Money lessons from our online village

By Liz Pulliam Weston

A few months ago, a public radio reporter asked me if online personal-finance communities actually made a difference in people's lives.

I'm proud to say that in the case of MSN Money's Your Money message board, the answer is definitely yes.

A message board, for those of you who don't know, is an online forum where people can post questions or comments and get feedback. I moderate the Your Money board, weighing in regularly, but most of the posts are generated by the users.

One of our posters recently started a thread asking others to share the positive changes they'd made in their lives based on ideas found on the Your Money board. The response was immediate -- and heartening.

The changes ranged from tweaks that helped people save more money to profound reorganizations of their financial lives -- and sometimes of their personal lives as well.

Here are some of the highlights of what Your Money regulars shared:

Save it like you mean it

The board has helped many people pay down their debts and build their savings. Poster "Lil Bizy Bee," for example, paid off her car loan, paid down her credit card debt and used 0% and 1.9% balance-transfer offers to lower the finance charges on her remaining debt. She also built up an emergency savings fund equal to eight months of her expenses.

"Educating yourself . . . financially . . . is the BEST thing you can do for yourself," she asserted.

Several posters credited their fellow posters with turning them on to high-rate savings accounts at online banks such as ING Direct, Emigrant Direct and HSBC Direct, where their money can earn 4% to 5%.

"Believe it or not, a couple months ago I had no idea online savings accounts existed, and I thought the best I could do was 0.75% at my local bank (and that's the best in our area, not counting CDs or accounts with five-figure minimum balances)," poster "StillOnTheRoad" wrote. "It's not a huge thing, but it feels good to be earning more interest than I would have otherwise."

The wonders of Roth

Lil Bizy Bee was among those who said the board had inspired them to save more for retirement. She started contributing to a 401(k) after a seven-year lapse and is close to maxing out an individual retirement account.

Others say they learned to save smarter. Many learned on the board about the advantages of Roth IRAs, which don't offer upfront tax deductions but give you tax-free withdrawals in retirement.

Poster "Karilyn" cut back on contributions to a tax-deferred 457 plan at her workplace in order to fund her Roth. (It can make sense to forgo contributions to a plan that gives you an upfront tax deduction in favor of a Roth if the plan doesn't offer a match and you expect to be in the same or higher tax bracket when you retire.)

"I also studied asset allocation, came up with a plan and then moved things around until my retirement investments were balanced," Karilyn said. "Before I came to this board I was putting everything into pretax investments and was just randomly picking the funds in the plan. Hopefully, diversifying will give me better returns with lower risk."

Speaking of investments, the board has convinced a few people that they have better things to do with their money than pay off their low-rate, deductible home loans. (See "Don't rush to pay off that mortgage.")

Poster "sweetnepenthe" cut her mortgage prepayments in half so she could instead use the money to invest. She plans to do the same with the proceeds from a second home she's selling.

"If not for this board, I would probably have paid off this house, even though I have a very low interest rate," she wrote, "and most likely ended up with less for retirement."

Freedom from car payments

Several readers said the board helped them appreciate how much money is wasted on car payments, something you can read more about in "The real reason you're broke."

"1WisdomSeeker" credited the board with helping him resist the urge to buy a new car, while "judyfishgeek" said her fellow posters made her "appreciate my beater car and beater house when I don't have to shell out large sums for a mortgage and car payment."

Continued: Making money on credit cards

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