This guest post was provided by Kyle Chezum, a content specialist at Lender411 – a firm that helps homebuyers compare mortgage rates, find local lenders, and locate the best mortgage packages available.

I’m 22 years old – and I’m buying a house. This may come as a surprising feat to some of you. According to a study released by the National Association of Home Builders, the average first-time home buyer is roughly 33 years old. When I buy my house, I will be the exception in that study.

The “Debt-bed”
As part of a company that specializes in matching homebuyers with mortgages, I see deals made around me every day. We’re able to do a stellar job pairing borrowers with lenders but I find myself concernedly hoping that I don’t spend the next 30 to 40 years of my life burdened with a mortgage.

Debt isn’t just a financial impediment – it carries a strong psychological aspect as well. It can brood over you and contribute to your fears of what lies in the future. It can kill passion and excitement.

• If you’re stuck in debt, you’re stuck in a job – you have to keep making those payments every month.
• If you’re stuck in a job, you’re most likely stuck wherever you live – you can’t quite and move across the nation, or relocate to Europe, or drop everything to make a wild attempt at becoming a rockstar.
• If you’re stuck wherever you live, that’s where you’ll wither away. Simple as that.

I know this sounds morbid, but in my opinion, this is what the future looks like under the shadow of debt. “Opinion” is the operative word here. Some people don’t mind debt. Most of the clients we work with each day do not mind it too much, or they wouldn’t be working with us. That’s fine. But I guess I’m kind of a rebel.

A Rigorous Plan
I’m buying a house. But not with a mortgage – not if I can help it. My goal is set on making a 75% down payment on the day that I purchase my home. Sounds impossible?

Here’s how I plan to save for this down payment:

1. I went to my bank a while back and set up a dedicated savings account. I told myself that as soon as any money entered that account, it was never coming back out. This savings account is my house fund.
2. I get two paychecks each month. Of those, the first goes immediately into my savings account. The second is used to pay for rent, utilities, and other significant bills.
3. I start each month with $100 in my checking account – no more than that. I make this $100 last all month. It covers groceries, gas, and other daily expenses.

And that’s it. It works for me. But, everyone has a different situation. I don’t seriously believe that the $100-per-month plan will work for everyone, though if you want to try it, go ahead – I think you’ll be astonished to find what you consider to be necessities.

The following tips are more broadly applicable:

• Budget. If you don’t have a budget, make one. There are a number of simple tools online that allow you to do this. One of the best is Mint.com. Take a few months and just keep track of your expenses – nothing more. See where your money goes. There are probably a few things you can cut out.
• Don’t use credit as income. Avoid credit cards, payday advances, auto loans, and any other short-term debt, if you can. It will always cost you more to use a credit card than it will to use cash. Avoid other extraneous debt.
• Drive a clunker. Forget about buying a brand new car. Get something older, something that runs well but doesn’t have the high price tag associated with that “new car smell”. A mid-90s Toyota sedan, for example, still has tens years of life in it and, depending on the exact car, will only run you a few thousand dollars.
• Don’t do the “luxury vacation” thing. Please don’t. Don’t go on a cruise or on a week-long adventure in Costa Rica. These kinds of trips are beyond expensive. Go on vacation every year when your home is paid off and you’re living debt free. Skip it for now, and those day will be here that much sooner.
• Start saving right now. This is the most important part. You’ll never be ready to save money – just do it.

Say It, Do It
Ultimately, your financial goals and life dreams will serve as driving propellants. Again, if you don’t mind debt, that’s fine. In order to be more financially effective in life, some of you will leverage your assets to some extent. I get that.

What bothers me most, though, is the psychological side. I don’t like debt. Plain and simple. Every month, when I deposit that paycheck into my savings, I tell myself, “I’m buying a house”. Because that’s what I’m doing.

I’m buying a house. Right here, right now – bit by bit. It’s a philosophy, in a way. A constant lifestyle. Movie tickets, dinners out and weekends at Disney World fade into the background. These things aren’t important yet. For now, I’ll work on buying that house.

Simon’s Note: Kyle’s plan is one of apparent extremes. I understand the reluctance to take on debt since interest charges are quite scary. He is doing what he feels is the correct path for him. What he can do may seem impossible to replicate but it isn’t to say that it is unachievable. This is one way to approach a goal. To each their own.

(Photo credit: bendeming)

The personal finance blogosphere is starting up a storm as of late. Sam from Financial Samurai led the charge 7 months ago with the Yakezie challenge to improve Alexa website ranking. Now he’s taking a huge leap forward.

The Benefits
Many benefits come from a higher Alexa website rank. Yes, any website owner should be working towards increasing their sites popularity. That is an understandable goal because the more traffic a site gets, it also:

• appeals to more advertisers
• increases ad revenue
• leads to more perks
• spreads community recognition
• means straight up bragging rights

The Challenge
The goal was for all participants to reach the top 200,000 on Alexa within a 6-month period. Those already in the top 200,000 will shoot for the top 100,000. And those already the top 100,000 will go for the top 50,000.

The challenge offers a collaborative effort by all participants to promote each other so that we can all reach our goals together. While obtaining a high Alexa rank is the primary goal, the Yakezie challenge also cultivates new relationships between bloggers in order to build a strong network of insightful online friends.

The advent of the brand new Yakezie website has drawn my interest in participating in this challenge. Sure, the money is a great bonus. But, I’ve been writing here on Realm of Prosperity for over 3 years with little expectation of much monetary gain – so I look forward to growth in readership and recognition over an extra buck.

Per the popular advice, do what you love doing and the money will follow.

A Long Journey Ahead
Currently, Realm of Prosperity has an Alexa rank of 1,115,170. The goal is to break 200,000 by February 18, 2011.

I will report on the progress when 6 months has passed. Until then, I’ll be contributing to the wrath of the Yakezie network.

Two months ago, I received a letter from Citi saying that they were going to “upgrade’ my Citi Dividend Platinum Select card to a Citi Dividend World Mastercard.

My primary concern was that the new card would have no pre-set spending limit – meaning it would have a negative effect on my credit score.

Now, I admit I slipped up when I accidentally tossed out the notification letter. I was supposed to call up Citi to let them know that I refused to receive this unrewarding upgrade. Anyway, they’ve sent out another letter alerting cardholders that the new card would arrive within 14 days. Without hesitation, I was on the phone with a Citi customer representative.

The Buzz Around the Changes
From a little research around the web, many Citi cardholders were finding out that their cards are on the list of those being upgraded. Many have been unsuccessful in opting out of this upgrade. Many have had to get a little rowdy (with persistence) to opt out. And, many have had no problems getting just what they wanted. They believe that it all depends on your luck in connecting to the right customer representative.

But, one thing is for sure:

You can opt out – no matter what they say.

If you didn’t receive prior notice of the upgrade and received the new card in the mail, you can ask them to reinstate your old card along with the old terms and conditions. Several card users were put in this position and were able to get their old cards back (even after activation of the new card).

My Opt-Out Call
For those who are in the same situation I was, I hope this will help you when you make your call:

1. I dialed 1(866)775-0556 and asked for customer representative (had to fight the automated answering system a little).
2. First, I had to verify my identity with the answer to a security question.
3. When asked “How can I help you today?”, my answer was “I received a letter in the mail saying that my card was be upgraded. I’d like to opt out of this upgrade because I like my card as it is.”
4. The customer rep. tells me they’ll process my request. It took around 30 seconds.
5. After I asked for proof of confirmation, the rep. offered her employee ID.
6. Of course, I declined the usual “special offer” pitch for a balance transfer at low rate.
7. Finally, I thanked her and went on my way.

The entire call took only 5 minutes.

I expected at least some resistance but it was nice to not have to escalate my voice past my typically amiable tone. One point for Citi on this one!

(Photo credit: hoyasmeg)

As I go through my occasional routine to file my important mail and documents, I realized that the most space-consuming files were my tax documents.

Since I am relatively new to the real world, I only have four years of tax returns. I was still in college so my tax situations weren’t too complicated – easy enough for me to file on my own with TurboTax. Still, I can’t wait to dispose of them to rid myself of clutter.

Advice From the IRS
Common sense tells me that I should hold on to my tax returns as long as possible – ideally, forever. Sure, the IRS has a “period of limitations” that would allow me to purge what I consider to be paper waste but the advancement of technology makes storage of financial paperwork such a breeze.

The period of limitations is basically the time frame in which filers can makes changed on tax returns to claim a credit or refund, or that the IRS can come knocking for additional tax.

Just because the IRS says they won’t hunt me down after I have cleared the period of limitations, it doesn’t mean you won’t need them for non-tax purposes. Thanks to a solid backup system, I can have multiple digital copies of my tax documents within minutes. I don’t believe someone can have too many records. Plus, digital scans reduces the clutter.

According to the IRS, apply the following rules for your records:

• If you filed a fraudulent return, keep your records forever.
• If you did not file a return, keep your records forever.
• If you do not disclose income that should have been reported and it comprises more than 25% of the gross income on your tax return, keep records for 6 years.
• If the above three situation do not apply to you and you own addition tax, keep records for 3 years.
• If you file a claim for a credit or refund after you fill your return, keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax (whichever is later).
• If you file a claim for a loss from worthless securities or bad debt deduction, keep records for 7 years.
• All employment tax records should be kept for at least 4 years after the date that the tax becomes due or is paid (whichever is later).

Important Note: Be aware that a tax return is created by the information provided in tax documents (e.g. W-2, 1099s, paycheck stubs, receipts, statements, and etc.). An audit by the IRS would require verification of these tax documents that rendered a suspicious tax return. Therefore, it seems logical that tax documents are more important than tax returns.

The Fate of My Tax Paperwork
The IRS suggestions seem somewhat tedious and mind-numbing. So, my simple solution is to:

1. Keep tax returns and tax documents for 7 years.
2. Make digital copies of all tax returns and documents and (try to) keep them forever.
3. Destroy original paper tax returns and tax documents after 7 years.

Honestly, with the help of a scanner, there’s no reason we can’t keep copies of any paperwork in a combination of flash drives and external drives.

(Photo credit: GenBug)