The Three Types of Fats In Your Food

Contributing Author: The Tortoise

Fats. They are one of the main reasons many foods taste so good. And some fats taste better than others, making it even more difficult to say no to certain foods. Fast food french fries, for example, were often cooked in lard or beef tallow before the nineties, giving them a markedly richer taste compared to fries cooked in vegetable oil¹. But all fats are not equal. And not all fats are good for us. Indeed, some of the tastiest fats may be some of the worst for our health. How do we know the difference?

Dietary fats fall into three categories: saturated fats, unsaturated fats and trans fats. We will examine each of these in turn.

Saturated Fats

Animals are the primary source of saturated fats. High levels are found in beef, pork, lamb and goat meat, and full-fat dairy products. The saturated fat levels in beef fat is 50%², lard 39%³, and butter 64%⁴. Poultry and eggs contain medium levels, with chicken fat consisting of 30% saturated⁵. Some vegetable oils, such as coconut oil and palm oil, are also very high in saturated fat, containing 82% and 49.3% respectively⁶. Saturated fats remain solid at room temperature. They should be eaten in small amounts, no more than 5 to 6 percent of your total calories. For someone eating 2000 calories a day, that equates to 11 to 13 grams of saturated fat⁷. Eating high levels of saturated fat increases LDL ('bad' cholesterol) and triglyceride levels (a type of fat converted from excess calories and stored in the fat cells), raises your blood pressure, and narrows your blood vessels⁸. All of these effects on your body increase your risk of cardiovascular disease.

Unsaturated Fats

These 'good' fats should form the majority of your fat intake as part of a heart-healthy diet. Unsaturated fats come in two types: monounsaturated and polyunsaturated. Plant-based liquid oils such as olive oil, canola oil, peanut oil, sunflower oil and sesame oil are high in monounsaturated fats, also known as oleic acid⁹. Many seeds and nuts contain good concentrations of oleic acid, including pecans, hazelnuts, almonds, sesame seeds and pumpkin seeds¹⁰. One fruit high in monounsaturated fat is the avocado. While the avocado and coconut have the highest fat contents of any fruit in the world, the fat in an avocado is mostly unsaturated, unlike the coconut's. 100 grams of raw Hass avocado contains 2 grams of saturated fat and 13 grams of unsaturated fat, of which 9.8 grams is monounsaturated¹¹. Polyunsaturated fats are the second type of unsaturated fat which is beneficial to the body, and can be found in oily fish such as salmon, mackerel, herring, tuna and trout, as well as in soyabeans and tofu, canola, walnuts, flax and sunflower seeds and their oils¹². Replacing saturated fats with unsaturated fats have been shown to lower blood pressure, improve lipid levels, decrease LDL and increase HDL ('good' cholesterol), and reduce cardiovascular risks¹³. Studies also suggest that eating good fats may decrease the risk of type-2 diabetes.¹⁴

Trans Fats

Of the three types of fats, trans fat is considered to be the worst type of fat you can eat. Also known as trans-fatty acids, trans fat raises your "bad" (LDL) cholesterol while it lowers your "good" (HDL) cholesterol, a combination which increases your risk of heart disease¹⁵. But what is trans fat? While trans fat occurs naturally in small amounts in some meat and dairy products, most trans fat is produced through an industrial process which adds hydrogen to vegetable oil, causing the oil to become solid at room temperature. This partially-hydrogenated oil is less likely to spoil, so foods made with trans fat have a longer shelf life. Manufactured trans fat may be found in baked goods containing shortening, such as cakes, cookies, pies and crackers, ready-made frosting, snack foods such as microwave popcorn, non-dairy creamers, margarines and any foods cooked or fried in partially-hydrogenated oil¹⁶. Trans fat, particularly the manufactured variety, appears to have no known benefit, with the US Food and Drug Administration (FDA) determining that partially-hydrogenated vegetable oil is no longer "generally recognized as safe" and should be phased out of food production within the next few years.¹⁷

References
¹ Palmer, Katie M., "What exactly is in McDonald's famous french fries?", Wired, July 16, 2014
² "Making Sense of Food: Types of Fat", NutritionMD
³ "Making Sense of Food: Types of Fat", NutritionMD
⁴ "Ask the doctor: Coconut oil", Harvard Health Publications
⁵ "Making Sense of Food: Types of Fat", NutritionMD
⁶ United States Department of Agriculture, National Nutrient Database, "Oil, Coconut", and "Oil, Palm"
⁷ "Know Your Fats", American Heart Association
⁸ Roberts, Eleanor., "Good Fats, Bad Fats", www.everydayhealth.com
⁹ "Monounsaturated Fats", American Heart Association
¹⁰ Roberts, Eleanor., "Good Fats, Bad Fats", www.everydayhealth.com
¹¹ "How Many Grams of Fat Are in Avocados?", Livestrong.com
¹² "Polyunsaturated Fats", American Heart Association
¹³ Roberts, Eleanor., "Good Fats, Bad Fats", www.everydayhealth.com
¹⁴ "Dietary Fats: Know which types to choose", Mayo Clinic
¹⁵ "Trans fat is double trouble for your heart health", Mayo Clinic
¹⁶ "Trans fat is double trouble for your heart health", Mayo Clinic
¹⁷ "Trans fat is double trouble for your heart health", Mayo Clinic

Photos from Morguefile.com.

How to Do Your Budget

Personal finance is exactly that: personal. Like one man's meat, ideas for money management, strategies and styles are individual - what works for you may not work for someone else. Choosing a budget plan for yourself from the multitude available may still require personalisation: you have to tweak it till it fits.

Budget planning is done in two parts. Part one is determining the how; part two is the what.

How To Budget

Begin your budget planning by considering four main budgeting styles and choosing which best fits your style.

The Classic Category Method
The classic budgeting style assigns a fixed spending limit on each of your expense categories - such as Food, Entertainment or Transport - for the month's budget. Once you have hit your limit for the particular category, you are done for the month.

The Zero-based Method
This is a budget style for the regimented and organised mind. Every dollar, pound, euro, etc. of the monthly income is accounted for in your budget plan. There is no 'left-over' or extras: the aim is to get your spending down to zero each month. The zero-based method requires you to plan your spending limits in advance, and the willpower to stick to it.

The Envelope Method
The envelope system is based on the classic category method with one difference: it requires you to pay for things in cash. After taking care of priority categories (rent, utilities, retirement contribution, etc), assign to each of a series of envelopes a category, spending limit and its fund of cash. Once you've spent the amount in an envelope, you may move cash from another envelope across, but you may not draw out more money from your account. What is in the envelopes is your limit for the month.

The Priority-based Method
Automate everything important, such as the rent, utilities, retirement contribution, etc. Cover all important and required priorities. What is left is the amount you can spend as you wish, until it has gone. This method allows you the security of always covering all your financial priorities, and the freedom of not having to set up categories for the rest.

When you have decided on a suitable method, you can follow these next steps to determine what goes into your budget.

What to Budget

1. Get organised. This is the part where you gather all the necessary paperwork and documents you will need to plan your budget. These will include:
   
   • several months' worth of bank statements
   • recent credit card bills
   • copies of your household bills
   • copies of your medical bills
   • details of your savings and pension/retirement contributions
   • information on any other sources of income
2. Add up your income. Make a list of all income, savings, investments, self-employment, rent from properties you own, and anything else, after deducting compulsory payments such as tax or national insurance. Add any weekly, yearly or sporadic earnings as well, such as dividends from shares. Separate your regular/monthly and irregular/annual earnings into columns, then calculate overall totals for each income trajectory, as well as a 'yearly earnings' figure. This is also a good time to check that you are paying the correct amount of tax. ASIC's online budget planner may help you with this and the following stages of determining what goes into your budget.
3. Work out what you are spending. Look at your bank statements, credit card bills, and household and medical bills to determine where your cash is going. Be realistic and avoid guessing. The more accurate your figures, the better your budget plan is going to work. Remember to account for occasional spending such as vacations, festival gifts, birthdays, insurance policies, car maintenance and tax, etc. Add these costs to your list of expenses in a separate 'yearly/occasional outgoings' column. Once you have included everything you need to, add up your monthly and occasional spending separately into two totals. Next, calculate an overall figure that incorporates all your yearly expenditure. If you divide this number by 12 and check the difference between your result and the 'regular spending' total, you will see how much money you need to earmark each month for 'irregular' spending such as gifts and car insurance.
4. Compare incoming and outgoing. You now examine your income and spending totals against each other. Subtract annual and monthly expenditure totals from annual and monthly income figures. The result will indicate the yearly and monthly surpluses or shortfalls in your finances (a shortfall will have a negative number).
5. Draw up your budget. Base your plan on the budget method you have chosen. Be as realistic as possible when budget planning. Balance detail and practicality. Your plan should consist of what you intend to spend each month on priority items, and in some cases each year. Keep in mind, however, that there will always be unforeseen costs, or emergencies. Once you have your budget plan, remain as faithful to it as you can.

Added Note. Financial planners will often advise you when determining your expenses, "First, pay yourself." When determining your spending, allocate some percentage of your pretax income for yourself. Ten percent is a good figure, if you can manage it. if you receive a paycheck via direct deposit, arrange to have that percentage of your paycheck deposited into a separate savings account, so you don't even see it right away. If direct deposit is not an option for you, set aside that percentage and deposit it into your savings account manually. Do this religiously. A little will add up to a lot over time. Additionally, don't forget your retirement. Creating a retirement nest egg can give you some peace of mind in your golden years.

Humpday Hint: When to Pay with Debit or Credit

Contributing Author: The Tortoise

Many people own both debit and credit cards nowadays. But how do you know when best to use one and not the other? And what exactly is the difference between the two, anyway?

A debit card is a payment card that deducts money directly from your transaction account (also known as a current or checking account) to pay for a purchase. In theory, it removes the need for you to carry cash or a chequebook. A debit card also allows you to withdraw money from your transaction account through an automated teller machine. A credit card, on the other hand, is a credit facility which allows you to buy things immediately, up to a pre-arranged limit, which you then pay for at a later date. It is not linked to your transaction account. Both debit and credit cards have different advantages in different spending situations.

How do you decide which to use, and when? Here are several tips:

1. If you are trying to maintain a good credit score, then paying with a credit card will help. The more you use your credit card while paying off its balance punctually each month, the healthier your credit report is going to be.
2. If you need to track your expenses, paying with a debit card is useful. Since it is linked to your transaction account, where full details of all transactions are logged, you can always check your payment history via postal statements or an online tool.
3. Debit cards are also a great convenience when it comes to recurring bill payments such as phone bills, utility bills, the monthly rent, etc. You can set up automatic payments which are taken directly from your transaction account. Just make sure there is enough money in the account to cover these payments when they are due!
4. There are certain situations when it is both wiser and safer to use a credit card. These include car rentals, booking travel, vacation costs, making deposits on purchases, medical bills and large purchases. In all of these, a credit card offers more security and protection than a debit card. Credit cards often also include insurance and concierge services, and the chance to earn points or rewards. In addition, replacing a stolen credit card on vacation is easier than replacing a debit card, and no funds need come out of your account.
5. If possible, do NOT use your debit card for online purchases. Since your debit card is linked directly to your bank account, entering your bank account information online increases your risk of identity or account theft. The recent spate of hacked user information from companies such as Target, EBay, Sony and TalkTalk is a grim reminder to keep your digital security tight at all times.

Sources:

• 'Debit Card', Investopedia
• 'Debit or Credit? 11 Tips on Knowing How to Pay for Your Stuff', Mamiverse
• 'What's the difference between a debit and credit card?', Barclays Bank

Understanding and Improving Your Credit Score

Contributing Author: The Tortoise

Credit reports. Credit history. Credit scores. To anyone who has never owned a credit card, bought insurance or taken out a bank loan, these things might sound unutterably alien. For the average citizen of the digital age, however, maintaining 'financial cred' has become an inescapable, sometimes stressful, part of modern life. Unlike 'credit ratings' which are assigned to businesses and governments, a 'credit score' is a numerical evaluation of an individual's creditworthiness, or the likelihood that you will pay your debts. Consequently, a good credit score often goes hand in hand with healthy personal finances, functioning as one's 'financial barometer'¹.

Most people will have a credit history. In the United States, three major credit reporting bureaus - Equifax, Experian and TransUnion - receive credit information about consumers. Any company which supplies you credit, from student to personal loans, mortgages or credit cards, will report information about your credit events to these three agencies. From this information, the bureaus calculate your credit score. Most lenders, however, depend not upon the bureaus' scores, but upon the Fair Issac Corporation (FICO) score, which is a calculation based upon information taken from the credit bureaus². Scores over 720 are considered to be excellent, while scores below 650 are considered poor. A 'good' credit score will make banks, insurance companies and potential landlords look benignly and favourably upon you, while a 'poor' score might get you shown the door. Potential employers often also look at applicants' credit reports.

So how do you improve your credit score? Your first course of action should be to avail yourself of the free annual credit reports from Equifax, Experian and TransUnion. Financial consultant firm Credit Karma has a good tip: Space out these three reports at 4-month intervals, so you get a year-long indication of how your credit health is doing³. Check your reports for accuracy. Knowing what goes into the calculation of your credit score is also an important battle strategy. The five key factors used by FICO to determine your credit score are: 1) payment history; 2) amounts owed; 3) length of credit history; 4) new credit; and 5) types of credit card⁴.

Your financial cred battle plan should aim for the following: Always pay your bills on time, in full. This is possibly the most important single factor affecting credit score calculation. Pay off any small balances on your credit cards. Use your credit cards less. Try for a credit utilisation rate below 20% between all your credit cards⁵. If you cannot lower your spending, request for higher credit limits on your cards, to improve utilisation percentages. Keep old (even unused) accounts open, to show that you have multiple options for credit usage, and to avoid decreasing the length of your credit history. Cancelling cards gives you fewer payment options while retaining the same amount of debt. In general, a longer credit history is better for your credit score. Do not open several new credit accounts in a short period of time, especially if you do not have a long credit history. Lastly, review the types of credit you are using. Different types of credit cards are viewed differently by the scoring algorithm, and major credit cards are generally better regarded than departmental store cards⁶.

NOTE: This article describes the credit scoring system in the United States. Every country has its own system. Some information about the credit scoring system in the United Kingdom is available here: http://www.moneysavingexpert.com/loans/credit-rating-credit-score. Wikipedia has some basic information about credit scoring systems in other countries: https://en.wikipedia.org/wiki/Credit_score.

References:

¹Mamiverse, 8 Tips on How to Raise Credit Score Right Now
²Investopedia, What's the difference between a credit rating and a credit score?
³Mamiverse, 8 Tips on How to Raise Credit Score Right Now
⁴MyFICO, What's in my FICO Scores
⁵Mamiverse, 8 Tips on How to Raise Credit Score Right Now
⁶Money Management International, Understanding Your Credit Score

Other Sources:

Credit Karma, https://www.creditkarma.com