional bank loan or credit card. But it&#8217;s also a good deal for lenders because they earn a higher return than they can through a savings account or certificate of deposit. (And, of course, it&#8217;s a good deal for the company arranging the loan because it skims money off every transaction.) P2P lending has been around for six or seven years, but I&#8217;ve always been wary of it until now. Over the past<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=60539&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
		<wfw:commentRss>http://business.time.com/2012/11/15/taking-a-peek-at-peer-to-peer-lending/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
	<primary_category>Personal Finance</primary_category><primary_category_link>http://business.time.com/category/personal-finance-2/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2012/11/88751715.jpg?w=240</featured_image>
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			<media:title type="html">88751715</media:title>
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			<media:title type="html">jdroth</media:title>
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		<title>Start an Emergency Fund to Prepare for Financial Emergencies</title>
		<link>http://business.time.com/2012/11/06/start-an-emergency-fund-to-prepare-for-financial-emergencies/</link>
		<comments>http://business.time.com/2012/11/06/start-an-emergency-fund-to-prepare-for-financial-emergencies/#comments</comments>
		<pubDate>Tue, 06 Nov 2012 16:00:42 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Saving & Spending]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=59897</guid>
		<description><![CDATA[Hurricane Sandy isn&#8217;t just a natural disaster; it&#8217;s a financial disaster, too. Current estimates predict the superstorm will ultimately cost the country tens of billions of dollars. But that big, big number represents its total damage to the nation. What matters more is how much financial damage the storm does to you. When disaster strikes, many people count on insurance to bail them out. Insurance is important, no question, but it&#8217;s also important to remember that nobody cares more about your money than you do. Ultimately, you are responsible for protecting your family&#8217;s financial well-being. One of the best ways to do this is through self-insurance, by building a substantial emergency fund. (PHOTOS: The Toil After the Storm: Life in Sandy’s Wake) An emergency fund &#8212; or &#8220;rainy-day account&#8221; or &#8220;safe and sound money&#8221; or whatever you&#8217;d like to call it &#8212; is a chunk of change set aside specifically for the unexpected things life throws your way. It&#8217;s not to be used to buy a new car. It&#8217;s not to be used for a vacation to Paris. It&#8217;s not to be used to remodel your bathroom. It&#8217;s for use only in case of emergency: a tree falls on your house, your youngest daughter breaks her arm, you lose your job. (MORE: Who&#8217;s Better for Markets: Romney or Obama?) Though personal finance experts agree emergency funds are necessary, there&#8217;s no consensus on how much is enough. Liz Weston, for instance, has argued that for many people a zero-dollar emergency fund makes sense. (Instead, she says, emergencies can be handled by credit card.) Others, such as Suze Orman, advocate stashing aside up to eight months of living expenses. My own advice is to do what works for you. Start small. If you don&#8217;t currently have a rainy-day fund, then something is better than nothing. Set aside $500. Or $100. Or $20. Over time, work to build this buffer until you have $1000 or $5000 on hand for catastrophe. Ultimately, you&#8217;ll sleep more soundly if you do have six to twelve months of<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=59897&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
		<wfw:commentRss>http://business.time.com/2012/11/06/start-an-emergency-fund-to-prepare-for-financial-emergencies/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
	<primary_category>Personal Finance</primary_category><primary_category_link>http://business.time.com/category/personal-finance-2/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2012/11/200543055-001.jpg?w=240</featured_image>
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			<media:title type="html">200543055-001</media:title>
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			<media:title type="html">jdroth</media:title>
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		<title>Going Shopping? Beware of Shopping Momentum</title>
		<link>http://business.time.com/2011/11/29/going-shopping-beware-of-shopping-momentum/</link>
		<comments>http://business.time.com/2011/11/29/going-shopping-beware-of-shopping-momentum/#comments</comments>
		<pubDate>Tue, 29 Nov 2011 10:00:43 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Economics & Policy]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Psychology of Money]]></category>
		<category><![CDATA[Saving & Spending]]></category>
		<category><![CDATA[Smart Spending]]></category>
		<category><![CDATA[Black Friday]]></category>
		<category><![CDATA[Christmas shopping]]></category>
		<category><![CDATA[consumer spending]]></category>
		<category><![CDATA[holiday shopping]]></category>
		<category><![CDATA[psychology]]></category>
		<category><![CDATA[shopping]]></category>
		<category><![CDATA[spending]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=26638</guid>
		<description><![CDATA[The Christmas shopping season is upon us, and if you decide to indulge in the shopping frenzy, be careful. Not just of your health, but of your wallet. Buying at bargain prices is a worthy thing, but once you start shopping it can be tough to stop. This isn&#8217;t just an urban myth, either. Research from the Stanford Graduate School of Business suggests that shopping really can lead to more shopping. Here&#8217;s a quote from the press release that announced their findings: When such savvy marketing researchers as Uzma Khan of Stanford, Ravi Dhar of Yale, and Joel Huber of Duke noticed that shopping sometimes proceeded unchecked even in their own private domains, they decided to get to the bottom of things. Setting up a series of tests of purchasing behavior, they found that for most people buying that fateful first — and often innocent — item seems to open the purchasing floodgates. This realization, they say, has important implications for how stores are laid out as well as for understanding individual behavior. Apparently, shopping is a two-stage process. To begin, the shopper decides whether to purchase the first item. She takes time, weighing the pros and cons. But after this initial &#8220;deliberation phase&#8221; has ended, once the shopper has made the decision to buy, less effort is put into evaluating future purchases on the same trip. (MORE: Black Friday 2011: By the Numbers) In other words, once a person decides to buy one thing, this creates &#8220;shopping momentum,&#8221; increasing the likelihood that that shopper will buy more stuff. If you pick up an impulse item (like a magazine or candy bar) as you enter a store, this can serve as a trigger to encourage you to buy more. This is certainly true in my own life. If I&#8217;m in outdoor retailer REI trying to decide whether to buy a new backpack, it&#8217;s easy to leave with nothing if I steel my mind. But as soon as I give in and pick out a pack, it&#8217;s much easier to buy a sleeping<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=26638&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Psychology of Money</primary_category><primary_category_link>http://business.time.com/category/personal-finance-2/economics-policy/psychology-of-money/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2011/11/a2011-11-25t102113z_16670732.jpg?w=240</featured_image>
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			<media:title type="html">Shopping Momentum</media:title>
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			<media:title type="html">jdroth</media:title>
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		<title>How to Save For Your Dream Vacation</title>
		<link>http://business.time.com/2011/11/18/how-i-saved-for-my-dream-vacation/</link>
		<comments>http://business.time.com/2011/11/18/how-i-saved-for-my-dream-vacation/#comments</comments>
		<pubDate>Fri, 18 Nov 2011 18:00:01 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Budgeting]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Saving]]></category>
		<category><![CDATA[Saving & Spending]]></category>
		<category><![CDATA[Smart Spending]]></category>
		<category><![CDATA[Bolivia]]></category>
		<category><![CDATA[budgeting]]></category>
		<category><![CDATA[Peru]]></category>
		<category><![CDATA[saving]]></category>
		<category><![CDATA[travel]]></category>
		<category><![CDATA[Vacation]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=26172</guid>
		<description><![CDATA[I just returned from a six-week vacation to Bolivia and Peru. Since the beginning of October, I&#8217;ve been climbing mountains, exploring ancient ruins, and sipping pisco sours. Many folks dream of taking trips like this, but few people make it happen. (Well, except for Australians it seems. In Peru, I met dozens of Australians who had somehow managed to make long-term travel a reality.) If travel is a priority for you, though, it is possible to work it into your budget. I did it through a combination of targeted saving and conscious spending. First up, using an online high-yield savings account, I’ve split my money into several different subaccounts, each of which I’ve named for a specific savings goal. My bank lets me name my accounts and subaccounts, so I give them titles to indicate their purpose. (MORE: We Buy Fun Stuff with Credit, Dull Stuff with Cash) I&#8217;ve designated one of these accounts specifically for travel to faraway places. At the end of every month, if I have money leftover after paying my expenses and funding my retirement accounts, that cash gets swept into my travel fund. But where does that money come from? I make a decent income, but I also have a a lot of indulgences. I like to eat at nice restaurants. I collect comic books. I attend an expensive gym and have a private Spanish tutor. It&#8217;s not possible for me to do all of these things while still pursuing my passion for travel. So, I made some conscious decisions. Over the past couple of years, I&#8217;ve given up cable television, opted to buy most of my clothes at thrift stores, and done what I can to walk or bike instead of drive. I eat out less often and I steer clear of comic book shops. By doing these things, I&#8217;ve been able to find enough cash to stash away for trips to Europe, Africa, and South America. In essence, I&#8217;ve cut back ruthlessly on the things that aren&#8217;t important to me so that I can spend on the things that<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=26172&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Saving</primary_category><primary_category_link>http://business.time.com/category/saving-saving-spending/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2011/11/apicture-11.jpg?w=240</featured_image>
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			<media:title type="html">Vacation</media:title>
		</media:content>

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			<media:title type="html">jdroth</media:title>
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		<title>America&#8217;s Love-Hate Relationship with Wealth</title>
		<link>http://business.time.com/2011/11/16/americas-love-hate-relationship-with-wealth/</link>
		<comments>http://business.time.com/2011/11/16/americas-love-hate-relationship-with-wealth/#comments</comments>
		<pubDate>Wed, 16 Nov 2011 17:47:27 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Economics & Policy]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Psychology of Money]]></category>
		<category><![CDATA[Saving & Spending]]></category>
		<category><![CDATA[Taxes]]></category>
		<category><![CDATA[Wall Street]]></category>
		<category><![CDATA[Democrats]]></category>
		<category><![CDATA[Occupy Wall Street]]></category>
		<category><![CDATA[OWS]]></category>
		<category><![CDATA[republicans]]></category>
		<category><![CDATA[wealth]]></category>
		<category><![CDATA[wealthy]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=25964</guid>
		<description><![CDATA[I&#8217;ve been on the road for the past two months, mostly in Bolivia and Peru, where I was pretty off the grid and didn&#8217;t keep up with the news. So I arrived home to find a strange phenomenon: Protesters &#8220;occupying&#8221; Wall Street. And Oakland. And Portland. And many other places as well. My immediate reactions? One was that the complaints of the Occupiers probably have merit. But I was maybe even more struck by the complex love-hate relationship Americans seem to have with wealth. We want to be rich — but we&#8217;re often suspicious of those who already are. The Wealth of Others Almost everyone who achieves financial success believes they&#8217;ve done so through justifiable means. They believe they&#8217;ve earned their money (or deserve it), and they don&#8217;t feel guilty for having it. We&#8217;re also generally supportive and appreciative of our friends who make it big. (I can think of a handful of folks I know who have managed to acquire wealth, and I&#8217;m proud of each of them.) But when it comes to strangers who are rich, that&#8217;s when our attitudes seem to change. (MORE: &#8216;This Home is Occupied&#8217;: An Occupy Atlanta Protest Moves to a Foreclosed Home) There&#8217;s an underlying distrust of the rich in mainstream American society, which seems odd. Isn&#8217;t that what most of us aspire to? Most of us want to be rich, yet we resent it when other people manage to achieve their financial goals. We complain that they had advantages that we didn&#8217;t, or that they cheated, or that they don&#8217;t deserve the money. But what if the same thing happened to us? What if we became rich? How would we feel about such judgment and criticism? Take my father, for instance. He was a serial entrepreneur, and managed to build two successful businesses during his short lifetime. He worked hard and dreamed big. He wanted to be rich so that he could provide his family everything they wanted. At the same time, my father bemoaned other people&#8217;s success. He didn&#8217;t resent everyone who<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=25964&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Psychology of Money</primary_category><primary_category_link>http://business.time.com/category/personal-finance-2/economics-policy/psychology-of-money/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2011/11/a84873171.jpg?w=240</featured_image>
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			<media:title type="html">Wealth</media:title>
		</media:content>

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			<media:title type="html">jdroth</media:title>
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		<title>The Benefits of Buying Virtually Everything Used</title>
		<link>http://business.time.com/2011/10/07/the-benefits-of-buying-used/</link>
		<comments>http://business.time.com/2011/10/07/the-benefits-of-buying-used/#comments</comments>
		<pubDate>Fri, 07 Oct 2011 12:00:55 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Saving & Spending]]></category>
		<category><![CDATA[Smart Spending]]></category>
		<category><![CDATA[Antiques]]></category>
		<category><![CDATA[Buying Used]]></category>
		<category><![CDATA[cars]]></category>
		<category><![CDATA[Craigslist]]></category>
		<category><![CDATA[furniture]]></category>
		<category><![CDATA[new cars]]></category>
		<category><![CDATA[used cars]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=20018</guid>
		<description><![CDATA[Most folks understand that buying a new car is — on paper at least — a poor financial decision. Buying a used car generally provides substantial long-term savings. But did you know there&#8217;s a growing number of folks who try to buy everything used? Or if not everything, then at least as much as possible. Take Katy Wolk-Stanley, for instance, who bills herself as The Non-Consumer Advocate. Wolk-Stanley takes her motto from a Depression-era saying: &#8220;Use it up, wear it out, make it do, or do without.&#8221; On her blog, she&#8217;s posted a list of the things she lets herself by new, which basically boils down to underwear and perishables. (LIST: 12 Things You Should Stop Buying Now) I had a chance to meet Wolk-Stanley recently, and she proudly gave me a tour of her home, pointing out the used furniture she&#8217;s acquired and telling me the story behind each piece. Her dining room chairs, for instance, are from a 1920s Carnegie library and are solid oak with a very classic &#8220;craftsman&#8221; style. &#8220;I had gone for a walk in my neighborhood and spied a big pile of unwanted stuff on someone&#8217;s porch,&#8221; Wolk-Stanley said. &#8220;That included a grouping of antique chairs. I knocked on the door and asked if they&#8217;d sell them to me, which the owner was all too pleased to do. I bought 11 chairs for a grand total of $75. They look perfect in my 1914 Portland bungalow!&#8221; Or there&#8217;s Ryan Finlay, who scours Craigslist for good deals. &#8220;When I started buying on Craigslist, I had to get past the stigma of buying things used,&#8221; Finlay says. &#8220;Friends would laugh when they learned that I&#8217;d purchased certain items secondhand instead of new. I have much more confidence now, having become very skilled at finding good deals. I usually buy things on average for 10% of the new price.&#8221; Finlay saves big bucks by buying used furniture, appliances, and technology. But more than that, he&#8217;s discovered he can make a living buying and selling used stuff on<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=20018&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
		<wfw:commentRss>http://business.time.com/2011/10/07/the-benefits-of-buying-used/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
	<primary_category>Smart Spending</primary_category><primary_category_link>http://business.time.com/category/saving-spending/smart-spending/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2011/09/forsaleusedcar1.jpg?w=240</featured_image>
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			<media:title type="html">Used Car</media:title>
		</media:content>

		<media:content url="http://2.gravatar.com/avatar/242be8d6b1d3228012c58ba1e9014477?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">jdroth</media:title>
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		<title>The Right Way to Cancel a Credit Card</title>
		<link>http://business.time.com/2011/10/03/how-to-cancel-a-credit-card-wisely/</link>
		<comments>http://business.time.com/2011/10/03/how-to-cancel-a-credit-card-wisely/#comments</comments>
		<pubDate>Mon, 03 Oct 2011 11:00:03 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Saving & Spending]]></category>
		<category><![CDATA[Smart Spending]]></category>
		<category><![CDATA[Canceling a Credit Card]]></category>
		<category><![CDATA[credit]]></category>
		<category><![CDATA[credit cards]]></category>
		<category><![CDATA[credit scores]]></category>
		<category><![CDATA[debt]]></category>
		<category><![CDATA[spending]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=20015</guid>
		<description><![CDATA[When I was younger, I carried more than $20,000 in credit card debt, and it took a long time to recover. While credit cards aren't evil, they can be very dangerous. So if you're planning to cancel one of your cards, make sure you do it wisely.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=20015&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
		<wfw:commentRss>http://business.time.com/2011/10/03/how-to-cancel-a-credit-card-wisely/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
	<primary_category>Smart Spending</primary_category><primary_category_link>http://business.time.com/category/saving-spending/smart-spending/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2011/09/creditcardscissors1.jpg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2011/09/creditcardscissors1.jpg?w=240" />
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			<media:title type="html">Cutting Credit Card</media:title>
		</media:content>

		<media:content url="http://2.gravatar.com/avatar/242be8d6b1d3228012c58ba1e9014477?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">jdroth</media:title>
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		<title>Don&#8217;t Panic! Why Falling Stock Prices Are a Good Thing</title>
		<link>http://business.time.com/2011/09/23/dont-panic-why-falling-stock-prices-are-a-good-thing/</link>
		<comments>http://business.time.com/2011/09/23/dont-panic-why-falling-stock-prices-are-a-good-thing/#comments</comments>
		<pubDate>Fri, 23 Sep 2011 09:00:10 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Investing]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Portfolio Strategy]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[dividend reinvestment plan]]></category>
		<category><![CDATA[dollar cost averaging]]></category>
		<category><![CDATA[investment policy statement]]></category>
		<category><![CDATA[market panic]]></category>
		<category><![CDATA[risk tolerance]]></category>
		<category><![CDATA[stock market]]></category>
		<category><![CDATA[Warren Buffett]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=16490</guid>
		<description><![CDATA[As tends to happen, yesterday&#8217;s dramatic stock market decline has put some investors on edge. The other day, I talked with my friend who is a financial planner, and he told me that after the market dropped by 15% in early August, he couldn&#8217;t keep certain clients from selling. They were scared to be caught in a downturn like the one three years ago, and they just wanted out. The problem, of course, is that selling in a panic is rarely a smart move. Remember the old adage: Buy low, sell high. When you sell your stocks or mutual funds after a market drop, you&#8217;re doing just the opposite. (GALLERY: 12 Things You Should Stop Buying Now) The best time to prepare for a market downturn is before it happens. I&#8217;m not suggesting that you should try to time the market upturns and downturns — nobody can do that reliably, not even the experts! — but that you invest in such a way that you don&#8217;t have to sell in a panic when the stock market decides to take a dive. Easier said than done, right? How does one actually do this? Well, there are few ways to make your investing less emotional and more methodical. First, know your risk tolerance. Each person is different. For some, even the slightest possibility that they may lose money induces a stomach ache. Others are willing to risk potential losses of the potential gains are greater. I&#8217;m young, so can take on more risk; on the other hand, I don&#8217;t like risk. I&#8217;ve found that having 60% of my investment in equities is the perfect balance for my risk tolerance. You can learn more about your risk tolerance using the Rutgers investment risk tolerance quiz. Second, have a plan. Serious investors create an investment policy statement, a roadmap with guidelines that they and their investment advisors can follow. When the stock market goes crazy — soaring with irrational exuberance are crashing with irrational fear — the investment policy statement can help take the<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=16490&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
		<wfw:commentRss>http://business.time.com/2011/09/23/dont-panic-why-falling-stock-prices-are-a-good-thing/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
	<primary_category>Portfolio Strategy</primary_category><primary_category_link>http://business.time.com/category/wall-street-markets/investing-wall-street-markets/portfolio-strategy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2011/09/notpanicking1.jpg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2011/09/notpanicking1.jpg?w=240" />
		<media:content url="http://timebusinessblog.files.wordpress.com/2011/09/notpanicking1.jpg?w=240" medium="image">
			<media:title type="html">Don&#039;t Panic</media:title>
		</media:content>

		<media:content url="http://2.gravatar.com/avatar/242be8d6b1d3228012c58ba1e9014477?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">jdroth</media:title>
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		<title>Debt Tsunamis, Debt Snowballs, and Why the Conventional Wisdom About Defeating Debt is Wrong</title>
		<link>http://business.time.com/2011/09/22/debt-tsunamis-debt-snowballs-and-why-the-conventional-wisdom-about-defeating-debt-is-wrong/</link>
		<comments>http://business.time.com/2011/09/22/debt-tsunamis-debt-snowballs-and-why-the-conventional-wisdom-about-defeating-debt-is-wrong/#comments</comments>
		<pubDate>Thu, 22 Sep 2011 09:00:24 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Borrowing]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Saving & Spending]]></category>
		<category><![CDATA[borrowing]]></category>
		<category><![CDATA[debt]]></category>
		<category><![CDATA[debt snowball]]></category>
		<category><![CDATA[debt tsunami]]></category>
		<category><![CDATA[getting out of debt]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=18951</guid>
		<description><![CDATA[When you&#8217;re in debt, one of the toughest problems is knowing where to start. It&#8217;s not that you have just one debt. You have several. Or dozens. Which debt should you pay off first? Let&#8217;s assume that Betsy is a typical young woman in her mid-twenties who awakes one morning to realize that she&#8217;s in debt and wants to do something about it. Betsy might be burdened with the following hypothetical liabilities: $20,000 college loan at 5% $8,000 credit card balance at 12% $2,000 computer loan at 10% $3,000 car loan at 4% $5,000 loan from parents at 0% Most financial advisers recommend that debts be repaid in a specific order: from highest interest rate to lowest interest rate. By paying off the high interest rate debt first, you&#8217;re minimizing the total you&#8217;ll eventually pay in interest. (MORE: The Right Way to Loan Money to Family and Friends) Following this advice, our hypothetical Betsy would attack her debts in the following order: $8,000 credit card balance at 12% $2,000 computer loan at 10% $20,000 college loan at 5% $3,000 car loan at 4% $5,000 loan from parents at 0% This payoff plan does, indeed, make the most financial sense — if you have the discipline to stick to it. But it often makes less sense from a psychological point of view. I struggled with debt for over a decade. I tried several times to eliminate my debt using the highest-to-lowest method, and each time I failed. Why? Because my highest interest rate debt was also my debt with the highest balance! Psychologically, I felt defeated; I could pay on this debt for months at a time and never seem like I was making progress. Eventually, I discovered an alternative. In his book The Total Money Makeover, Dave Ramsey advocates the debt snowball approach to debt elimination. Using the debt snowball method, you ignore interest rates when determining the order in which you&#8217;ll repay your debts. Instead, you organize them from smallest balance to largest balance. Using Betsy&#8217;s debts as an example,<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=18951&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
		<wfw:commentRss>http://business.time.com/2011/09/22/debt-tsunamis-debt-snowballs-and-why-the-conventional-wisdom-about-defeating-debt-is-wrong/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
	<primary_category>Borrowing</primary_category><primary_category_link>http://business.time.com/category/saving-spending/borrowing-saving-spending/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2011/09/debthand31.jpg?w=240</featured_image>
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			<media:title type="html">debthand</media:title>
		</media:content>

		<media:content url="http://2.gravatar.com/avatar/242be8d6b1d3228012c58ba1e9014477?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">jdroth</media:title>
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		<title>The Easiest Way to Grow Your Investment A Hundred-Fold? Home Maintenance</title>
		<link>http://business.time.com/2011/09/19/the-easiest-way-to-grow-your-investment-a-hundred-fold-home-maintenance/</link>
		<comments>http://business.time.com/2011/09/19/the-easiest-way-to-grow-your-investment-a-hundred-fold-home-maintenance/#comments</comments>
		<pubDate>Mon, 19 Sep 2011 12:00:53 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Real Estate & Homes]]></category>
		<category><![CDATA[home improvement]]></category>
		<category><![CDATA[home maintenance]]></category>
		<category><![CDATA[home repair]]></category>
		<category><![CDATA[maintenance checklist]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=18562</guid>
		<description><![CDATA[My wife called me in a panic at the beginning of July. I was at a conference in Denver, where the sun was brilliant and blazing. Back home in Portland, however, the sun was nowhere to be found. Instead, it was raining cats and dogs — and much of that rain was leaking through the roof and into our house. With the help of a neighbor, my wife made some quick, soggy repairs to the roof. It was enough to keep things dry until the rain had passed. Since then, we&#8217;ve hired a contractor to make real repairs before the autumn rains return. In the meantime, we&#8217;ve been reminded how important it is to perform routine home maintenance. (LIST: 12 Things You Should Stop Buying Now) Your house is like a living, breathing organism. As much as you try to keep things in working order, eventually something goes wrong — and usually at the worst possible time. (My wife and I once woke on Christmas morning to find our water heater had broken, flooding one end of the house. Happy Holidays!) Just as daily exercise and a sensible diet keep your body healthy and help you avoid costly medical bills, regular home maintenance keeps normal wear-and-tear from developing into emergency repairs. Don&#8217;t be lazy or cheap. When it comes to protecting your most valuable possession, cutting corners can be costly. As a rule of thumb, every year you should set aside about 1% of your home&#8217;s purchase price for maintenance and repairs. In other words, if you bought a $300,000 home, budget about $3,000 for annual upkeep. This is just a guideline, obviously — some years you&#8217;ll spend much more. (And some lucky years, you won&#8217;t spend anything at all!) If you make a point of doing your own maintenance whenever possible, you&#8217;ll save money and develop confidence to tackle similar projects in the future. Home improvement can be intimidating at first, but with time you can learn to do most common household repairs. If you&#8217;re interested in improving your<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=18562&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
		<wfw:commentRss>http://business.time.com/2011/09/19/the-easiest-way-to-grow-your-investment-a-hundred-fold-home-maintenance/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
	<primary_category>Real Estate &amp; Homes</primary_category><primary_category_link>http://business.time.com/category/personal-finance-2/real-estate-homes/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2011/09/moneyunderfloor1.jpg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2011/09/moneyunderfloor1.jpg?w=240" />
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			<media:title type="html">Money Under Floor</media:title>
		</media:content>

		<media:content url="http://2.gravatar.com/avatar/242be8d6b1d3228012c58ba1e9014477?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">jdroth</media:title>
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		<title>The Right Way to Loan Money to Family and Friends</title>
		<link>http://business.time.com/2011/09/16/the-right-way-to-loan-money-to-family-and-friends/</link>
		<comments>http://business.time.com/2011/09/16/the-right-way-to-loan-money-to-family-and-friends/#comments</comments>
		<pubDate>Fri, 16 Sep 2011 16:21:53 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Borrowing]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Saving & Spending]]></category>
		<category><![CDATA[Borrowing from Friends]]></category>
		<category><![CDATA[Borrowing from Relatives]]></category>
		<category><![CDATA[family]]></category>
		<category><![CDATA[Friends]]></category>
		<category><![CDATA[lending]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=18570</guid>
		<description><![CDATA[&#8220;Neither a borrower nor a lender be,&#8221; Shakespeare wrote in Hamlet. &#8220;For oft loan loses both itself and friend.&#8221; When a friend or a family members asks to borrow money, your first inclination is probably to help out. But many people have learned the hard way that friendships and finances make a poor mix. You can save yourself a lot of grief by knowing in advance how you&#8217;ll handle these situations. (LIST: 12 Things You Should Stop Buying Now) Some people decide they&#8217;ll never make personal loans. If they&#8217;re asked, they say something like, &#8220;Sorry, but it&#8217;s my policy never to lend money to people I know.&#8221; If you think this is too harsh, you can offer to help in some other way. Not all loans between family and friends end in disaster, of course. In fact, although I&#8217;ve never been able to find stats on the subject, I&#8217;d be willing to wager that most loans go smoothly. But the potential for trouble is so great that you should think twice before lending (or borrowing) money. How would it affect your finances &#8212; and your friendship? You&#8217;re likely better off saying &#8220;no&#8221; than putting yourself in a position where you have to hound a friend for money. I&#8217;ve watched my own family be put under strain from this sort of situation. One of my brothers borrowed a large chunk of change from my mother, money she could barely afford to part with. He&#8217;s never repaid the loan (despite buying brand new iPhones for his wife and kids), and now nobody in the family will trust him financially. It&#8217;s awkward. Despite these warnings, some of you will be tempted to lend money. If you do, at least be smart about it: Discuss other options. Is there some other way you could help your friend? Sometimes money may seem like the only answer when there are actually other ways to deal with a problem. Only lend money you can afford to lose. You may never see the money again, so don&#8217;t put<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=18570&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Borrowing</primary_category><primary_category_link>http://business.time.com/category/saving-spending/borrowing-saving-spending/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2011/09/lendingtofriends1.jpg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2011/09/lendingtofriends1.jpg?w=240" />
		<media:content url="http://timebusinessblog.files.wordpress.com/2011/09/lendingtofriends1.jpg?w=240" medium="image">
			<media:title type="html">Lending to Friends</media:title>
		</media:content>

		<media:content url="http://2.gravatar.com/avatar/242be8d6b1d3228012c58ba1e9014477?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">jdroth</media:title>
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		<title>A Message From Your Financial Future: Thanks for Keeping It Real</title>
		<link>http://business.time.com/2011/09/09/a-message-from-your-financial-future-thanks-for-keeping-it-real/</link>
		<comments>http://business.time.com/2011/09/09/a-message-from-your-financial-future-thanks-for-keeping-it-real/#comments</comments>
		<pubDate>Fri, 09 Sep 2011 11:00:05 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Financial Planning]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[conscious spending]]></category>
		<category><![CDATA[dumb mistakes]]></category>
		<category><![CDATA[future self]]></category>
		<category><![CDATA[prepareing for the future]]></category>
		<category><![CDATA[saving]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=17957</guid>
		<description><![CDATA[You make financial decisions when you're younger, but it's your future self that has to pay for them.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=17957&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
		<wfw:commentRss>http://business.time.com/2011/09/09/a-message-from-your-financial-future-thanks-for-keeping-it-real/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
	<primary_category>Financial Planning</primary_category><primary_category_link>http://business.time.com/category/planning/financial-planning/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2011/09/crystalball1.jpg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2011/09/crystalball1.jpg?w=240" />
		<media:content url="http://timebusinessblog.files.wordpress.com/2011/09/crystalball1.jpg?w=240" medium="image">
			<media:title type="html">Crystal Ball</media:title>
		</media:content>

		<media:content url="http://2.gravatar.com/avatar/242be8d6b1d3228012c58ba1e9014477?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">jdroth</media:title>
		</media:content>
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		<title>How Much Should You Save for Emergencies?</title>
		<link>http://business.time.com/2011/09/08/how-much-should-you-save-for-emergencies/</link>
		<comments>http://business.time.com/2011/09/08/how-much-should-you-save-for-emergencies/#comments</comments>
		<pubDate>Thu, 08 Sep 2011 09:00:35 +0000</pubDate>
		<dc:creator>J.D. Roth</dc:creator>
				<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Saving]]></category>
		<category><![CDATA[Saving & Spending]]></category>
		<category><![CDATA[emergency funds]]></category>
		<category><![CDATA[emergency savings]]></category>
		<category><![CDATA[personal savings rate]]></category>
		<category><![CDATA[savings accounts]]></category>
		<category><![CDATA[Suze Orman]]></category>

		<guid isPermaLink="false">http://moneyland.time.com/?p=17608</guid>
		<description><![CDATA[A few years ago, the personal saving rate had dwindled to barely one percent. Americans were spending nearly all of their disposable incomes. Now, however, the personal saving rate hovers at about five percent. With all this saving going on, many folks are faced with a burning question: How much should we save, anyhow? How much is enough to survive a financial emergency?<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=56258&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Saving</primary_category><primary_category_link>http://business.time.com/category/saving-saving-spending/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2011/09/emergencymoney1.jpg?w=240</featured_image>
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			<media:title type="html">Emergency Money</media:title>
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			<media:title type="html">jdroth</media:title>
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