While it's certainly true that money doesn't grow on trees, it can swell in your wallet if you are willing to put forth a little effort. The tips offered here are geared to the Internet savvy and those who hate getting ripped off. Suggestions found below won't involve a great deal of sacrifice, but they will help you spend less and save more.
Consider these five tried-and-true money-saving ideas:
DROP NEEDLESS TELEPHONE CHARGES.
Most phone companies charge their customers a monthly fee for something called inside wire maintenance. Usually, the tariff for this "service" is between $4 to $6 a month. Let me ask you a question: When's the last time you encountered a problem with the telephone wiring inside your home? Inside wire maintenance is a nonessential expense, so take a few minutes to call and cancel it. Be sure to scrutinize all the add-on charges of your phone bill, as you may be paying for other unrequested items.
TRIM GROCERY BILLS.
Valupage is a free online grocery discount service offering a weekly printout of specials at your local supermarket. Simply log on to http://www.valupage.com/, print the ValuPage sheet, then present it at checkout once you're done shopping. The store's coupon printer yields "Web bucks," which you can redeem like cash on your next store visit.
ZAP ENERGY EXPENSES.
Many utility companies provide off-hour rate plans designed to save participants up to $120 annually in electricity costs. This will require adjusting the time you use high-energy appliances, but it's well worth the small effort. Call your utility provider for information about these cost-saving options.
DINE CHEAPER.
Want to cut at least $100 off your eating-out expenses each year? Nearly every city offers some type of two-for-one entree program. Numerous restaurants participate, varying from roadside diners to upscale bistros. Annual membership fees vary, but if you eat out even once a month it's a wise investment. For more information, contact Premiere Dining (800-346-3241) or Entertainment Publications (800-374-4464).
DISCOVER BARGAINS.
If you shop over the Internet, you owe it to yourself to check out bargaindog.com. This excellent, user-friendly Web site provides a free electronic newsletter offering the top deals from online companies. You can save on everything from clothing to computers. The newsletter is personalized and notifies you of the bargains of most interest. Fast, free, and functional, this one is hard to beat.
Monday, June 30, 2008
Friday, June 27, 2008
Money budgeting is simple if you know these tips.
Marriage counselors know it, children hear it and couples will eventually admit it. The thing they fight most about is money.
Don’t let it be inevitable in your marriage. There are positive ways to budget your money and stop the bickering. A marriage is a partnership; budgeting is just another place to act as partners.
First, spend time discerning what meaning money holds for you, or even over you. During this time spent working on yourself, revisit how money was handled by your parents. Was money tight and you felt deprived of all the clothes and attachments that make a kid fit in with his peers? Were your parent careless with money, buying furniture and vacations they couldn’t afford? Did they gamble or drink away their income? Were your parents investors and responsible about avoiding debt? Were you taught, as a child, how to save and shop for bargains?
Your spouse should be asking himself the same questions. Share your money backgrounds with each other. Be honest about your individual spending styles and needs. Realize that as a couple you will have to find a middle ground to meet your financial, and your emotional needs.
You may already have debts. Student loans, car loans, mortgage payments - these are part of most individual’s lives. Sometimes the loans are pre-existing to the marriage; sometimes they are acquired after the wedding. While most spouses are understanding about the above types of loans, credit card debt, which can be overwhelming, may not be forgivable in your husband or wife’s eyes. Beginning a partnership in the financial realm of a marriage means letting go of the past so you can move forward. Face the debts, consider how to pay them off, begin saving money - this is where you need to be now. Stop pointing fingers and blaming someone for the debt they ran up four years ago. One woman was still moaning about the business losses her husband suffered ten years earlier, even as the loans were nearly paid off.
She lived in the past, fretting over the vacations she’d missed and the big house they could never buy. Yes, a business loss or financial catastrophe is disheartening. And yes, the best way to control the disaster (and not let it control you) is to confront yourself, your fears and plan to move forward.
One way to move forward, even when bickering is still a problem, is to hold weekly sit-downs. Review the bills, discuss where the money is going and share ways to save money.
If anger on either person’s part rears up, you will want to set a time limit of five or ten minutes. Use a timer, and stick to it. Some small work can get done, and the frustration doesn’t have time to build.
Listen to each other’s ideas. A gourmet coffee each morning may be a necessity for you to buy on your way to work. Your husband may enjoy his costly micro-brewed beer. Decide, as partners, what you can do without, permanently or short term, and then allow room for maneuvering. If something is that important, then give yourself that coffee two or three times a week instead of five. Compromise by bringing a lunch to work, and then the cost of the beer won’t be such a burden.
It’s not just the adults that need to know how to budget. Involve children in the discussion. One family, anticipating rising heating costs, dreaded the onset of winter. The previous year’s mail brought outrageous electric and gas bills. A family meeting was held, informally over dinner, and the children offered up the best ideas - no lights on in empty rooms, and use of the gas fire was strictly limited to special times when everyone was in the room. The thermostat was kept low and everyone wore layers. Towels were hung up after showers so laundry costs were reduced. By working together and honoring the children’s ideas, the bills came down, much to everyone’s relief.
Sit down and write out a tentative budget - listing where you think your money goes. Then carry small notebooks around with you and write everything down for 30 days. What a shock! As bills come in study them and make notes on what the cost is for and whether you need the expanded cable, call waiting, the electric dryer during the summer or the odds and ends you throw into your grocery cart on each shopping trip.
After six months of following your money around, you will be able to write out a realistic budget, one that you can stick to without arguing.
Money itself is often a volatile issue for couples, but sometimes it’s not about the money at all. What does money represent for you? Does a savings account mean freedom? Does holding tightly to your money or, the opposite, spending wildly give you a sense of control over yourself, and your spouse? Therapy is not a last resort. A professional, objective outsider may see problems, and solutions, where we may feel completely lost. If money continues to create arguments, and the debts continue to pile up without any relief in sight, see a professional counselor or psychotherapist to help you and your spouse work through the money issue and into a happier marriage.
Don’t let it be inevitable in your marriage. There are positive ways to budget your money and stop the bickering. A marriage is a partnership; budgeting is just another place to act as partners.
First, spend time discerning what meaning money holds for you, or even over you. During this time spent working on yourself, revisit how money was handled by your parents. Was money tight and you felt deprived of all the clothes and attachments that make a kid fit in with his peers? Were your parent careless with money, buying furniture and vacations they couldn’t afford? Did they gamble or drink away their income? Were your parents investors and responsible about avoiding debt? Were you taught, as a child, how to save and shop for bargains?
Your spouse should be asking himself the same questions. Share your money backgrounds with each other. Be honest about your individual spending styles and needs. Realize that as a couple you will have to find a middle ground to meet your financial, and your emotional needs.
You may already have debts. Student loans, car loans, mortgage payments - these are part of most individual’s lives. Sometimes the loans are pre-existing to the marriage; sometimes they are acquired after the wedding. While most spouses are understanding about the above types of loans, credit card debt, which can be overwhelming, may not be forgivable in your husband or wife’s eyes. Beginning a partnership in the financial realm of a marriage means letting go of the past so you can move forward. Face the debts, consider how to pay them off, begin saving money - this is where you need to be now. Stop pointing fingers and blaming someone for the debt they ran up four years ago. One woman was still moaning about the business losses her husband suffered ten years earlier, even as the loans were nearly paid off.
She lived in the past, fretting over the vacations she’d missed and the big house they could never buy. Yes, a business loss or financial catastrophe is disheartening. And yes, the best way to control the disaster (and not let it control you) is to confront yourself, your fears and plan to move forward.
One way to move forward, even when bickering is still a problem, is to hold weekly sit-downs. Review the bills, discuss where the money is going and share ways to save money.
If anger on either person’s part rears up, you will want to set a time limit of five or ten minutes. Use a timer, and stick to it. Some small work can get done, and the frustration doesn’t have time to build.
Listen to each other’s ideas. A gourmet coffee each morning may be a necessity for you to buy on your way to work. Your husband may enjoy his costly micro-brewed beer. Decide, as partners, what you can do without, permanently or short term, and then allow room for maneuvering. If something is that important, then give yourself that coffee two or three times a week instead of five. Compromise by bringing a lunch to work, and then the cost of the beer won’t be such a burden.
It’s not just the adults that need to know how to budget. Involve children in the discussion. One family, anticipating rising heating costs, dreaded the onset of winter. The previous year’s mail brought outrageous electric and gas bills. A family meeting was held, informally over dinner, and the children offered up the best ideas - no lights on in empty rooms, and use of the gas fire was strictly limited to special times when everyone was in the room. The thermostat was kept low and everyone wore layers. Towels were hung up after showers so laundry costs were reduced. By working together and honoring the children’s ideas, the bills came down, much to everyone’s relief.
Sit down and write out a tentative budget - listing where you think your money goes. Then carry small notebooks around with you and write everything down for 30 days. What a shock! As bills come in study them and make notes on what the cost is for and whether you need the expanded cable, call waiting, the electric dryer during the summer or the odds and ends you throw into your grocery cart on each shopping trip.
After six months of following your money around, you will be able to write out a realistic budget, one that you can stick to without arguing.
Money itself is often a volatile issue for couples, but sometimes it’s not about the money at all. What does money represent for you? Does a savings account mean freedom? Does holding tightly to your money or, the opposite, spending wildly give you a sense of control over yourself, and your spouse? Therapy is not a last resort. A professional, objective outsider may see problems, and solutions, where we may feel completely lost. If money continues to create arguments, and the debts continue to pile up without any relief in sight, see a professional counselor or psychotherapist to help you and your spouse work through the money issue and into a happier marriage.
Thursday, June 26, 2008
Leasing a Car: Why it’s a Bad Deal
Leasing a car may sound like an affordable and easy way to get behind the wheel of a new car, but it’s generally not the best deal for you the consumer. Find out why.
The Sales PitchYou’ve no doubt seen those tantalizingly low lease offers advertised on TV and in the newspaper. You’ve maybe even considered taking advantage of one of them. It just sounds so great—you can pay less per month than if you were to buy, and still drive the same vehicle. How can you not win with a deal like that? Well, unfortunately there are several ways in which you won’t come out a winner. Here’s a look at the downside of leasing:
-The monthly payments on a lease may be less than what you would pay on a car loan, but there’s a big catch—at the end of the lease period you won’t own that car. Compare the price to lease to the price to own and it’s often only about $100 difference between the two.
-If the vehicle is totaled in an accident or stolen, you’ll still be responsible for the full lease amount—even if your insurance company gives you less than what you owe. You can purchase gap insurance to cover the difference, but that’s an extra expense to add to your monthly budget.
-If you put more mileage on the vehicle than is outlined in your lease contract, you’ll have to pay a penalty. This is usually handled on a per mile basis, and can be quite high.
-If you cause any damage to the vehicle during the time that you have it, you’ll have to pay for the repairs.
-If your finances change to where you can no longer afford the vehicle, you’ll still be responsible for making the payments.You can give it back to the lease company; but if you do they’ll simply auction it off for a low price, and hold you responsible for paying the difference—even though you no longer have the vehicle! In some instances, they may even charge you a penalty for returning the vehicle early.
-You’ll have a monthly car payment for as long as you continue to lease cars. With a car loan you can make payments for five years (or whatever the length of your car loan is) and then scratch car payments from your budget.
-If you lease your vehicle, you won’t be able to count your car among your assets—somebody else will be able to count it among theirs.
-When you lease you won’t be able to make any modifications to personalize your vehicle. You’ll have to keep the car as somebody else wants it.
-If you later decide to purchase the vehicle from the lease company, you’ll pay more than if you had bought the vehicle from a dealership—considerably more.
Forgo that Lease
The next time you hear a seemingly good offer on a car lease, remind yourself of all of the downsides to leasing. You can be sure that nobody at the dealership will.
The Sales PitchYou’ve no doubt seen those tantalizingly low lease offers advertised on TV and in the newspaper. You’ve maybe even considered taking advantage of one of them. It just sounds so great—you can pay less per month than if you were to buy, and still drive the same vehicle. How can you not win with a deal like that? Well, unfortunately there are several ways in which you won’t come out a winner. Here’s a look at the downside of leasing:
-The monthly payments on a lease may be less than what you would pay on a car loan, but there’s a big catch—at the end of the lease period you won’t own that car. Compare the price to lease to the price to own and it’s often only about $100 difference between the two.
-If the vehicle is totaled in an accident or stolen, you’ll still be responsible for the full lease amount—even if your insurance company gives you less than what you owe. You can purchase gap insurance to cover the difference, but that’s an extra expense to add to your monthly budget.
-If you put more mileage on the vehicle than is outlined in your lease contract, you’ll have to pay a penalty. This is usually handled on a per mile basis, and can be quite high.
-If you cause any damage to the vehicle during the time that you have it, you’ll have to pay for the repairs.
-If your finances change to where you can no longer afford the vehicle, you’ll still be responsible for making the payments.You can give it back to the lease company; but if you do they’ll simply auction it off for a low price, and hold you responsible for paying the difference—even though you no longer have the vehicle! In some instances, they may even charge you a penalty for returning the vehicle early.
-You’ll have a monthly car payment for as long as you continue to lease cars. With a car loan you can make payments for five years (or whatever the length of your car loan is) and then scratch car payments from your budget.
-If you lease your vehicle, you won’t be able to count your car among your assets—somebody else will be able to count it among theirs.
-When you lease you won’t be able to make any modifications to personalize your vehicle. You’ll have to keep the car as somebody else wants it.
-If you later decide to purchase the vehicle from the lease company, you’ll pay more than if you had bought the vehicle from a dealership—considerably more.
Forgo that Lease
The next time you hear a seemingly good offer on a car lease, remind yourself of all of the downsides to leasing. You can be sure that nobody at the dealership will.
Wednesday, June 25, 2008
Money and Your Family: Building on Solid Financial Principles
Family Financial Goals
One of the important roles of fathers in both traditional and non traditional families is the role of provider. Even if our partners work and provide income to support the family's financial needs, dad at least feels the primary responsibility for providing financial support for his family.
But more often than not, fathers end up wondering why there is more month at the end of the money than there is money at the end of the month. If you have that experience, you are not alone. Some recent research suggests that many families have expenses that exceed their income by several hundred dollars each month.
So how do you manage your money, rather than being managed by money? What principles do financially secure families follow that others don't?
Setting Financial GoalsThe first step families should take in managing their money is to set financial goals. These goals will be different for every family depending on their stage of life, their needs and the demands on their resources. For example, a family just starting out may have as their goals:
• Saving for the down payment on a home
• Increasing their income through additional education and training
• Beginning a small savings account for college expenses
A family in later years of life may have goals such as:
• Saving for wedding and college expenses
• Paying off the mortgage on their home
• Putting more money into retirement accounts
In each case, families must decide what is important to them. Financial planners recommend that goals be in one-year, five-year and longer-term horizons.
One process that I have seen work successfully is to convene a family council for the purpose of setting financial goals. Each member of the family writes down their individual goals that cost money. Then, individually, each family member prioritizes their goals using stars. A "one star" goal is one that would be nice to have, but could be delayed. A "two star" goal is one that is needed or wanted if the family could find the money to pay for it. A "three star" goal is something the family must have or do.
Then one family member should collect all of the written and prioritized goals and develop one list with like goals categorized together. From that list, the entire family goes through the list, discussing each one and coming to agreement on its relative importance to the family. Next, a list of agreed upon goals should be made based on the priority and the time horizon (1-year, 5-year or long-term).
Finally, the question of how to achieve the goal should be determined. Perhaps for one goal, the family would decide to set aside money from an upcoming tax return. Or a savings plan could be developed. Perhaps one family member would work part-time until the goal was met and would then quit working. In any case, the method for achieving the goal in its appropriate time frame would be decided.
Your Family Budget
Once the family has determined its short and long term financial goals, it is time to begin establishing the budget. The purpose of the budget is to match financial resources (income, interest earnings, etc.) with savings and spending needs on a periodic basis. Family budgets can be monthly, weekly or in some other frequency. What has worked best for us is to budget bi-weekly since that is the frequency of my pay checks. We look each payday and set a budget for the coming four to six paydays.In terms of our income, we have some fixed income amounts such as the biweekly paycheck from my employment. This we budget as income. Also, we have some variable income from outside sources which is generally available but not always. These amounts we budget to go into our short-term savings accounts. In the process of budgeting for expenses, it is important to look at needs and timing, and to identify priorities. In our family's budgeting process, we look first at our fixed obligations. For example, the house payment is a fixed amount each month. Payments on other loans for cars, education or other obligations come in this category as well. These costs generally have a regular payment date and amount. We also set aside a fixed amount each month for savings and for retirement; these are included in our fixed obligations.
Next we consider expenses over which we have some control. These include utility bills, groceries, subscriptions, automobile expenses, clothing and the like. These we budget to fit around our fixed expenses. We try to take in seasonal variations. For example, our natural gas bills tend to be higher in the winter, while our electric and water bills tend to be higher in the summer. We try to be realistic in our budgeting, but we also know in a month when we may have higher auto expenses, we may have to cut back on groceries or clothing.
One thing we have also tried to work on is known expenses which may be coming later in the year. Foe example, we try to program savings throughout the year to cover our Christmas gift budget. Or if tuition is due for our daughter in college, we program that into our short term savings as well. Then, we are not surprised or stressed when the bills come due.
Good Financial Habits
Now that you have good financial goals and a budget, you need to develop some good habits for managing your money. Here are some of my recommendations for successfully working your financial plan.
Pay all bills the day the money arrives. It is important when planning your budget to consider due dates and make sure you are meeting those deadlines. Paying your bills on time saves you a lot of money in late fees. And you always run the risk of bouncing checks if you pay bills before your income is deposited.
Consider using direct deposit. If your employer does not require it (and more and more are requiring it), ask your employer about directly depositing your paycheck into your bank account. Normally, the funds arrive at your bank earlier than you could to deposit the account, and many banks now offer free checking if you have direct deposit. It is easy, convenient, and you have access to your money faster.
Have all the bills in one place, ready to pay when the time comes. Keeping the bills organized and together is important and makes bill paying easier
Consider paying bills online. More and more financial institutions are offering free online bill paying. This can be very convenient and saves you the cost of a stamp. You can also program in automatic payments on those fixed expenses saving you time each month.
Grocery shop once a week or every two weeks. Going to the store less frequently and with a well planned grocery list will save you lots of money. Also, a little planning ahead will avoid the need to run out for very expensive fast food.
Consider "level payment plans" on heating/cooling expenses each month to avoid large bills due at one time. Most utility companies and agencies offer level payment plans which can help immensely with budgeting.
Set up an "envelope system" to help you track where your money goes. Label each envelope with a specific spending category such as housing, food, transportation, clothing, entertainment, personal care, and credit/loan payments. At the beginning of each month, put the money you have budgeted into the appropriate envelopes. When payments are due, withdraw the amount needed. This strategy, even if only employed for a few months, can help you really see where your money is going and how to better manage it.
Conclusion
With a little planning and by following some basic important financial principles, families can do a much better job managing their money each month and putting savings away for planned expenses and for emergencies.
One of the important roles of fathers in both traditional and non traditional families is the role of provider. Even if our partners work and provide income to support the family's financial needs, dad at least feels the primary responsibility for providing financial support for his family.
But more often than not, fathers end up wondering why there is more month at the end of the money than there is money at the end of the month. If you have that experience, you are not alone. Some recent research suggests that many families have expenses that exceed their income by several hundred dollars each month.
So how do you manage your money, rather than being managed by money? What principles do financially secure families follow that others don't?
Setting Financial GoalsThe first step families should take in managing their money is to set financial goals. These goals will be different for every family depending on their stage of life, their needs and the demands on their resources. For example, a family just starting out may have as their goals:
• Saving for the down payment on a home
• Increasing their income through additional education and training
• Beginning a small savings account for college expenses
A family in later years of life may have goals such as:
• Saving for wedding and college expenses
• Paying off the mortgage on their home
• Putting more money into retirement accounts
In each case, families must decide what is important to them. Financial planners recommend that goals be in one-year, five-year and longer-term horizons.
One process that I have seen work successfully is to convene a family council for the purpose of setting financial goals. Each member of the family writes down their individual goals that cost money. Then, individually, each family member prioritizes their goals using stars. A "one star" goal is one that would be nice to have, but could be delayed. A "two star" goal is one that is needed or wanted if the family could find the money to pay for it. A "three star" goal is something the family must have or do.
Then one family member should collect all of the written and prioritized goals and develop one list with like goals categorized together. From that list, the entire family goes through the list, discussing each one and coming to agreement on its relative importance to the family. Next, a list of agreed upon goals should be made based on the priority and the time horizon (1-year, 5-year or long-term).
Finally, the question of how to achieve the goal should be determined. Perhaps for one goal, the family would decide to set aside money from an upcoming tax return. Or a savings plan could be developed. Perhaps one family member would work part-time until the goal was met and would then quit working. In any case, the method for achieving the goal in its appropriate time frame would be decided.
Your Family Budget
Once the family has determined its short and long term financial goals, it is time to begin establishing the budget. The purpose of the budget is to match financial resources (income, interest earnings, etc.) with savings and spending needs on a periodic basis. Family budgets can be monthly, weekly or in some other frequency. What has worked best for us is to budget bi-weekly since that is the frequency of my pay checks. We look each payday and set a budget for the coming four to six paydays.In terms of our income, we have some fixed income amounts such as the biweekly paycheck from my employment. This we budget as income. Also, we have some variable income from outside sources which is generally available but not always. These amounts we budget to go into our short-term savings accounts. In the process of budgeting for expenses, it is important to look at needs and timing, and to identify priorities. In our family's budgeting process, we look first at our fixed obligations. For example, the house payment is a fixed amount each month. Payments on other loans for cars, education or other obligations come in this category as well. These costs generally have a regular payment date and amount. We also set aside a fixed amount each month for savings and for retirement; these are included in our fixed obligations.
Next we consider expenses over which we have some control. These include utility bills, groceries, subscriptions, automobile expenses, clothing and the like. These we budget to fit around our fixed expenses. We try to take in seasonal variations. For example, our natural gas bills tend to be higher in the winter, while our electric and water bills tend to be higher in the summer. We try to be realistic in our budgeting, but we also know in a month when we may have higher auto expenses, we may have to cut back on groceries or clothing.
One thing we have also tried to work on is known expenses which may be coming later in the year. Foe example, we try to program savings throughout the year to cover our Christmas gift budget. Or if tuition is due for our daughter in college, we program that into our short term savings as well. Then, we are not surprised or stressed when the bills come due.
Good Financial Habits
Now that you have good financial goals and a budget, you need to develop some good habits for managing your money. Here are some of my recommendations for successfully working your financial plan.
Pay all bills the day the money arrives. It is important when planning your budget to consider due dates and make sure you are meeting those deadlines. Paying your bills on time saves you a lot of money in late fees. And you always run the risk of bouncing checks if you pay bills before your income is deposited.
Consider using direct deposit. If your employer does not require it (and more and more are requiring it), ask your employer about directly depositing your paycheck into your bank account. Normally, the funds arrive at your bank earlier than you could to deposit the account, and many banks now offer free checking if you have direct deposit. It is easy, convenient, and you have access to your money faster.
Have all the bills in one place, ready to pay when the time comes. Keeping the bills organized and together is important and makes bill paying easier
Consider paying bills online. More and more financial institutions are offering free online bill paying. This can be very convenient and saves you the cost of a stamp. You can also program in automatic payments on those fixed expenses saving you time each month.
Grocery shop once a week or every two weeks. Going to the store less frequently and with a well planned grocery list will save you lots of money. Also, a little planning ahead will avoid the need to run out for very expensive fast food.
Consider "level payment plans" on heating/cooling expenses each month to avoid large bills due at one time. Most utility companies and agencies offer level payment plans which can help immensely with budgeting.
Set up an "envelope system" to help you track where your money goes. Label each envelope with a specific spending category such as housing, food, transportation, clothing, entertainment, personal care, and credit/loan payments. At the beginning of each month, put the money you have budgeted into the appropriate envelopes. When payments are due, withdraw the amount needed. This strategy, even if only employed for a few months, can help you really see where your money is going and how to better manage it.
Conclusion
With a little planning and by following some basic important financial principles, families can do a much better job managing their money each month and putting savings away for planned expenses and for emergencies.
Tuesday, June 24, 2008
Plan a Debt-Free Vacation
Think it’s impossible to plan a fun vacation without going into debt? Then, think again. With a bit of planning, you can enjoy a well-deserved break without breaking out the credit card. Here’s how:
1. Figure out what you can afford to spend.If you’re going to pay for a trip out-of-pocket, you’ve got to know what you have to spend. Crunch some numbers to determine just how much you have to devote to your vacation. Don’t worry if the number is small or even non-existent—creativity can make up the difference.
2. Form a realistic plan.Once you have a budget for your vacation, use it to determine what you can afford to do, instead of what you would like to do. Only have $100 to devote to your trip? Then, a cruise probably isn’t an option, but lots of other things might be. For example, you could make plans to visit a relative, arrange for a series of day trips or even vacation at-home. If you’re not sure what kind of trip your budget will buy, spend some time looking at travel deals online.
3. Make all of the arrangements.After you’ve determined your destination, it’s time to put your bargain-hunting skills to work. Challenge yourself to find the best deal on lodging, food and everything in between. For lots of money-saving ideas, consider these sources:
Affordable Vacations
Take Your Thriftiness on the Road
Ways to Save on Souvenirs
4. Crunch those numbers again.Jot down all of the known expenses for your trip (hotel, attraction admission, parking, etc.), and estimate the expenses that you don’t know (gas, food, souvenirs, etc.). Then, compare this number to the amount that you’ve budgeted for your trip? Do you plans fall within your budget? If not, go back and rework your plans until they do.
5. Build in a cushion.Vacations have a way of costing more than you’d expect, so it’s important to build a bit of wiggle room into your budget. If you can plan a trip that falls below your budgeted amount, you’ll have the money that you need to cover those overages with ease. Just what sort of things do you need to budget for? Car repairs, higher than expected food and souvenir costs and rising gas prices are just a few to consider.
Remember: The goal is to plan a debt-free trip, so you need to plan for the worst-case scenario, not the best-case scenario.
6. Go out and have some fun.Know what the best part of a debt-free vacation is? Not having to worry about how you’re going to pay for it. Plan your vacation carefully, and then go off and enjoy it guilt-free!
1. Figure out what you can afford to spend.If you’re going to pay for a trip out-of-pocket, you’ve got to know what you have to spend. Crunch some numbers to determine just how much you have to devote to your vacation. Don’t worry if the number is small or even non-existent—creativity can make up the difference.
2. Form a realistic plan.Once you have a budget for your vacation, use it to determine what you can afford to do, instead of what you would like to do. Only have $100 to devote to your trip? Then, a cruise probably isn’t an option, but lots of other things might be. For example, you could make plans to visit a relative, arrange for a series of day trips or even vacation at-home. If you’re not sure what kind of trip your budget will buy, spend some time looking at travel deals online.
3. Make all of the arrangements.After you’ve determined your destination, it’s time to put your bargain-hunting skills to work. Challenge yourself to find the best deal on lodging, food and everything in between. For lots of money-saving ideas, consider these sources:
Affordable Vacations
Take Your Thriftiness on the Road
Ways to Save on Souvenirs
4. Crunch those numbers again.Jot down all of the known expenses for your trip (hotel, attraction admission, parking, etc.), and estimate the expenses that you don’t know (gas, food, souvenirs, etc.). Then, compare this number to the amount that you’ve budgeted for your trip? Do you plans fall within your budget? If not, go back and rework your plans until they do.
5. Build in a cushion.Vacations have a way of costing more than you’d expect, so it’s important to build a bit of wiggle room into your budget. If you can plan a trip that falls below your budgeted amount, you’ll have the money that you need to cover those overages with ease. Just what sort of things do you need to budget for? Car repairs, higher than expected food and souvenir costs and rising gas prices are just a few to consider.
Remember: The goal is to plan a debt-free trip, so you need to plan for the worst-case scenario, not the best-case scenario.
6. Go out and have some fun.Know what the best part of a debt-free vacation is? Not having to worry about how you’re going to pay for it. Plan your vacation carefully, and then go off and enjoy it guilt-free!
Monday, June 23, 2008
Learn the tips of planning for a large annual vacation.
Planning and budgeting for an annual vacation should be done well ahead of time, in order that the vacation itself is as stress-free and smooth as possible. The last thing you want to be doing while trying to relax and enjoy yourself, is to be worrying about the cost of travel and wondering if you'll be able to afford your trip. So take a few extra steps beforeThe first thing to do when planning a vacation is to start early. You should be thinking about possible locations and times well ahead of your actual vacation. Often, booking flights ahead of time and researching in a variety of places will result in a major discount or savings. This applies doubly for summer vacations. Not only do summer travel dates fill up much faster than at other times of the year, but short-term planning could mean a price hike of up to 200%.
In order to draw up a tentative budget for your annual vacation, you should get to know the basic costs of what you plan to do. When traveling abroad, the most expensive part of the trip is often the airfare or transportation costs. Before you book a flight or travel package, get information on the applicable fees and taxes. Tickets for international travel often have processing fees on top of the basic sticker price, as well as airport fees, and exit/entry taxes for the country of origin. Be sure to get all available information before you book your flight, so that you are not stuck with an unpleasant surprise.In addition, travelers must watch out for hidden fees with airlines, bus services, or even cruise lines. There is usually a strict baggage allowance for flights, and the number of bags and carry ons is controlled on buses and ships as well.
Additional or extra heavy items may mean a fine, which can often be more expensive than the ticket itself! So remember to travel light, especially if you are only going on a short vacation. Chances are you will end up buying new clothes and items while there, and will want to transport them back with you, so leaving that extra space and weight will come in very handy on the return voyage.Once travel has been taken care of, then next major budget item is lodging and food. Lodging is the most important, since arriving in a foreign location without a place to stay can lead to disaster. Instead, it is usually best to make reservations well ahead of your trip, to ensure that you not only have a place to sleep, but that the price you pay will not be a last-minute desperate location. Planning ahead can also mean discounts, if you buy early enough to avoid the usual summer price hike. Although it is often difficult to gauge the accommodations of a hotel or hostel before you arrive, you can count on listings to give you photos and reviews of the location, as well as prices to help with your budgeting. Too keep accommodation costs down, consider staying a little outside the center of the city, in a quieter or more residential neighborhood. Multiple-night stays also can be a way to get an additional discount on the total price of a visit. Sometimes, especially on the off-season, travelers staying for a week or more can expect a lower nightly rate than those staying only a day or two.
Besides accommodation, the last major cost of a trip is food. Most travelers want to sample the local cuisines, eating out almost every night to make the most out of their experience. This can be a great way to get an inside knowledge of the culture and cuisine of your vacation spot, but is also a great way to increase your travel budget. Try to cut food costs by visiting supermarkets and making picnic lunches, or by cooking your own food if you are in a location for a significant amount of time.
When you do eat out, try your best to avoid the obvious tourist traps, which may serve the same food as the small local shops, but at much higher prices. Local places are also great for getting the real view of the local culture, and seeing things outside the tourist loop.
If you've planned early, make wise travel decisions and found cheap and good lodgings, you will be well on your way to having a great annual vacation while still keeping costs at a reasonable level. Always remember to keep some spare emergency money in the budget, in case of accident or sudden departure, or if your wallet gets stolen somehow. And of course, include entertainment and fun items within your budget, so that you make sure that you have the money to go out and make the most of your vacation!
In order to draw up a tentative budget for your annual vacation, you should get to know the basic costs of what you plan to do. When traveling abroad, the most expensive part of the trip is often the airfare or transportation costs. Before you book a flight or travel package, get information on the applicable fees and taxes. Tickets for international travel often have processing fees on top of the basic sticker price, as well as airport fees, and exit/entry taxes for the country of origin. Be sure to get all available information before you book your flight, so that you are not stuck with an unpleasant surprise.In addition, travelers must watch out for hidden fees with airlines, bus services, or even cruise lines. There is usually a strict baggage allowance for flights, and the number of bags and carry ons is controlled on buses and ships as well.
Additional or extra heavy items may mean a fine, which can often be more expensive than the ticket itself! So remember to travel light, especially if you are only going on a short vacation. Chances are you will end up buying new clothes and items while there, and will want to transport them back with you, so leaving that extra space and weight will come in very handy on the return voyage.Once travel has been taken care of, then next major budget item is lodging and food. Lodging is the most important, since arriving in a foreign location without a place to stay can lead to disaster. Instead, it is usually best to make reservations well ahead of your trip, to ensure that you not only have a place to sleep, but that the price you pay will not be a last-minute desperate location. Planning ahead can also mean discounts, if you buy early enough to avoid the usual summer price hike. Although it is often difficult to gauge the accommodations of a hotel or hostel before you arrive, you can count on listings to give you photos and reviews of the location, as well as prices to help with your budgeting. Too keep accommodation costs down, consider staying a little outside the center of the city, in a quieter or more residential neighborhood. Multiple-night stays also can be a way to get an additional discount on the total price of a visit. Sometimes, especially on the off-season, travelers staying for a week or more can expect a lower nightly rate than those staying only a day or two.
Besides accommodation, the last major cost of a trip is food. Most travelers want to sample the local cuisines, eating out almost every night to make the most out of their experience. This can be a great way to get an inside knowledge of the culture and cuisine of your vacation spot, but is also a great way to increase your travel budget. Try to cut food costs by visiting supermarkets and making picnic lunches, or by cooking your own food if you are in a location for a significant amount of time.
When you do eat out, try your best to avoid the obvious tourist traps, which may serve the same food as the small local shops, but at much higher prices. Local places are also great for getting the real view of the local culture, and seeing things outside the tourist loop.
If you've planned early, make wise travel decisions and found cheap and good lodgings, you will be well on your way to having a great annual vacation while still keeping costs at a reasonable level. Always remember to keep some spare emergency money in the budget, in case of accident or sudden departure, or if your wallet gets stolen somehow. And of course, include entertainment and fun items within your budget, so that you make sure that you have the money to go out and make the most of your vacation!
Friday, June 20, 2008
In many families one parent will quit a job to raise children. Learn how to live on one income with these tips and ideas.
Many parents wish that they could quit their job and stay home with their children while they are little. But most of those parents will conclude that they cannot afford to live on one income. While living on one income certainly is not easy, it is definitely do-able for the vast majority of families. Here’s how.
First, take a hard look at the numbers. How much money does your job cost you? Get a piece of paper and write your monthly take-home pay at the top. Then subtract all of your job-related expenses. There are daycare expenses, of course. It is likely that you will have increased food expenses when both parents work – working parents tend to buy more convenience foods, eat out more often, and eat lunches out, as well. You will probably have more medical expenses, too, since children who are in daycare get sick more frequently than children who are home. Additionally, you will want to subtract items like dry-cleaning, the cost of new clothes, parking expenses, and driving expenses (gas, maintenance, etc.).
Once you subtract all of these expenses from your take-home pay, you will have a more realistic look at how much money you really contribute to the family budget each month. For some parents, this number will actually be a negative – meaning that they are actually spending money each month in order to hold a job. Most parents will find that they are still bringing home money, but it is not much. Is your job worth this small amount? Is being away from your kids worth this small amount?
Next, take a look at your family spending habits. What could you cut out? Are your kids worth canceling the cable TV? Cutting down on dining out? Not renting videos? Don’t underestimate the difference you can make in your monthly bills by conserving water and turning off lights. You could probably cut down on your food bill by buying cheaper foods and avoiding junk foods. You might even consider the possibility of selling a car or moving to a smaller house or apartment. These might seem like drastic measures, but if it will allow you to be home with your children, it might be worth it!
Last, consider working from home. Many stay-at-home parents complete some sort of work for pay to supplement their family’s income. Starting up a home-based business does not need to be complicated – but you should keep careful records for tax purposes. Perhaps you could complete some work for your current employer on a contract basis. Or perhaps somebody that you know is looking for a home worker. You could use your skills to start a new business that will let you bring in some income while being home with your children. A teacher could tutor a few hours a week. Somebody skilled in music could teach music lessons a few hours each week. A writer could start freelancing. A person could even clean houses for friends and family, start an errand running service, or take in laundry. No matter what your skills are, there is a way to put them to use to help you earn money from home!
Be careful, however, not to fall for work at home scams. Scams usually require you to first pay money before you really learn about the business opportunity. If it sounds too good to be true, it probably is. Contact your Better Business Bureau if you’re uncertain about a company’s opportunity.
First, take a hard look at the numbers. How much money does your job cost you? Get a piece of paper and write your monthly take-home pay at the top. Then subtract all of your job-related expenses. There are daycare expenses, of course. It is likely that you will have increased food expenses when both parents work – working parents tend to buy more convenience foods, eat out more often, and eat lunches out, as well. You will probably have more medical expenses, too, since children who are in daycare get sick more frequently than children who are home. Additionally, you will want to subtract items like dry-cleaning, the cost of new clothes, parking expenses, and driving expenses (gas, maintenance, etc.).
Once you subtract all of these expenses from your take-home pay, you will have a more realistic look at how much money you really contribute to the family budget each month. For some parents, this number will actually be a negative – meaning that they are actually spending money each month in order to hold a job. Most parents will find that they are still bringing home money, but it is not much. Is your job worth this small amount? Is being away from your kids worth this small amount?
Next, take a look at your family spending habits. What could you cut out? Are your kids worth canceling the cable TV? Cutting down on dining out? Not renting videos? Don’t underestimate the difference you can make in your monthly bills by conserving water and turning off lights. You could probably cut down on your food bill by buying cheaper foods and avoiding junk foods. You might even consider the possibility of selling a car or moving to a smaller house or apartment. These might seem like drastic measures, but if it will allow you to be home with your children, it might be worth it!
Last, consider working from home. Many stay-at-home parents complete some sort of work for pay to supplement their family’s income. Starting up a home-based business does not need to be complicated – but you should keep careful records for tax purposes. Perhaps you could complete some work for your current employer on a contract basis. Or perhaps somebody that you know is looking for a home worker. You could use your skills to start a new business that will let you bring in some income while being home with your children. A teacher could tutor a few hours a week. Somebody skilled in music could teach music lessons a few hours each week. A writer could start freelancing. A person could even clean houses for friends and family, start an errand running service, or take in laundry. No matter what your skills are, there is a way to put them to use to help you earn money from home!
Be careful, however, not to fall for work at home scams. Scams usually require you to first pay money before you really learn about the business opportunity. If it sounds too good to be true, it probably is. Contact your Better Business Bureau if you’re uncertain about a company’s opportunity.
Thursday, June 19, 2008
How to Talk to Your Family About Money
Dealing with touchy money matters between parents and adult children
When your bank of choice had pink ears and a snout, you had no problem talking about money with Mom and Dad. In fact, you were no doubt eager to negotiate a raise in your allowance. But somewhere along the way you learned that money involves a lot more than paper bills and spare change — especially when family is involved.
“Financial decisions are so sensitive because they communicate more than just the way money is handled,” says Rebecca Merrill, coauthor of Life Matters: Creating a Dynamic Balance of Work, Family, Time & Money (McGraw-Hill, $14, http://www.amazon.com/). Money can represent love, security, independence, and more. So how do you navigate all these different meanings and the issues that accompany them? Here, experts weigh in on some sensitive scenarios. Consider it a whole new approach to family values.
My daughter, who has always been very independent, is on her own for the first time. Can I help her out financially without stifling her?
You’re on the right track by honoring her desire to make it on her own, says A. Roger Merrill, Rebecca Merrill’s husband and coauthor. Start by talking with your daughter about how budgeting is tough for people of any age, says Neale Godfrey, author of Money Still Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Teenagers and Young Adults (Rodale, $11, http://www.amazon.com/). Then point her to a website where she can track her spending (see Web Resources). Also, ask her where she needs help — whether it’s with the gym or the utilities — and if she would like you to pay that bill each month. That way, your contribution is consistent, and you know where your money is going.
My in-laws make comments about the way my husband and I spend our money. How can we stop their unsolicited advice?Although it’s undeniably annoying, nagging can be a sign of sincere concern, Godfrey says. So the next time your in-laws offer you and your husband unasked-for advice, view it as a chance to talk with them about your choices and assure them of your financial stability. “Because he’s their son, let your husband do most of the talking,” Godfrey says. “You can sit there repeating to yourself, ‘I love my husband, and he has parents,’” she adds. If you can help your in-laws gain a better grasp of where you’re coming from, they’ll have less cause for worry, Roger Merrill says.
If that doesn’t work, follow the advice of Elizabeth Warren, coauthor (with her daughter, Amelie Tyagi) of All Your Worth: The Ultimate Lifetime Money Plan (Simon & Schuster, $17, http://www.amazon.com/): “Be vague about what you have done and even more vague about what you will do.
Whether you let them bother you is a matter of attitude.”One of my sons is a doctor and the other is a teacher. How can I help the one who is making less money without upsetting the other?
“Money shouldn’t be confused with love or preference,” says David deBoer, a clinical psychologist in Chicago. But because it often is, Godfrey suggests that you first have a conversation with the doctor. “Make sure he knows how much you love him and how proud you are of him,” she says. “Then explain why you want to help his brother.” You might be surprised by his reaction, says Susan Heitler, a clinical psychologist and a coauthor of The Power of Two Workbook (New Harbinger, $14, http://www.amazon.com/): “The more affluent one may be relieved to know you’re helping his brother.” Consider, too, ways that you can support the doctor. For example, he may not have money trouble but could be in need of babysitting. “The gifts don’t have to be financially equitable,” says Dale Atkins, a psychologist and the author of I’m OK, You’re My Parents (Henry Holt, $17, http://www.amazon.com/).
My elderly parents can be really gullible, and I’m afraid someone could take advantage of them. What can I do to help them out with their finances?
The one thing you absolutely want to avoid is telling them, “I’m here to take charge,” Warren says. “Control of one’s money represents autonomy for older adults, just as it did for you when you were breaking out on your own,” adds deBoer. So ease gently into any discussion about money. “An article about how an older person was cheated can be a good way to start a conversation,” Warren says. For a more direct yet still sensitive approach, Ginita Wall, director of the nonprofit group Women’s Institute for Financial Education, suggests that you sit down with your parents and say, “One of you may be on your own someday. How can I help you manage your money and prepare for when that happens?” Some other ways you can assist your parents without upsetting them: Offer to balance their checkbook, take care of paying their bills, or read the fine print on any investments they plan to make, Wall says.
My daughter thinks I go overboard with the gifts I buy her children. She’s asked me to put money into college funds for them instead. I love surprising my grandchildren with presents, but I don’t want to upset my daughter. What should I do?
Nothing will stop grandparents from wanting to give their grandchildren fantastic presents.
“That’s one of the distinct pleasures of being a grandparent,” Godfrey says. However, you should respect your daughter’s wishes when it comes to her children — whether she’s worried that her kids will grow up spoiled or that you’re simply spending too much money. Think about striking a compromise with your daughter, Godfrey suggests. Offer to limit the extravagant gifts to once or twice a year. Then, says Robert Brokamp, retirement editor for The Motley Fool (http://www.fool.com/), you can put some of the money you save into tax-exempt 529 college savings plans, which grandparents can contribute to (see Web Resources). Or perhaps your daughter can put you in charge of giving the “big ticket” gifts for the kids, allowing her to put the money she saves into the college funds. Either way, Godfrey says, you should remember that what your grandchildren want most is quality time with Grandma and Grandpa. “When grandparents visit, they can take the kids to the park, to the museum, or golfing for the day,” she recommends.
My parents insist on paying when we go out to dinner, which is a problem for me. How can I get them to let me cover the check?“
Parents will always be parents, regardless of what age their children are,” Godfrey says. And sometimes that can clash with your attempts to cover the check (whether you want to assert your independence or just feel like treating). This dilemma cannot be solved over dinner (or by a long argument when the check arrives), so try to sidestep it. Pay the bill early, by discreetly passing your credit card to the maître d’ or waiter as you come in. “Often it’s the parents who are most adamant about paying who are the most delighted when you find a graceful way to cover the bill,” Heitler says.
I’m expecting an inheritance from my parents, but I could use the money now to buy a first home. Is there a tactful way to ask for it early? Does this make financial sense?
It might make sense for you, but not necessarily for your parents or for your siblings, deBoer says. There’s no way of knowing if your folks will need their money for an emergency or for catastrophic or long-term care when they get older. And how do you think your brother or sister will feel if, for some reason, your parents’ estate takes a hit, leaving them with a smaller inheritance than the one you already took? “It is presumptuous to expect that kind of help from anybody,” deBoer says.
But if you have no siblings and your parents will not be hindered by digging into their savings now, there are steps you should take to make this proposition less awkward, says Brokamp. First show them how such a deal can make sense for them, too. Ask them where they have most of their money invested. The interest that they’re earning could be less than the interest rate on any home loan you could obtain. Offering them a higher rate of interest (somewhere between what they’re currently earning and what you’d have to pay a bank) makes the offer a better business proposition. Wall made this kind of deal with her father. “I pay only the interest and will never pay back the principal, because that’s my inheritance,” she says. She broached the subject by telling her father that she was buying a house and asking if he would lend her the money. Only after starting the conversation did she suggest that he could make the loan her part of the estate.
Ever since my parents retired, I’ve felt that they’ve been struggling to get by. How can I help them without hurting their pride?“It’s natural for parents to want to be in a position of power in relationships with their children,” deBoer says. “And it can be demoralizing for them to accept help from their kids.” To avoid this situation, Brokamp says, you should employ unobtrusive ways to give them a hand. Gift cards are a great way of disguising a handout. Or set them up with a meal-preparation or cleaning service. If their home needs repairs, send a carpenter or offer to fix the problems yourself. Brokamp also suggests browsing BenefitsCheckUp, a website that matches seniors with service agencies (see Web Resources). “And don’t forget to use special occasions, like Mother’s Day or Father’s Day, to purchase items they might like to have but can’t afford, such as a refrigerator, a television, or a day at the spa,” says Warren.
My son wants to borrow money from me to buy a new car. Should I give him a loan, or would that cause me more trouble than it’s worth?
It depends on your relationship with your son and how responsible you think he is, Godfrey says. If you’re often frustrated by his choices (is he more likely to buy a flashy car than a sensible one?), then don’t agree to the loan. Both parties need to evaluate if this would put a strain on the relationship, and if so, if the loan is worth the risk. If you can and do respect his decisions (even when they seem to fly in the face of common sense), go ahead and give him some financial help. But make it a true loan, Wall says. Have him pay it back on a mutually agreed-upon schedule, with an interest rate that works for both of you.
When your bank of choice had pink ears and a snout, you had no problem talking about money with Mom and Dad. In fact, you were no doubt eager to negotiate a raise in your allowance. But somewhere along the way you learned that money involves a lot more than paper bills and spare change — especially when family is involved.
“Financial decisions are so sensitive because they communicate more than just the way money is handled,” says Rebecca Merrill, coauthor of Life Matters: Creating a Dynamic Balance of Work, Family, Time & Money (McGraw-Hill, $14, http://www.amazon.com/). Money can represent love, security, independence, and more. So how do you navigate all these different meanings and the issues that accompany them? Here, experts weigh in on some sensitive scenarios. Consider it a whole new approach to family values.
My daughter, who has always been very independent, is on her own for the first time. Can I help her out financially without stifling her?
You’re on the right track by honoring her desire to make it on her own, says A. Roger Merrill, Rebecca Merrill’s husband and coauthor. Start by talking with your daughter about how budgeting is tough for people of any age, says Neale Godfrey, author of Money Still Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Teenagers and Young Adults (Rodale, $11, http://www.amazon.com/). Then point her to a website where she can track her spending (see Web Resources). Also, ask her where she needs help — whether it’s with the gym or the utilities — and if she would like you to pay that bill each month. That way, your contribution is consistent, and you know where your money is going.
My in-laws make comments about the way my husband and I spend our money. How can we stop their unsolicited advice?Although it’s undeniably annoying, nagging can be a sign of sincere concern, Godfrey says. So the next time your in-laws offer you and your husband unasked-for advice, view it as a chance to talk with them about your choices and assure them of your financial stability. “Because he’s their son, let your husband do most of the talking,” Godfrey says. “You can sit there repeating to yourself, ‘I love my husband, and he has parents,’” she adds. If you can help your in-laws gain a better grasp of where you’re coming from, they’ll have less cause for worry, Roger Merrill says.
If that doesn’t work, follow the advice of Elizabeth Warren, coauthor (with her daughter, Amelie Tyagi) of All Your Worth: The Ultimate Lifetime Money Plan (Simon & Schuster, $17, http://www.amazon.com/): “Be vague about what you have done and even more vague about what you will do.
Whether you let them bother you is a matter of attitude.”One of my sons is a doctor and the other is a teacher. How can I help the one who is making less money without upsetting the other?
“Money shouldn’t be confused with love or preference,” says David deBoer, a clinical psychologist in Chicago. But because it often is, Godfrey suggests that you first have a conversation with the doctor. “Make sure he knows how much you love him and how proud you are of him,” she says. “Then explain why you want to help his brother.” You might be surprised by his reaction, says Susan Heitler, a clinical psychologist and a coauthor of The Power of Two Workbook (New Harbinger, $14, http://www.amazon.com/): “The more affluent one may be relieved to know you’re helping his brother.” Consider, too, ways that you can support the doctor. For example, he may not have money trouble but could be in need of babysitting. “The gifts don’t have to be financially equitable,” says Dale Atkins, a psychologist and the author of I’m OK, You’re My Parents (Henry Holt, $17, http://www.amazon.com/).
My elderly parents can be really gullible, and I’m afraid someone could take advantage of them. What can I do to help them out with their finances?
The one thing you absolutely want to avoid is telling them, “I’m here to take charge,” Warren says. “Control of one’s money represents autonomy for older adults, just as it did for you when you were breaking out on your own,” adds deBoer. So ease gently into any discussion about money. “An article about how an older person was cheated can be a good way to start a conversation,” Warren says. For a more direct yet still sensitive approach, Ginita Wall, director of the nonprofit group Women’s Institute for Financial Education, suggests that you sit down with your parents and say, “One of you may be on your own someday. How can I help you manage your money and prepare for when that happens?” Some other ways you can assist your parents without upsetting them: Offer to balance their checkbook, take care of paying their bills, or read the fine print on any investments they plan to make, Wall says.
My daughter thinks I go overboard with the gifts I buy her children. She’s asked me to put money into college funds for them instead. I love surprising my grandchildren with presents, but I don’t want to upset my daughter. What should I do?
Nothing will stop grandparents from wanting to give their grandchildren fantastic presents.
“That’s one of the distinct pleasures of being a grandparent,” Godfrey says. However, you should respect your daughter’s wishes when it comes to her children — whether she’s worried that her kids will grow up spoiled or that you’re simply spending too much money. Think about striking a compromise with your daughter, Godfrey suggests. Offer to limit the extravagant gifts to once or twice a year. Then, says Robert Brokamp, retirement editor for The Motley Fool (http://www.fool.com/), you can put some of the money you save into tax-exempt 529 college savings plans, which grandparents can contribute to (see Web Resources). Or perhaps your daughter can put you in charge of giving the “big ticket” gifts for the kids, allowing her to put the money she saves into the college funds. Either way, Godfrey says, you should remember that what your grandchildren want most is quality time with Grandma and Grandpa. “When grandparents visit, they can take the kids to the park, to the museum, or golfing for the day,” she recommends.
My parents insist on paying when we go out to dinner, which is a problem for me. How can I get them to let me cover the check?“
Parents will always be parents, regardless of what age their children are,” Godfrey says. And sometimes that can clash with your attempts to cover the check (whether you want to assert your independence or just feel like treating). This dilemma cannot be solved over dinner (or by a long argument when the check arrives), so try to sidestep it. Pay the bill early, by discreetly passing your credit card to the maître d’ or waiter as you come in. “Often it’s the parents who are most adamant about paying who are the most delighted when you find a graceful way to cover the bill,” Heitler says.
I’m expecting an inheritance from my parents, but I could use the money now to buy a first home. Is there a tactful way to ask for it early? Does this make financial sense?
It might make sense for you, but not necessarily for your parents or for your siblings, deBoer says. There’s no way of knowing if your folks will need their money for an emergency or for catastrophic or long-term care when they get older. And how do you think your brother or sister will feel if, for some reason, your parents’ estate takes a hit, leaving them with a smaller inheritance than the one you already took? “It is presumptuous to expect that kind of help from anybody,” deBoer says.
But if you have no siblings and your parents will not be hindered by digging into their savings now, there are steps you should take to make this proposition less awkward, says Brokamp. First show them how such a deal can make sense for them, too. Ask them where they have most of their money invested. The interest that they’re earning could be less than the interest rate on any home loan you could obtain. Offering them a higher rate of interest (somewhere between what they’re currently earning and what you’d have to pay a bank) makes the offer a better business proposition. Wall made this kind of deal with her father. “I pay only the interest and will never pay back the principal, because that’s my inheritance,” she says. She broached the subject by telling her father that she was buying a house and asking if he would lend her the money. Only after starting the conversation did she suggest that he could make the loan her part of the estate.
Ever since my parents retired, I’ve felt that they’ve been struggling to get by. How can I help them without hurting their pride?“It’s natural for parents to want to be in a position of power in relationships with their children,” deBoer says. “And it can be demoralizing for them to accept help from their kids.” To avoid this situation, Brokamp says, you should employ unobtrusive ways to give them a hand. Gift cards are a great way of disguising a handout. Or set them up with a meal-preparation or cleaning service. If their home needs repairs, send a carpenter or offer to fix the problems yourself. Brokamp also suggests browsing BenefitsCheckUp, a website that matches seniors with service agencies (see Web Resources). “And don’t forget to use special occasions, like Mother’s Day or Father’s Day, to purchase items they might like to have but can’t afford, such as a refrigerator, a television, or a day at the spa,” says Warren.
My son wants to borrow money from me to buy a new car. Should I give him a loan, or would that cause me more trouble than it’s worth?
It depends on your relationship with your son and how responsible you think he is, Godfrey says. If you’re often frustrated by his choices (is he more likely to buy a flashy car than a sensible one?), then don’t agree to the loan. Both parties need to evaluate if this would put a strain on the relationship, and if so, if the loan is worth the risk. If you can and do respect his decisions (even when they seem to fly in the face of common sense), go ahead and give him some financial help. But make it a true loan, Wall says. Have him pay it back on a mutually agreed-upon schedule, with an interest rate that works for both of you.
Wednesday, June 18, 2008
Get paid every other week? Here are budget tips that show you how to KEEP two whole paychecks a year - - money you already earn!
Just imagine, twice a year, getting to keep your whole paycheck for yourself! Seed money for a new business, holiday gifts without debt, school tuition--anything that having those extra hundreds dropped into your pocket would allow.
If you are one of the millions of people who get paychecks every other week, such as every other Friday, you have 26 paydays a year instead of the 24 people have who get paid twice a month, for example on the 1st and the 15th. If you plan ahead, you really can keep those two extra ones. And, you can do it while paying all your bills ahead of schedule!
Here's how. Set aside a couple of quiet, undisturbed hours and gather your tools. You will need a notebook, some scratch paper, a calculator, and a calendar. You will also need a list of your bills, including their monthly due date and the amount due.
**Step One**Make a list of your bills and arrange the list in the order of the day of each month they are due. Ignore for right now the variables that you have control over, like food, clothing, entertainment. We'll look at those further down the list.
**Step Two**Divide the list into two sections, Section One for bills due between the 1st and the 15th of the month, and Section Two for those due between the 15th and the 31st.
**Step Three**Take out your calendar and circle every payday coming up for the next year.
**Step Four**Get out your notebook. Using one page for every payday, write those dates at the top of the page. On the rest of the page, make four columns. Column 1 for the due date (including the month), column 2 for the creditor, and column 3 for the amount due. Column 4 is for the amount paid; you will fill that in after you actually make each payment.
Make a separate page for every payday.
**Step Five**This is important! You must PRETEND that you get paid only twice a month!Assign the Section One bills to the paydays that fall on or previous to the 1st of every month.
Assign the Section Two bills to the paydays that fall on or previous to the 15th of every month.Go through your notebook, and next to the date at the top of the page, identify whether that payday is a Section One or a Section Two.
Did you discover the magic here? There are two paydays that you can claim as FREE ONES; usually, they will fall in March and August. Put big red hearts on these pages, or a picture of the dream that you plan to use the money for--anything to mark it in some way to remind you that these two are all yours!
One the pages you identify as Section One or Section Two, write the corresponding bills on their respective pages, filling in the first three columns.
**Step Six**Look through your bills for the payments you must make regularly, but not monthly. These might be property taxes, home or auto insurance, school tuition, quarterly utility payments, or the like. If they are small amounts (that will be relative to your personal finances) write them in on the payday before they are due.
If they are too large for you to handle comfortably in one chunk, divide the amount by 12, and write that amount on all the Section One OR the all the Section Two pages. Put this money in a savings account earmarked just for this purpose.
**Step Seven**Now is the time to consider the variables (food, clothing, entertainment, gifts) that we set aside in Step One. If you have been following these steps, you know which payday has the heaviest payment demand. Plan to use the other one to refill the freezer, stock up on cleaning supplies and paper goods, or buy clothing.
This is the time, also, to write in important gift-giving occasions, so you can plan ahead for birthdays, graduations, and anniversaries. Write the occasion in your budget book at least one payday ahead of the event.
See why planning ahead is so important? It may sound complicated at first reading, but if you follow the steps carefully in order, they will make sense. You will be paying your bills on time, keeping your credit clean, and still keeping two whole paychecks a year for yourself. This plan really does work!
If you are one of the millions of people who get paychecks every other week, such as every other Friday, you have 26 paydays a year instead of the 24 people have who get paid twice a month, for example on the 1st and the 15th. If you plan ahead, you really can keep those two extra ones. And, you can do it while paying all your bills ahead of schedule!
Here's how. Set aside a couple of quiet, undisturbed hours and gather your tools. You will need a notebook, some scratch paper, a calculator, and a calendar. You will also need a list of your bills, including their monthly due date and the amount due.
**Step One**Make a list of your bills and arrange the list in the order of the day of each month they are due. Ignore for right now the variables that you have control over, like food, clothing, entertainment. We'll look at those further down the list.
**Step Two**Divide the list into two sections, Section One for bills due between the 1st and the 15th of the month, and Section Two for those due between the 15th and the 31st.
**Step Three**Take out your calendar and circle every payday coming up for the next year.
**Step Four**Get out your notebook. Using one page for every payday, write those dates at the top of the page. On the rest of the page, make four columns. Column 1 for the due date (including the month), column 2 for the creditor, and column 3 for the amount due. Column 4 is for the amount paid; you will fill that in after you actually make each payment.
Make a separate page for every payday.
**Step Five**This is important! You must PRETEND that you get paid only twice a month!Assign the Section One bills to the paydays that fall on or previous to the 1st of every month.
Assign the Section Two bills to the paydays that fall on or previous to the 15th of every month.Go through your notebook, and next to the date at the top of the page, identify whether that payday is a Section One or a Section Two.
Did you discover the magic here? There are two paydays that you can claim as FREE ONES; usually, they will fall in March and August. Put big red hearts on these pages, or a picture of the dream that you plan to use the money for--anything to mark it in some way to remind you that these two are all yours!
One the pages you identify as Section One or Section Two, write the corresponding bills on their respective pages, filling in the first three columns.
**Step Six**Look through your bills for the payments you must make regularly, but not monthly. These might be property taxes, home or auto insurance, school tuition, quarterly utility payments, or the like. If they are small amounts (that will be relative to your personal finances) write them in on the payday before they are due.
If they are too large for you to handle comfortably in one chunk, divide the amount by 12, and write that amount on all the Section One OR the all the Section Two pages. Put this money in a savings account earmarked just for this purpose.
**Step Seven**Now is the time to consider the variables (food, clothing, entertainment, gifts) that we set aside in Step One. If you have been following these steps, you know which payday has the heaviest payment demand. Plan to use the other one to refill the freezer, stock up on cleaning supplies and paper goods, or buy clothing.
This is the time, also, to write in important gift-giving occasions, so you can plan ahead for birthdays, graduations, and anniversaries. Write the occasion in your budget book at least one payday ahead of the event.
See why planning ahead is so important? It may sound complicated at first reading, but if you follow the steps carefully in order, they will make sense. You will be paying your bills on time, keeping your credit clean, and still keeping two whole paychecks a year for yourself. This plan really does work!
Tuesday, June 17, 2008
Fix Your Money Leaks
Plugging your money leaks is a lot easier than you think, according to financial advisor Amy Gibb."All my clients have issues with a little money getting away from them," she said, "I have a client who goes to the ATM a couple times a week."
Frequent trips to the ATM, Gibb said, causes money leaks.The easy fixes, Gibb said, are to use a debit card, take money out at your own bank, or take more cash out at each visit.
"Take $200 instead of $40, five times. It's easy," said Gibb.The estimated savings on ATM fees over a year, she said, can be $300 or more.
Paper checks, Gibb points out, also cost a lot of money, as does postage and the time it takes to write out bills.The money leak here, Gibb said, is waiting for bills to arrive and paying by snail mail.The easy fix she suggests is paying your bills online or electronically.
There are various auto-payment plans available through banks or the business you’re paying and, Gibb said, you can usually sign up online or over the phone."You invest five to 10 minutes to do that and then your done," Gibb said.The estimated savings by paying bills electronically? Gibb said at least $60 a year.
She said there is a bonus to paying bills that way, avoiding late fees since the money is coming directly out of your account.Gibb said another little known money leak is carrying too much insurance.
"Rather than getting car insurance where you have $250 deductible, you get a $500 or $1,000 deductible. You may save $400 dollars a year on your car insurance," said Gibb.
Another costly leak Gibb points out is bounced checks.She suggests getting an overdraft line of credit connected to your checking account.
Gibb has a few other quick tips.If you need a free credit report, she said do not pay for one. In Colorado people are entitled to one, free credit report each year.Gibb recommends paying insurance premiums for the year all at once, rather than in increments. She said you can save 10 to 20 percent on your total bill.
Also, do not pay annual credit card fees. Gibb said if you are charged, ask your company to refund the fee.
Finally, Gibb suggests you review your cell phone plan. She even admits, she was over-paying for service.
Frequent trips to the ATM, Gibb said, causes money leaks.The easy fixes, Gibb said, are to use a debit card, take money out at your own bank, or take more cash out at each visit.
"Take $200 instead of $40, five times. It's easy," said Gibb.The estimated savings on ATM fees over a year, she said, can be $300 or more.
Paper checks, Gibb points out, also cost a lot of money, as does postage and the time it takes to write out bills.The money leak here, Gibb said, is waiting for bills to arrive and paying by snail mail.The easy fix she suggests is paying your bills online or electronically.
There are various auto-payment plans available through banks or the business you’re paying and, Gibb said, you can usually sign up online or over the phone."You invest five to 10 minutes to do that and then your done," Gibb said.The estimated savings by paying bills electronically? Gibb said at least $60 a year.
She said there is a bonus to paying bills that way, avoiding late fees since the money is coming directly out of your account.Gibb said another little known money leak is carrying too much insurance.
"Rather than getting car insurance where you have $250 deductible, you get a $500 or $1,000 deductible. You may save $400 dollars a year on your car insurance," said Gibb.
Another costly leak Gibb points out is bounced checks.She suggests getting an overdraft line of credit connected to your checking account.
Gibb has a few other quick tips.If you need a free credit report, she said do not pay for one. In Colorado people are entitled to one, free credit report each year.Gibb recommends paying insurance premiums for the year all at once, rather than in increments. She said you can save 10 to 20 percent on your total bill.
Also, do not pay annual credit card fees. Gibb said if you are charged, ask your company to refund the fee.
Finally, Gibb suggests you review your cell phone plan. She even admits, she was over-paying for service.
Monday, June 16, 2008
Tips a free home budgeting program that will work with your lifestyle.
Budget is not a dirty word, and doesn't have to be the cause of serious fights. Learn how to set up a budget that works for you, not against you. The reason for having a budget is not to cause problems, but rather to help you see where your money is going, and where you can cut corners comfortably.
The first thing you need to do is get in the habit of writing down every penny you spend. A small notebook that you carry in your wallet, or purse is ideal for this. Don't forget to include the coffee you stop for every morning, or that soda you have in the afternoon at work. If you can keep track of the pennies, you will be well on your way to keeping track of your larger bills.After at least a week, or more preferably a month, list all of your expenses in groups. Your groups can be work related, meals, utility bills, insurance, home, car, or any other groupings that make sense to you. Remember this is for you, no one else is going to be looking at this so if you want to call your morning coffee a meal, then do so.
After you have listed all your expenses, and grouped them, total it all. Hopefully it is less than your income, if not we will get to that part later. Look at your list, and double check that you haven't forgotten to list expenses that you don't have on a monthly basis, such as school clothes or tax payments. It is a good idea to walk away from your budget at this time, and come back to it in an hour or so, this way you can see things that you missed the first time.
Now list your income, your paycheck, if you save cans and sell them, if you do side work and get paid for it. Anything that brings money in on a somewhat regular basis. Don't include income from things like lottery winnings, that is too irregular.Compare the income and the expenses, if the expenses are larger than the income, you are going to have to look at cutting corners. The easiest place to cut corners are on the discretionary expenses, for example the grocery bill, or the entertainment expenses. Your fixed expenses such as mortgage, or rent, car insurance, utility bills can be lessened a little, but for the most part will stay the same.
Small savings will add up, if you figure that one day a week you bring your lunch from home, your savings will be about $5.00 a week, and then added to only getting one soda from the machine at work a day, rather than the two you usually do, the total savings for the week will be about $7.50, times 4 weeks in a month, that is $30.00 for another bill, maybe a small utility bill or paying extra on the credit card bill.
You don't have to deprive yourself of everything that you enjoy, but cutting back a little will help. Using coupons at the grocery store, and shopping for sale items will help cut your grocery bill. You can also limit your entertainment expenses, go to a mantinee showing for movies, the price is usually half of the evening showings, the extra you save could be used for another movie, or towards something that you really need, or want.
Make your budget work for you, not you work for your budget. Everyone's spending habits are different, and as long as you are living within your means you are doing fine.
You should plan on saving about three monthes worth of expenses, for emergencies. This could be important if something should happen, you lose a job, or become ill. Again this will depend upon your individual spending habits. Think about the things that are important to you, and go from there.
The first thing you need to do is get in the habit of writing down every penny you spend. A small notebook that you carry in your wallet, or purse is ideal for this. Don't forget to include the coffee you stop for every morning, or that soda you have in the afternoon at work. If you can keep track of the pennies, you will be well on your way to keeping track of your larger bills.After at least a week, or more preferably a month, list all of your expenses in groups. Your groups can be work related, meals, utility bills, insurance, home, car, or any other groupings that make sense to you. Remember this is for you, no one else is going to be looking at this so if you want to call your morning coffee a meal, then do so.
After you have listed all your expenses, and grouped them, total it all. Hopefully it is less than your income, if not we will get to that part later. Look at your list, and double check that you haven't forgotten to list expenses that you don't have on a monthly basis, such as school clothes or tax payments. It is a good idea to walk away from your budget at this time, and come back to it in an hour or so, this way you can see things that you missed the first time.
Now list your income, your paycheck, if you save cans and sell them, if you do side work and get paid for it. Anything that brings money in on a somewhat regular basis. Don't include income from things like lottery winnings, that is too irregular.Compare the income and the expenses, if the expenses are larger than the income, you are going to have to look at cutting corners. The easiest place to cut corners are on the discretionary expenses, for example the grocery bill, or the entertainment expenses. Your fixed expenses such as mortgage, or rent, car insurance, utility bills can be lessened a little, but for the most part will stay the same.
Small savings will add up, if you figure that one day a week you bring your lunch from home, your savings will be about $5.00 a week, and then added to only getting one soda from the machine at work a day, rather than the two you usually do, the total savings for the week will be about $7.50, times 4 weeks in a month, that is $30.00 for another bill, maybe a small utility bill or paying extra on the credit card bill.
You don't have to deprive yourself of everything that you enjoy, but cutting back a little will help. Using coupons at the grocery store, and shopping for sale items will help cut your grocery bill. You can also limit your entertainment expenses, go to a mantinee showing for movies, the price is usually half of the evening showings, the extra you save could be used for another movie, or towards something that you really need, or want.
Make your budget work for you, not you work for your budget. Everyone's spending habits are different, and as long as you are living within your means you are doing fine.
You should plan on saving about three monthes worth of expenses, for emergencies. This could be important if something should happen, you lose a job, or become ill. Again this will depend upon your individual spending habits. Think about the things that are important to you, and go from there.
Friday, June 13, 2008
How to Teach Teens the Value of a Dollar
Teens figure they must know a lot about money. After all, they spend more than $100 billion of it every year, and many even earn part of that. The reality is that they are woefully short on the knowledge and tools they need to manage their own money.
Teaching your teen about money is really preparing them to be responsible, self-reliant adults. Here are five great money skills for teens:
Manage a Checking Account
If your child receives a paycheck or is going to college, she should have her own checking account. Shop for one with the smallest balance requirement and the lowest service charge. Balance the checkbook with her for the first few months. And make sure she understands about fees for bounced checks and how to report a lost checkbook.
Prepare and Follow a Spending Plan
If $100 running shoes don't fit in the family budget but your child insists that his social life will shrivel without them, set up a clothing allowance.
Calculate a reasonable amount for a year's worth of clothing and dole it out in quarterly chunks. If your child overspends, he can stop buying or add his own money.
For college-bound teens, work out a month-by-month spending plan with them and then have your child track expenses. A pencil-and-paper system works fine, although some teens prefer computer programs like Quicken.
Understand Credit
The typical teen receives a steady flow of credit card offers and yet knows very little about how they work.
Here are the essentials:
1. Every time you make a purchase with a card, you are taking out a loan.
2. There is a high price for this loan; it's called interest. If you make minimum payments, you will take almost eight years to repay a $1,000 purchase on a card charging 18 percent interest.
3. The only way to avoid interest is to pay the full balance each month. Except for true emergencies, that's what should happen.
4. One credit card is enough.Start your teen off with a debit card on his checking account or a second card on your own account.
Manage a Paycheck
Teens learn a lot about responsibility and independence by holding down a job. They also see how taxes shrink their take-home pay and how many hours of work it takes to buy a car or a new outfit. Just be careful it isn't too much of a good thing. School should be the first priority, so put a limit (say, 10 to 20 hours a week) on outside work.
Save and Invest Wisely
When it comes to investing, teens have a huge advantage over their parents: time. The magic of compounding is dramatic when you start saving young. A 15-year old who invests $2,000 a year in a Roth IRA for just 5 years (until age19) will have almost $1 million tax-free at age 65.
Diversified no-load mutual funds, such as the Vanguard Total Stock Market Index, are great choices for Roth IRAs. T. Rowe Price will allow you to start an account for $50 a month.
Teaching your teen about money is really preparing them to be responsible, self-reliant adults. Here are five great money skills for teens:
Manage a Checking Account
If your child receives a paycheck or is going to college, she should have her own checking account. Shop for one with the smallest balance requirement and the lowest service charge. Balance the checkbook with her for the first few months. And make sure she understands about fees for bounced checks and how to report a lost checkbook.
Prepare and Follow a Spending Plan
If $100 running shoes don't fit in the family budget but your child insists that his social life will shrivel without them, set up a clothing allowance.
Calculate a reasonable amount for a year's worth of clothing and dole it out in quarterly chunks. If your child overspends, he can stop buying or add his own money.
For college-bound teens, work out a month-by-month spending plan with them and then have your child track expenses. A pencil-and-paper system works fine, although some teens prefer computer programs like Quicken.
Understand Credit
The typical teen receives a steady flow of credit card offers and yet knows very little about how they work.
Here are the essentials:
1. Every time you make a purchase with a card, you are taking out a loan.
2. There is a high price for this loan; it's called interest. If you make minimum payments, you will take almost eight years to repay a $1,000 purchase on a card charging 18 percent interest.
3. The only way to avoid interest is to pay the full balance each month. Except for true emergencies, that's what should happen.
4. One credit card is enough.Start your teen off with a debit card on his checking account or a second card on your own account.
Manage a Paycheck
Teens learn a lot about responsibility and independence by holding down a job. They also see how taxes shrink their take-home pay and how many hours of work it takes to buy a car or a new outfit. Just be careful it isn't too much of a good thing. School should be the first priority, so put a limit (say, 10 to 20 hours a week) on outside work.
Save and Invest Wisely
When it comes to investing, teens have a huge advantage over their parents: time. The magic of compounding is dramatic when you start saving young. A 15-year old who invests $2,000 a year in a Roth IRA for just 5 years (until age19) will have almost $1 million tax-free at age 65.
Diversified no-load mutual funds, such as the Vanguard Total Stock Market Index, are great choices for Roth IRAs. T. Rowe Price will allow you to start an account for $50 a month.
Thursday, June 12, 2008
How to End Up In Debt Without Even Trying
Trying hard to stay out of debt, but still falling further behind each month? Here are five reasons that may be happening. You:
Operate without an Emergency Fund
The unexpected happens; and if you haven’t planned for it, it’s probably going to cause you to go into debt. Set up an emergency fund to cover those unexpected medical bills, car repairs and other spur-of-the-moment expenses that crop up, and keep your credit card out of it.
• Starting an Emergency Fund
Allow Yourself to Splurge.
We all deserve the occasional treat, but spending money you don’t have is never a treat—even if that money is used to buy something really cool. Restrict your splurge spending to what you can afford now, and you’ll be treating yourself to a better financial situation today and into the future.
Pay Off Debt Without Feeling Deprived
• Delayed Gratification &
The Debt Free Lifestyle
Pay Full Price for ThingsBuying things at retail when you could have bought them on sale or with coupons is like throwing money away—and that just doesn’t make sense (especially when you’re in debt). Strive to get the best deal on everything you need, from your car to your groceries to your electric bill and everything in between. If this seems like a hassle, just remember: it’s a lot less painful to whip out a coupon than it is to whip out a credit card.
• How to Get Free Groceries
• Eat Out for Less
• Simple Ways to Keep Your Heating Costs Down
Ignore the Need for a Budget
Think budgets are overrated? Then, expect to find your credit cards over charged. Why? Because, if you don’t now how much money you have, and how it is spent, you can’t begin to make decisions about whether you’re spending your money wisely or whether you can afford to buy something. You’re just spending blindly, and hoping everything turns out well—not a good strategy.
• Live the Cash-Only Lifestyle
Create a Budget, but Don’t Follow It
Budgets are great, but here’s a funny thing about them: they only work when you follow them.
Commit your budget goals to memory; remind yourself of those goals as you spend; and track your progress towards those goals throughout the month. It’s the only way to take your budget from paper to reality.
• Simple Ways to Restrict Your Spending
Operate without an Emergency Fund
The unexpected happens; and if you haven’t planned for it, it’s probably going to cause you to go into debt. Set up an emergency fund to cover those unexpected medical bills, car repairs and other spur-of-the-moment expenses that crop up, and keep your credit card out of it.
• Starting an Emergency Fund
Allow Yourself to Splurge.
We all deserve the occasional treat, but spending money you don’t have is never a treat—even if that money is used to buy something really cool. Restrict your splurge spending to what you can afford now, and you’ll be treating yourself to a better financial situation today and into the future.
Pay Off Debt Without Feeling Deprived
• Delayed Gratification &
The Debt Free Lifestyle
Pay Full Price for ThingsBuying things at retail when you could have bought them on sale or with coupons is like throwing money away—and that just doesn’t make sense (especially when you’re in debt). Strive to get the best deal on everything you need, from your car to your groceries to your electric bill and everything in between. If this seems like a hassle, just remember: it’s a lot less painful to whip out a coupon than it is to whip out a credit card.
• How to Get Free Groceries
• Eat Out for Less
• Simple Ways to Keep Your Heating Costs Down
Ignore the Need for a Budget
Think budgets are overrated? Then, expect to find your credit cards over charged. Why? Because, if you don’t now how much money you have, and how it is spent, you can’t begin to make decisions about whether you’re spending your money wisely or whether you can afford to buy something. You’re just spending blindly, and hoping everything turns out well—not a good strategy.
• Live the Cash-Only Lifestyle
Create a Budget, but Don’t Follow It
Budgets are great, but here’s a funny thing about them: they only work when you follow them.
Commit your budget goals to memory; remind yourself of those goals as you spend; and track your progress towards those goals throughout the month. It’s the only way to take your budget from paper to reality.
• Simple Ways to Restrict Your Spending
Wednesday, June 11, 2008
Household budget tips
Well, let's tinker with your budget a bit. Figure up how much you spend each month. To do this, we must first add up all our necessary costs like food, shelter, and utilities. These are our needs. Then we must figure out just how much we are spending on entertainment, clothing, household products, and other "extra" items. By doing this, we learn what we need and what we can live without. Here is a worksheet that might just help.
Housing Costs:(These should be figured in monthly amounts.) To figure car and household insurance, use the formula below. For many of these items you can consult your monthly bill. If you pay something quarterly, this means four times per year (every 3 months), so divide quarterly costs by 3. Divide an annual bill by 12. Divide a semi-annual amount by 6.
Mortgage or Rent =Homeowners Insurance or renter's Insurance =Electric =Heating (gas, oil, or other fuel) =Telephone (Do not include cellular bills, Internet bills, or bills for a second line here.)=Water =Sewer =Garbage Disposal =Cable Services (Do not include pay channels, Internet service, and pay-per-view items.) =Household Repairs =TOTAL =
Housing Cost Tip:A great tip for lowering your housing costs is to think about buying a house, rather than resting. This way you will build equity. Another money-saving tip is to consider a mobile home rather than paying high rent for small apartments.
Homeowners Insurance Tip:For lower insurance rates, try raising your deductible amount. Make sure that you are not over-insured. For renters, see if your landlord has you covered.
Food and Household cleaners/products:Groceries (Do not include expenses from eating out.) =Laundry costs (Do not include dry-cleaning and laundry services)=Cleaning Items (Do not include maid services) =Toiletries like soap, shampoo, and other necessities =Paper products like toilet paper, paper towels, and other items =TOTAL =(Are there any areas where you could cut something out? If there are, make a note of this now.)
GROCERY TIP:
A good grocery saving tip is to shop on Mondays- prices are lower on average. Always check in the bargain cart for deep discounts. Shop at stores that always have low costs. In the produce and bakery aisles, check for reduced fruit and baked goods. Always make a list up before going shopping! Never shop when hungry. Coupons are another great way to save on groceries. Of course, there are also coupons for other merchandise and cleaning items too.
Cleaning Product Tip:
When buying cleaning products, many people waste money. The best all-purpose cleaner to always have is chlorine bleach. You can clean toilets, sinks, white counters, and even some floors with this. Another all-purpose and affordable cleaner is ammonia. Just mix 1 part ammonia with 5 parts water for a great spray cleaner that will clean up the stove, colored counters, sinks, and windows too!
Clothing Costs:
Put all clothing and shoe costs here. =Include all accessories, jewelry, hair items, and dry-cleaning expenses here. =TOTAL =(Make notes here on how to cut costs.)
Transportation =
Car Payment (If you don't own a car, put your other transportation costs here.)=Car Insurance =Gasoline Costs =Other Car Expenses =TOTAL =(Make notes here on how to cut costs.)
Clothing Tip:
Remember to always check for great deals on designer clothes at garage sales, next-to-new stores, and yes, even the Salvation Army. You would be amazed at the designer labels that you will find. This is because many wealthy people give their items away to these thrift shops to get big tax deductions. You will find sequined evening gowns, leather coats, and even fur ones at these places!
Insurance Tip:
Lower your car insurance by finding out what the state limit is for liability insurance. Also you can raise your deductible to help lower your expenses. Drive a more sensible car to lower costs too. The fancier and more expensive the car, the higher the insurance rates. The sportier your car is, the higher the insurance rate is too! A two-door car costs much more to insure than a four-door one!
Entertainment =
Sports Activities =
Concerts =
Travel =
Dry Cleaning =
Maid or laundry services =
Movies =
Restaurants = (Include carry-out and delivery too!)
Clubs =
Alcohol Consumption =
Cigarettes and other "extra" products =
Any other entertainment or "extra" expense should go here:
TOTAL =
**Note: Any other product that is not needed for survival should go here in this area!
Entertainment Tips:
1. After you total up all of the areas, you will have an idea on what areas of your budget that you need to work the hardest to improve. If you spend too much on entertainment, like many people, you may need a few tips on how to save money on those fun extras. One way is by learning to make homemade pizza or tacos instead of ordering out. It is relatively easy to buy dough mix, bottled sauce, cheese, veggies, and pepperoni. Try it! Your family may just have more fun making it than eating it! Save money on bakery items too by baking homemade cookies. These are so inexpensive to make, and easy too.
2. Why not rent a movie instead of going out to a new box buster hit? You will save nearly $25 for a family of four. If you are having money problems, cancel those high-priced cable subscriptions like HBO, Cinemax, etc. These are just one more extra that you could probably live without.
3. Watch your favorite team instead of paying those high-ticket prices. You can save hundreds of dollars by just watching the game at home instead. Let's face it, we usually see more this way anyhow. You can save money this way on concerts too. Have a concert or sport theme part. Charge a buck a person admission and order a pay-per-view concert or sporting event!Remember that there is always a creative solution to almost any financial problem. Many times, we just need to decide what is more important to us. Hopefully this article was able to help you lower your costs. By seeing the exact amount that we spend monthly on entertainment and other "extras", we often see where to modify our budget. Remember to use common sense and what works the best for you when crafting your household budget.
Housing Costs:(These should be figured in monthly amounts.) To figure car and household insurance, use the formula below. For many of these items you can consult your monthly bill. If you pay something quarterly, this means four times per year (every 3 months), so divide quarterly costs by 3. Divide an annual bill by 12. Divide a semi-annual amount by 6.
Mortgage or Rent =Homeowners Insurance or renter's Insurance =Electric =Heating (gas, oil, or other fuel) =Telephone (Do not include cellular bills, Internet bills, or bills for a second line here.)=Water =Sewer =Garbage Disposal =Cable Services (Do not include pay channels, Internet service, and pay-per-view items.) =Household Repairs =TOTAL =
Housing Cost Tip:A great tip for lowering your housing costs is to think about buying a house, rather than resting. This way you will build equity. Another money-saving tip is to consider a mobile home rather than paying high rent for small apartments.
Homeowners Insurance Tip:For lower insurance rates, try raising your deductible amount. Make sure that you are not over-insured. For renters, see if your landlord has you covered.
Food and Household cleaners/products:Groceries (Do not include expenses from eating out.) =Laundry costs (Do not include dry-cleaning and laundry services)=Cleaning Items (Do not include maid services) =Toiletries like soap, shampoo, and other necessities =Paper products like toilet paper, paper towels, and other items =TOTAL =(Are there any areas where you could cut something out? If there are, make a note of this now.)
GROCERY TIP:
A good grocery saving tip is to shop on Mondays- prices are lower on average. Always check in the bargain cart for deep discounts. Shop at stores that always have low costs. In the produce and bakery aisles, check for reduced fruit and baked goods. Always make a list up before going shopping! Never shop when hungry. Coupons are another great way to save on groceries. Of course, there are also coupons for other merchandise and cleaning items too.
Cleaning Product Tip:
When buying cleaning products, many people waste money. The best all-purpose cleaner to always have is chlorine bleach. You can clean toilets, sinks, white counters, and even some floors with this. Another all-purpose and affordable cleaner is ammonia. Just mix 1 part ammonia with 5 parts water for a great spray cleaner that will clean up the stove, colored counters, sinks, and windows too!
Clothing Costs:
Put all clothing and shoe costs here. =Include all accessories, jewelry, hair items, and dry-cleaning expenses here. =TOTAL =(Make notes here on how to cut costs.)
Transportation =
Car Payment (If you don't own a car, put your other transportation costs here.)=Car Insurance =Gasoline Costs =Other Car Expenses =TOTAL =(Make notes here on how to cut costs.)
Clothing Tip:
Remember to always check for great deals on designer clothes at garage sales, next-to-new stores, and yes, even the Salvation Army. You would be amazed at the designer labels that you will find. This is because many wealthy people give their items away to these thrift shops to get big tax deductions. You will find sequined evening gowns, leather coats, and even fur ones at these places!
Insurance Tip:
Lower your car insurance by finding out what the state limit is for liability insurance. Also you can raise your deductible to help lower your expenses. Drive a more sensible car to lower costs too. The fancier and more expensive the car, the higher the insurance rates. The sportier your car is, the higher the insurance rate is too! A two-door car costs much more to insure than a four-door one!
Entertainment =
Sports Activities =
Concerts =
Travel =
Dry Cleaning =
Maid or laundry services =
Movies =
Restaurants = (Include carry-out and delivery too!)
Clubs =
Alcohol Consumption =
Cigarettes and other "extra" products =
Any other entertainment or "extra" expense should go here:
TOTAL =
**Note: Any other product that is not needed for survival should go here in this area!
Entertainment Tips:
1. After you total up all of the areas, you will have an idea on what areas of your budget that you need to work the hardest to improve. If you spend too much on entertainment, like many people, you may need a few tips on how to save money on those fun extras. One way is by learning to make homemade pizza or tacos instead of ordering out. It is relatively easy to buy dough mix, bottled sauce, cheese, veggies, and pepperoni. Try it! Your family may just have more fun making it than eating it! Save money on bakery items too by baking homemade cookies. These are so inexpensive to make, and easy too.
2. Why not rent a movie instead of going out to a new box buster hit? You will save nearly $25 for a family of four. If you are having money problems, cancel those high-priced cable subscriptions like HBO, Cinemax, etc. These are just one more extra that you could probably live without.
3. Watch your favorite team instead of paying those high-ticket prices. You can save hundreds of dollars by just watching the game at home instead. Let's face it, we usually see more this way anyhow. You can save money this way on concerts too. Have a concert or sport theme part. Charge a buck a person admission and order a pay-per-view concert or sporting event!Remember that there is always a creative solution to almost any financial problem. Many times, we just need to decide what is more important to us. Hopefully this article was able to help you lower your costs. By seeing the exact amount that we spend monthly on entertainment and other "extras", we often see where to modify our budget. Remember to use common sense and what works the best for you when crafting your household budget.
Tuesday, June 10, 2008
How to save money by cyber shopping.
For some, online shopping seems like a luxurious experience. After all, you don’t have to leave the house and deal with traffic; you have your packages delivered to your door and only need to point and click to make a purchase. It seems unlikely that cyber shopping could lead to savings, but it can, in a variety of ways.
One of the most obvious ways that online shopping can save you money is by saving you the gas and associated car maintenance costs that come with driving. It may not seem like much, but the half hour you spend in the car driving to and from the store can add up in terms of both mileage and your time, which presumably is also worth money. It may also save you money on headache medicine, if you tend to do your errands during rush hour.
Online shopping definitely does save time, and for most, time is money. If you decide that you want to buy a new DVD player, for example, you can use online price comparisons to determine which store in your town has the best price on the item. Then, you also have the option of going to pick it up yourself, but unlike regular shopping, where you either drive from store to store looking for the best deal, or get impatient and pays the asking price at the first store you stop at, with online price comparisons you know exactly which store carries the item you are looking for at the best price and whether or not the item is in stock. So if you do end up in the car, at least you are not driving around wasting more time and gas looking for the best deal.
To do an online price comparison, simply go to a site such as Yahoo Shopping and enter the item that you want, in this example, a DVD player. The site will then offer you the choice of searching by brand, price range or most popular items. You choose your search terms, and the search engine will return results on a variety of DVD players from many different stores. You decide which DVD player that you want, which is becoming easier as well, since the sites offer full product specifications and even ratings and detailed reviews of the product. After you decide which player you want, you look at the stores that are selling it for the best price. Chances are, either you will save so much money by going with one particular store that you will save money in spite of the shipping costs, or you will quickly discover which store in your area carries the exact DVD player that you want for the best price. Be sure to use the feature that allows you to check and see if it is in stock. Most stores’ web pages will facilitate this.
Let’s discuss product reviews. Who do you trust more, a salesperson working on commission, or someone who has bought the same exact product that you are considering buying? Take advantage of reading the reviews that are written by other online shoppers and see if you are getting a lemon. Often, reviews can tell you about glitches that the product has, if it is lacking features and other useful tidbits of information. If several people have posted lackluster or negative reviews, you may save yourself a bundle by investigating an alternative product. On the other hand, if you see that the product reviews are primarily positive, then you can buy with confidence.
Another way that individuals use online shopping to save money is by carefully tracking items that they want on online auctions. This is not a good way to save money unless you have already done your homework on the price and know exactly what it is that you want. If you are looking for a specific item, however, an online auction can be the way to go. Be careful not to get sucked into the bidding wars. Decide how much money you are willing to pay before you ever bid, and then use an auction sniper, which is software that will bid your maximum bid (although you may not end up paying that much) during the last few seconds of the auction. That way, you do not have to be near the computer at the end of the auction, and will not be tempted to get in a bidding war. The auction sniper knows your bottom line, and will stick to it, even if you are outbid.
One thing that not many people are aware of is that you can avoid paying taxes if you shop at an online store that is not located in your state. Yes, you will still pay shipping, one of the downsides of online shopping, but often, the tax savings will cancel out your shipping costs. When you factor in the savings in taxes, gas, price comparisons, eliminating the purchase of items with unsatisfactory performance, and the time you will save, cyber shopping can definitely be a sweetheart of a deal.
One of the most obvious ways that online shopping can save you money is by saving you the gas and associated car maintenance costs that come with driving. It may not seem like much, but the half hour you spend in the car driving to and from the store can add up in terms of both mileage and your time, which presumably is also worth money. It may also save you money on headache medicine, if you tend to do your errands during rush hour.
Online shopping definitely does save time, and for most, time is money. If you decide that you want to buy a new DVD player, for example, you can use online price comparisons to determine which store in your town has the best price on the item. Then, you also have the option of going to pick it up yourself, but unlike regular shopping, where you either drive from store to store looking for the best deal, or get impatient and pays the asking price at the first store you stop at, with online price comparisons you know exactly which store carries the item you are looking for at the best price and whether or not the item is in stock. So if you do end up in the car, at least you are not driving around wasting more time and gas looking for the best deal.
To do an online price comparison, simply go to a site such as Yahoo Shopping and enter the item that you want, in this example, a DVD player. The site will then offer you the choice of searching by brand, price range or most popular items. You choose your search terms, and the search engine will return results on a variety of DVD players from many different stores. You decide which DVD player that you want, which is becoming easier as well, since the sites offer full product specifications and even ratings and detailed reviews of the product. After you decide which player you want, you look at the stores that are selling it for the best price. Chances are, either you will save so much money by going with one particular store that you will save money in spite of the shipping costs, or you will quickly discover which store in your area carries the exact DVD player that you want for the best price. Be sure to use the feature that allows you to check and see if it is in stock. Most stores’ web pages will facilitate this.
Let’s discuss product reviews. Who do you trust more, a salesperson working on commission, or someone who has bought the same exact product that you are considering buying? Take advantage of reading the reviews that are written by other online shoppers and see if you are getting a lemon. Often, reviews can tell you about glitches that the product has, if it is lacking features and other useful tidbits of information. If several people have posted lackluster or negative reviews, you may save yourself a bundle by investigating an alternative product. On the other hand, if you see that the product reviews are primarily positive, then you can buy with confidence.
Another way that individuals use online shopping to save money is by carefully tracking items that they want on online auctions. This is not a good way to save money unless you have already done your homework on the price and know exactly what it is that you want. If you are looking for a specific item, however, an online auction can be the way to go. Be careful not to get sucked into the bidding wars. Decide how much money you are willing to pay before you ever bid, and then use an auction sniper, which is software that will bid your maximum bid (although you may not end up paying that much) during the last few seconds of the auction. That way, you do not have to be near the computer at the end of the auction, and will not be tempted to get in a bidding war. The auction sniper knows your bottom line, and will stick to it, even if you are outbid.
One thing that not many people are aware of is that you can avoid paying taxes if you shop at an online store that is not located in your state. Yes, you will still pay shipping, one of the downsides of online shopping, but often, the tax savings will cancel out your shipping costs. When you factor in the savings in taxes, gas, price comparisons, eliminating the purchase of items with unsatisfactory performance, and the time you will save, cyber shopping can definitely be a sweetheart of a deal.
Monday, June 9, 2008
How Children Can Affect Your Tax Return
Aside from claiming your child as a dependent on your taxes, the two biggest tax breaks in this category are the dependent-care credit and the child tax credit. If you pay for baby-sitting or day care for a child under 13, you can claim a tax credit if you and your spouse both work or if one parent is a full-time student or disabled. A single parent with earned income is also eligible.
The credit is calculated on a sliding scale of 20 percent to 30 percent of $2,400 of eligible costs ($4,800 for two or more children). For example, if you pay $4,000 a year for day care for a six-year-old child and your adjusted gross income is $30,000, you can take a credit of 20 percent of the first $2,400 of expenses, or $480.
If you are in the 28 percent tax bracket (taxable income over $43,850 for a couple or $35,150 for a head of household), you are better off participating in an employer-sponsored dependent care savings plan and skipping the credit. These plans allow you to pay dependent-care costs with dollars that are free from federal, state and Social Security taxes, up to $5,000 a year. If you only have one eligible child, participating in an employer plan is usually smarter no matter what your tax bracket because the dollar limit is higher.
More things to consider:
• If you are divorced, only the custodial parent can claim the dependent-care credit.
• Nursery school and kindergarten costs are usually eligible, but private-school expenses in first grade or higher are not.
• Overnight camp expenses are not eligible but day camp expenses are, as long as the cost is about the same as other forms of day care.
• The $500 child credit is available for children under 17 and starts to phase out at $110,000 adjusted gross income for couples, $75,000 for singles and heads of household and $55,000 for a married person filing separately.
• A married couple whose joint income exceeds the limit may be able to take advantage of the credit by filing separately. Just remember that filing separately will exclude you from other benefits such as the Roth IRA.
The Kiddie TaxParents often give stocks, bonds or mutual funds to their children in order to save taxes on their own return. Unless your child stars in her own sitcom, she is probably in a lower tax bracket, so she'll pay less tax on investments than you will.
However, the IRS is wise to this tactic. So beware of the kiddie tax. If your child is under 14, the first $700 of unearned income (dividends, interest, capital gains) is free of tax, and the next $700 is taxed at her rate. All investment income above that amount is taxed at your (the parents') rate. The child can file a separate return, or you can file the income on your own return.
After age 14, the kiddie tax disappears and all investment income is taxed at the child's rate. There is no kiddie tax for money earned on a job; your child will only pay taxes on earned income above $4,300.
If your child is younger than 18 (or 21 in some states), investments in her name must be held in a custodial account (also called an UGMA or UTMA account). An adult -- often the parent -- is the custodian and controls the investment, but the proceeds can only be used for "extras" for the child such as private-school tuition, music lessons, camp and so on. It is not legal to charge your child room and board in order to get at the money.
The advantage of custodial accounts is the tax break, but there are lots of drawbacks. Control shifts to the child when she is 18 or 21. Even if the money is earmarked for college, the child may decide to cash in the investments and travel the world or snap up that red Miata she's had her eye on. Investments in the child's name may make her ineligible for financial aid.Instead of holding investments in your child's name, consider keeping them in your own name and gifting them to your child when you're sure she's headed for college and hasn't qualified for financial aid.
She can cash them in and pay taxes at her own (lower) rate.
Older ChildrenIf you are self-employed (and your business is not incorporated), consider hiring your child to work for you. The work must be bona fide and business-related like filing, copying, or cleaning the office and the wage must be reasonable. If your child is under 18, she is exempt from Social Security, Medicare and unemployment tax, and the money you pay her is a deductible business expense. Plus, the child's income for the year or $2,000, whichever is less, can be set aside in a Roth IRA for a college or new house fund or a big head start on a retirement nest egg.
The tax breaks that got a big buzz when introduced in 1998 were the Hope and Lifetime Learning credits. The Hope credit applies to the first two years after high school and allows for a credit up to 100 percent of the first $1,000 of tuition and 50 percent of the next $1,000 for a total of $1,500. You can take a Hope credit for each eligible child.
The Lifetime Learning credit of 20 percent of up to $5,000 of qualified tuition expenses applies to undergraduate, graduate, and professional coursework as well as for students acquiring or improving job skills. Only one credit is available per family. Both credits phase out completely if your income is over $100,000 (married) or $50,000 (single or head of household).
If your income is too high to claim the Hope or Lifetime Learning credit and your child had substantial earned income, she may be able to take the credit instead. However, neither of you will be able to claim her as an exemption.
The credit is calculated on a sliding scale of 20 percent to 30 percent of $2,400 of eligible costs ($4,800 for two or more children). For example, if you pay $4,000 a year for day care for a six-year-old child and your adjusted gross income is $30,000, you can take a credit of 20 percent of the first $2,400 of expenses, or $480.
If you are in the 28 percent tax bracket (taxable income over $43,850 for a couple or $35,150 for a head of household), you are better off participating in an employer-sponsored dependent care savings plan and skipping the credit. These plans allow you to pay dependent-care costs with dollars that are free from federal, state and Social Security taxes, up to $5,000 a year. If you only have one eligible child, participating in an employer plan is usually smarter no matter what your tax bracket because the dollar limit is higher.
More things to consider:
• If you are divorced, only the custodial parent can claim the dependent-care credit.
• Nursery school and kindergarten costs are usually eligible, but private-school expenses in first grade or higher are not.
• Overnight camp expenses are not eligible but day camp expenses are, as long as the cost is about the same as other forms of day care.
• The $500 child credit is available for children under 17 and starts to phase out at $110,000 adjusted gross income for couples, $75,000 for singles and heads of household and $55,000 for a married person filing separately.
• A married couple whose joint income exceeds the limit may be able to take advantage of the credit by filing separately. Just remember that filing separately will exclude you from other benefits such as the Roth IRA.
The Kiddie TaxParents often give stocks, bonds or mutual funds to their children in order to save taxes on their own return. Unless your child stars in her own sitcom, she is probably in a lower tax bracket, so she'll pay less tax on investments than you will.
However, the IRS is wise to this tactic. So beware of the kiddie tax. If your child is under 14, the first $700 of unearned income (dividends, interest, capital gains) is free of tax, and the next $700 is taxed at her rate. All investment income above that amount is taxed at your (the parents') rate. The child can file a separate return, or you can file the income on your own return.
After age 14, the kiddie tax disappears and all investment income is taxed at the child's rate. There is no kiddie tax for money earned on a job; your child will only pay taxes on earned income above $4,300.
If your child is younger than 18 (or 21 in some states), investments in her name must be held in a custodial account (also called an UGMA or UTMA account). An adult -- often the parent -- is the custodian and controls the investment, but the proceeds can only be used for "extras" for the child such as private-school tuition, music lessons, camp and so on. It is not legal to charge your child room and board in order to get at the money.
The advantage of custodial accounts is the tax break, but there are lots of drawbacks. Control shifts to the child when she is 18 or 21. Even if the money is earmarked for college, the child may decide to cash in the investments and travel the world or snap up that red Miata she's had her eye on. Investments in the child's name may make her ineligible for financial aid.Instead of holding investments in your child's name, consider keeping them in your own name and gifting them to your child when you're sure she's headed for college and hasn't qualified for financial aid.
She can cash them in and pay taxes at her own (lower) rate.
Older ChildrenIf you are self-employed (and your business is not incorporated), consider hiring your child to work for you. The work must be bona fide and business-related like filing, copying, or cleaning the office and the wage must be reasonable. If your child is under 18, she is exempt from Social Security, Medicare and unemployment tax, and the money you pay her is a deductible business expense. Plus, the child's income for the year or $2,000, whichever is less, can be set aside in a Roth IRA for a college or new house fund or a big head start on a retirement nest egg.
The tax breaks that got a big buzz when introduced in 1998 were the Hope and Lifetime Learning credits. The Hope credit applies to the first two years after high school and allows for a credit up to 100 percent of the first $1,000 of tuition and 50 percent of the next $1,000 for a total of $1,500. You can take a Hope credit for each eligible child.
The Lifetime Learning credit of 20 percent of up to $5,000 of qualified tuition expenses applies to undergraduate, graduate, and professional coursework as well as for students acquiring or improving job skills. Only one credit is available per family. Both credits phase out completely if your income is over $100,000 (married) or $50,000 (single or head of household).
If your income is too high to claim the Hope or Lifetime Learning credit and your child had substantial earned income, she may be able to take the credit instead. However, neither of you will be able to claim her as an exemption.
Hospital bills: how to reduce those bills
Hospital stays can be extremely expensive. It would seem that all the consumer could do would be to just endure the cost. There are, however, some strategies to make the cost of a hospital stay as expensive as possible.
(1) Consult the physician about the necessity for having the procedure done in a hospital. Also, could it be done in his office or on an outpatient basis? How long will the hospital stay be? Can it be shortened?
(2) If the care needed is the non-emergency type, compare prices at various hospitals. Hospital room rates can vary significantly. Also inquire about the availability of a non-private room, which would cost considerably less daily.
(3) Find out what fees the doctor will be charging in addition to those for the medical procedure. Some physicians routinely add charges for admission and release.
(4) Never check into a hospital on a weekend or a holiday. Major medical procedures will probably not be performed until the next business day but you will still be charged for a room for the days that could have been spent at home.
(5) If there are no diet restrictions, consider bringing food from home and bypass the charge for hospital meals.
(6) When entering a hospital for childbirth, find out how soon you may be released. Some hospitals release mothers after as little as 24 hours. Also, find out if hospital policy allows the baby to "room in" (stay in the same room) with the mother, cutting hospital nursery fees. Avoid Caesarian-Sections, if possible. They are risky, expensive and not always necessary. Consult your physician about this. If no complications are foreseen, consider using a nurse-practitioner or midwife for birthing at home or at a birthing facility.
(7) If terminally ill, make sure that a living will has been filed with hospital personnel so that they will know the limits you wish them to use in your treatment.
(8) Ask your physician if it is possible to furnish your own medication, whether it be a prescription or just aspirin. You may be able to get in-hospital medication free or at a reduced cost through your insurance. At any rate, the cost will be cheaper than if purchased through the hospital. Hospital costs for medications are notoriously high.
(9) Know all doctors who will be treating you and refuse treatment if a doctor enters your room that you are not familiar with until you are sure that he should be treating you.
(10) Refuse routine tests that the hospital might require before admission if they do not relate to your condition or surgery. Hospitals routinely perform a series of routine tests which may considerably raise the bill but are not necessary for diagnosis or treatment.
(11) Ask the hospital for a daily breakdown of charges. They may be reluctant but are perfectly capable of doing so.
(12) After receiving the bill, make sure that there are clear amounts and details showing:--kind of room charges (private, semi-private?)
---number of days charged (if leaving before checkout time is an extra day billed?)
---all tests and procedures received
---medical equipment used (charges for equipment that was not taken home?)
---charges for blood (any blood donations made to offset cost?)
---doctors visits (number of visits daily for each doctor)
---for mothers, any bills for extra nursery care if child not kept in room
---extra treatment by any specialized personnel-therapists, etc.
(1) Consult the physician about the necessity for having the procedure done in a hospital. Also, could it be done in his office or on an outpatient basis? How long will the hospital stay be? Can it be shortened?
(2) If the care needed is the non-emergency type, compare prices at various hospitals. Hospital room rates can vary significantly. Also inquire about the availability of a non-private room, which would cost considerably less daily.
(3) Find out what fees the doctor will be charging in addition to those for the medical procedure. Some physicians routinely add charges for admission and release.
(4) Never check into a hospital on a weekend or a holiday. Major medical procedures will probably not be performed until the next business day but you will still be charged for a room for the days that could have been spent at home.
(5) If there are no diet restrictions, consider bringing food from home and bypass the charge for hospital meals.
(6) When entering a hospital for childbirth, find out how soon you may be released. Some hospitals release mothers after as little as 24 hours. Also, find out if hospital policy allows the baby to "room in" (stay in the same room) with the mother, cutting hospital nursery fees. Avoid Caesarian-Sections, if possible. They are risky, expensive and not always necessary. Consult your physician about this. If no complications are foreseen, consider using a nurse-practitioner or midwife for birthing at home or at a birthing facility.
(7) If terminally ill, make sure that a living will has been filed with hospital personnel so that they will know the limits you wish them to use in your treatment.
(8) Ask your physician if it is possible to furnish your own medication, whether it be a prescription or just aspirin. You may be able to get in-hospital medication free or at a reduced cost through your insurance. At any rate, the cost will be cheaper than if purchased through the hospital. Hospital costs for medications are notoriously high.
(9) Know all doctors who will be treating you and refuse treatment if a doctor enters your room that you are not familiar with until you are sure that he should be treating you.
(10) Refuse routine tests that the hospital might require before admission if they do not relate to your condition or surgery. Hospitals routinely perform a series of routine tests which may considerably raise the bill but are not necessary for diagnosis or treatment.
(11) Ask the hospital for a daily breakdown of charges. They may be reluctant but are perfectly capable of doing so.
(12) After receiving the bill, make sure that there are clear amounts and details showing:--kind of room charges (private, semi-private?)
---number of days charged (if leaving before checkout time is an extra day billed?)
---all tests and procedures received
---medical equipment used (charges for equipment that was not taken home?)
---charges for blood (any blood donations made to offset cost?)
---doctors visits (number of visits daily for each doctor)
---for mothers, any bills for extra nursery care if child not kept in room
---extra treatment by any specialized personnel-therapists, etc.
Friday, June 6, 2008
Family Finances
For many families, one of the biggest sources of disagreement and aggravation is the subject of family finances. For many of us, the money coming in never seems to match the money going out. Then of course, there always follows the stress of what to spend the money on, and when, and how much, and where, and on and on.
Getting control of your finances means a lot more than just getting control of your money. It means getting a handle on your habits--both thinking and spending--as well as your short term and long term goals. Not only can getting control decrease much of your stress (making for a more satisfying family life) it can also help you efficiently prepare for the future (making for a more leisurely life as the family matures). Although many families make use of a financial advisor, a large degree of your financial control can be handled on your own.
Leaving your finances "to chance," as so many families do (many without even realizing that they are doing it) is a sure-fire path to allowing them to get out of control. Without a plan--for a budget, for getting the most value out of the things that you buy, and for your future--you will most likely find yourself in a constant uphill battle with the finance gremlins.
SPEND LESS SAVE MORE
It sounds simplistic, but simple concepts are often the basis for effective life changes.
So where do you start to bring your finances under control? Begin by taking the time to work on (and live by) a family budget--everything else flows from there. Then, concentrate on how to save money on what you own or buy, and how to get the most purchasing power possible. All along the way, try to remember to include planning for the future in your budgeting process whenever you can.
Eliminate the waste:
Quit paying large sums of money for things that are rarely used--expensive toys that sit in the corner, things for hobbies that you never took up, 4 Wheel Drive SUV's a thousand miles from the nearest snowstorm. Stop "investing" in wasteful items and get rid of those that you have and convert them into cash.
Decrease your debt:
Collectively, we keep adding to our debt load month after month. At the same time, our saving rate is generally headed downward. With a super-strong (and growing) economy, you may be able to hold on to such a position for a while, but should the economy stagnate--or crash--you can quickly lose your footing. Start the process by putting the reins on spending that increases your debt load, both on necessary items (like food and shelter) and those that are not necessities (like "toys").
See some tips on saving money on specific items and getting control of your purchases. Then, with the aid of a family budget, begin to designate a specific amount monthly toward reducing the debt--not paying the monthly minimums but adding enough to make a concerted effort at debt reduction. Many families also take advantage of Home Equity Loans, where they can consolidate their debt into a lower monthly payment (and generally a lower interest rate) so that they can concentrate on debt reduction. A good source to consolidate your bills is www.creditiswealth.com.
Start a program of saving instead of spending: Not only do you have the benefit of eliminating waste (and the availability of money from the elimination) you can begin to focus on long term goals instead of short term spending. If you are not already involved in an investment program (or if you are not devoting enough to it), get started now.
Don't procrastinate:
Because of compounding--the negative effect of compounding when it comes to credit (the longer you have the debt the more interest you will pay) and the positive effect of compounding with savings (the longer you have the savings the higher the return) to procrastinate is to cost yourself lots of your hard earned dollars.
It is amazing the difference getting control of your finances will make in your life. Less money will be wasted, so you may find you don't have to work as long (or hard) to make ends meet.
That means you'll have more time to spend on the important things in your life. Your stress level most likely decrease in direct proportion to the decrease in bickering over family money.
Getting control of your finances means a lot more than just getting control of your money. It means getting a handle on your habits--both thinking and spending--as well as your short term and long term goals. Not only can getting control decrease much of your stress (making for a more satisfying family life) it can also help you efficiently prepare for the future (making for a more leisurely life as the family matures). Although many families make use of a financial advisor, a large degree of your financial control can be handled on your own.
Leaving your finances "to chance," as so many families do (many without even realizing that they are doing it) is a sure-fire path to allowing them to get out of control. Without a plan--for a budget, for getting the most value out of the things that you buy, and for your future--you will most likely find yourself in a constant uphill battle with the finance gremlins.
SPEND LESS SAVE MORE
It sounds simplistic, but simple concepts are often the basis for effective life changes.
So where do you start to bring your finances under control? Begin by taking the time to work on (and live by) a family budget--everything else flows from there. Then, concentrate on how to save money on what you own or buy, and how to get the most purchasing power possible. All along the way, try to remember to include planning for the future in your budgeting process whenever you can.
Eliminate the waste:
Quit paying large sums of money for things that are rarely used--expensive toys that sit in the corner, things for hobbies that you never took up, 4 Wheel Drive SUV's a thousand miles from the nearest snowstorm. Stop "investing" in wasteful items and get rid of those that you have and convert them into cash.
Decrease your debt:
Collectively, we keep adding to our debt load month after month. At the same time, our saving rate is generally headed downward. With a super-strong (and growing) economy, you may be able to hold on to such a position for a while, but should the economy stagnate--or crash--you can quickly lose your footing. Start the process by putting the reins on spending that increases your debt load, both on necessary items (like food and shelter) and those that are not necessities (like "toys").
See some tips on saving money on specific items and getting control of your purchases. Then, with the aid of a family budget, begin to designate a specific amount monthly toward reducing the debt--not paying the monthly minimums but adding enough to make a concerted effort at debt reduction. Many families also take advantage of Home Equity Loans, where they can consolidate their debt into a lower monthly payment (and generally a lower interest rate) so that they can concentrate on debt reduction. A good source to consolidate your bills is www.creditiswealth.com.
Start a program of saving instead of spending: Not only do you have the benefit of eliminating waste (and the availability of money from the elimination) you can begin to focus on long term goals instead of short term spending. If you are not already involved in an investment program (or if you are not devoting enough to it), get started now.
Don't procrastinate:
Because of compounding--the negative effect of compounding when it comes to credit (the longer you have the debt the more interest you will pay) and the positive effect of compounding with savings (the longer you have the savings the higher the return) to procrastinate is to cost yourself lots of your hard earned dollars.
It is amazing the difference getting control of your finances will make in your life. Less money will be wasted, so you may find you don't have to work as long (or hard) to make ends meet.
That means you'll have more time to spend on the important things in your life. Your stress level most likely decrease in direct proportion to the decrease in bickering over family money.
Thursday, June 5, 2008
Budget and saving: can you save more money?
Saving money can become an addiction. Sometimes it seems like the more we save, the more we want to save. If that's true for you, here are a few ideas for finding more money to save from the regular budget.
1. Make do or do without. When you're ready to buy the next pair of sneakers for everyday wear, see if you can hold out until next month, which may be just days away. If you've budgeted $25 a month for family shoes, and no one has used it this month, waiting for next month means you can use this month's $25 for savings. Do the same with other budgeted needs. If you can put off buying a replacement until the following month, you can put the unused money in a savings account.
2. Postpone replacing household items. For example, if you run out of shampoo, try liquid dish soap (NOT the kind intended for dishwasher appliances, which can damage your skin). If you run out of bathroom cleaner, use baking soda. While you don't want to do this indefinitely, delaying the next purchase will mean staying ahead of the budget and placing that money in savings.
3. Tone down gift-giving. Rather than spending hundreds of dollars each year on birthday and holiday gifts, give the homemade kind. Fresh-baked gingerbread tied in plastic and ribbon makes a tasty and inexpensive present. Use your special skills to create an ingenious gift. For example, if you are good at computer work, offer to create a Web page for someone as a gift. If you can write, author a short story about a friend or family member and frame it as your holiday offering. Your gifts will cost a fraction of their usual rates, providing more savings over the course of the year.
4. Get a telephone card. If you don't have a good long distance program with your telephone service, get an inexpensive telephone card for making long distance calls. Some are priced at just two or three cents a minute, which can save you hundreds of dollars a year over the usual cell phone rates or billings at conventional ten cents a minute for out-of-state calls. Get the best possible pricing for both cell and land phone lines.
5. Check your home and auto insurance rates. Ask your insurance carriers if you are eligible for
premium discounts. Age, marital status, education level, vehicle depreciation, and other factors can make a difference in how much you pay each month for auto and home insurance. If you are able to discount your premiums, place the saved funds into your savings account.
6. Ride the bus. If you live in an area with reliable and safe public transportation, you can take advantage of it to get to destinations that would cost more in automobile fuel to get you there.
Especially if you make a routine trip to a dentist, for example, whose office is across town, you can save a chunk of change by taking the bus or carpooling with others (not to the dentist) to save gas money.
7. These are just some of the caches where you may be able to find hidden money. Putting unused funds into a savings account is a great idea, but you also can use your newfound money for a vacation or other monetary goal. Start shopping and start saving today!
1. Make do or do without. When you're ready to buy the next pair of sneakers for everyday wear, see if you can hold out until next month, which may be just days away. If you've budgeted $25 a month for family shoes, and no one has used it this month, waiting for next month means you can use this month's $25 for savings. Do the same with other budgeted needs. If you can put off buying a replacement until the following month, you can put the unused money in a savings account.
2. Postpone replacing household items. For example, if you run out of shampoo, try liquid dish soap (NOT the kind intended for dishwasher appliances, which can damage your skin). If you run out of bathroom cleaner, use baking soda. While you don't want to do this indefinitely, delaying the next purchase will mean staying ahead of the budget and placing that money in savings.
3. Tone down gift-giving. Rather than spending hundreds of dollars each year on birthday and holiday gifts, give the homemade kind. Fresh-baked gingerbread tied in plastic and ribbon makes a tasty and inexpensive present. Use your special skills to create an ingenious gift. For example, if you are good at computer work, offer to create a Web page for someone as a gift. If you can write, author a short story about a friend or family member and frame it as your holiday offering. Your gifts will cost a fraction of their usual rates, providing more savings over the course of the year.
4. Get a telephone card. If you don't have a good long distance program with your telephone service, get an inexpensive telephone card for making long distance calls. Some are priced at just two or three cents a minute, which can save you hundreds of dollars a year over the usual cell phone rates or billings at conventional ten cents a minute for out-of-state calls. Get the best possible pricing for both cell and land phone lines.
5. Check your home and auto insurance rates. Ask your insurance carriers if you are eligible for
premium discounts. Age, marital status, education level, vehicle depreciation, and other factors can make a difference in how much you pay each month for auto and home insurance. If you are able to discount your premiums, place the saved funds into your savings account.
6. Ride the bus. If you live in an area with reliable and safe public transportation, you can take advantage of it to get to destinations that would cost more in automobile fuel to get you there.
Especially if you make a routine trip to a dentist, for example, whose office is across town, you can save a chunk of change by taking the bus or carpooling with others (not to the dentist) to save gas money.
7. These are just some of the caches where you may be able to find hidden money. Putting unused funds into a savings account is a great idea, but you also can use your newfound money for a vacation or other monetary goal. Start shopping and start saving today!
Wednesday, June 4, 2008
A Small Business Loan Isn't an Impossible Dream:
5 Ways to Impress Lenders and Get the Funding Your Business Needs.
Maybe you're starting a new business and seeking funding from acquaintances or from a local credit union that is willing to risk lending money to startup businesses. Or you're proud owner of an established business seeking expansion funding from a large, national bank. Either way, you will need to impress your lender in order to get a loan from them.
Contrary to the popular images of the greedy, mean-spirited banker who gets a kick out of denying you the money that you need (think about the banker on Deal or No Deal!), most commercial lenders are happy, even overjoyed, to make loans: that's what they're in business to do. The only problem is that they can't find enough people and businesses that they feel comfortable lending money to.
Here's how to help your lender feel comfortable with you, so that you can get the funding that your business needs.
1. Be Credit Worthy-- More than anything, your lender is interested in being as sure as they can that you will pay back their loan. In order to be able to project whether you are likely to pay them back, they will look at your credit history. Like it or not, your lender will look at your credit report and may use it to help them learn a lot about your personality as well as your financial responsibility.
By looking at the number and types of loans you have taken, what they were for, the amounts of the loans in relation to your income and whether or not you paid them back early, on time, late, or not at all, your bank will try to infer whether or not you will repay your debt to them, and whether you will do so on time.
If you feel that your credit report doesn't tell the whole story about your reliability, don't despair: include strong character references from respected people who know you well in your loan application. For instance, a letter from your pastor, a former boss, or teacher that describes how reliable you are, what a high level of honesty and integrity you display and how seriously you take your assignments or responsibilities will reassure your lender somewhat if you do happen to have a spotty credit report.
2. Have Training and Experience That Will Help You Run Your Business-- If you are looking for money to expand your successful business, then you have already proven that you have what it takes to run that business well. If you are still trying to get your business off the ground, your lender will want to know that you have the experience and skills that will help you do so. Be able to prove that you have the technical skills to run the business that you envision or that you can hire and manage people who do.
If you have little or no experience in your dream business' industry and lack advanced managerial skills, you should probably look at getting a job in your chosen field instead of starting a business in it. Once you have some relevant experience under your belt, you will have gained lots of new insights into how you would like your own business to run (you may have also decided that that particular industry doesn't appeal to you anymore!).
3. Write a Great Loan Proposal-- A loan proposal describes your business and the credentials of you and your management team. It also contains detailed financial projections for your business and states the purpose of the loan you are requesting. Last but not least, your plan presents the terms of the financing and repayment plans that you would like.
Each lending institution is likely to prefer a specific format for your Loan Proposal. Be sure to ask them what that format is, and tailor your report to their specifications. This will give them all the information that they need in the way that is easiest for them to process it.
4. Have a Clear and Realistic Picture of Your Business' Financial Needs--Many entrepreneurs don't really understand what kind of financing they need, who to get it from, or how much it will actually cost them to borrow money. Do your homework, and decide what type of loan you are looking for (i.e. equity or debt financing), how long you will need to borrow the money for and how much it will cost you to borrow it. Will you be able to pay the loan back if your business fails? How? Your potential lenders are very interested in the answer to that question and others like it. Have a detailed, realistic answer for them.
5. Present Yourself Well-- In other words, earn your banker's trust and respect. Your banker isn't making a loan to your financial statement: he's making a loan to you as an individual. If your banker feels that you are an honest, hardworking person with a strong commitment to your business, it will truly increase your chances of getting a loan (neat, clean clothes and a fresh haircut don't hurt either!). Your banker's respect for you can also lead to reduced loan processing times, smaller fees and, most importantly, introductions to other local businesspeople who can become suppliers, customers and mentors to you.
Just keep in mind that you and your lender are partners, not adversaries. This will make the process of getting your small business loan by feel a lot more pleasant than it otherwise would have, increase your chances of securing a loan and may even help you make some important new contacts. If you have a viable business plan, get out there and sell it: you may have heard that it's impossible to get a small business loan, but now that you know how to put a smile on your lender's face, you can forget the rumors and go get your loan!
Maybe you're starting a new business and seeking funding from acquaintances or from a local credit union that is willing to risk lending money to startup businesses. Or you're proud owner of an established business seeking expansion funding from a large, national bank. Either way, you will need to impress your lender in order to get a loan from them.
Contrary to the popular images of the greedy, mean-spirited banker who gets a kick out of denying you the money that you need (think about the banker on Deal or No Deal!), most commercial lenders are happy, even overjoyed, to make loans: that's what they're in business to do. The only problem is that they can't find enough people and businesses that they feel comfortable lending money to.
Here's how to help your lender feel comfortable with you, so that you can get the funding that your business needs.
1. Be Credit Worthy-- More than anything, your lender is interested in being as sure as they can that you will pay back their loan. In order to be able to project whether you are likely to pay them back, they will look at your credit history. Like it or not, your lender will look at your credit report and may use it to help them learn a lot about your personality as well as your financial responsibility.
By looking at the number and types of loans you have taken, what they were for, the amounts of the loans in relation to your income and whether or not you paid them back early, on time, late, or not at all, your bank will try to infer whether or not you will repay your debt to them, and whether you will do so on time.
If you feel that your credit report doesn't tell the whole story about your reliability, don't despair: include strong character references from respected people who know you well in your loan application. For instance, a letter from your pastor, a former boss, or teacher that describes how reliable you are, what a high level of honesty and integrity you display and how seriously you take your assignments or responsibilities will reassure your lender somewhat if you do happen to have a spotty credit report.
2. Have Training and Experience That Will Help You Run Your Business-- If you are looking for money to expand your successful business, then you have already proven that you have what it takes to run that business well. If you are still trying to get your business off the ground, your lender will want to know that you have the experience and skills that will help you do so. Be able to prove that you have the technical skills to run the business that you envision or that you can hire and manage people who do.
If you have little or no experience in your dream business' industry and lack advanced managerial skills, you should probably look at getting a job in your chosen field instead of starting a business in it. Once you have some relevant experience under your belt, you will have gained lots of new insights into how you would like your own business to run (you may have also decided that that particular industry doesn't appeal to you anymore!).
3. Write a Great Loan Proposal-- A loan proposal describes your business and the credentials of you and your management team. It also contains detailed financial projections for your business and states the purpose of the loan you are requesting. Last but not least, your plan presents the terms of the financing and repayment plans that you would like.
Each lending institution is likely to prefer a specific format for your Loan Proposal. Be sure to ask them what that format is, and tailor your report to their specifications. This will give them all the information that they need in the way that is easiest for them to process it.
4. Have a Clear and Realistic Picture of Your Business' Financial Needs--Many entrepreneurs don't really understand what kind of financing they need, who to get it from, or how much it will actually cost them to borrow money. Do your homework, and decide what type of loan you are looking for (i.e. equity or debt financing), how long you will need to borrow the money for and how much it will cost you to borrow it. Will you be able to pay the loan back if your business fails? How? Your potential lenders are very interested in the answer to that question and others like it. Have a detailed, realistic answer for them.
5. Present Yourself Well-- In other words, earn your banker's trust and respect. Your banker isn't making a loan to your financial statement: he's making a loan to you as an individual. If your banker feels that you are an honest, hardworking person with a strong commitment to your business, it will truly increase your chances of getting a loan (neat, clean clothes and a fresh haircut don't hurt either!). Your banker's respect for you can also lead to reduced loan processing times, smaller fees and, most importantly, introductions to other local businesspeople who can become suppliers, customers and mentors to you.
Just keep in mind that you and your lender are partners, not adversaries. This will make the process of getting your small business loan by feel a lot more pleasant than it otherwise would have, increase your chances of securing a loan and may even help you make some important new contacts. If you have a viable business plan, get out there and sell it: you may have heard that it's impossible to get a small business loan, but now that you know how to put a smile on your lender's face, you can forget the rumors and go get your loan!
15 ways to spend less
Americans get more and more in debt each year. We have a bad spending habit. It wouldn't be so bad if we just bought the necessities. Goodness knows things are expensive enough just to battle there. But that is not where our true battle lies. We are all spoiled rotten. Most of it we do not need, but just want. Here are some tips to stop the urge to splurge and start saving.
-make a list. When you go to the store, buy ONLY what is on your list!don't buy in bulk unless you have a secret hiding place for stuff, because buying more will only make your family use more of the stuff you buy. For example, if you buy a case of cookies, your kids will just eat more cookies.
-get rid of the credit cards. Keep one for emergencies if you must.
-watch less t.v. (no home shopping channels) and no buying online, no catalogs. All of these increase the temptation to buy, buy, buy!
-don't go window shopping when you are bored or depressed. You will buy more than the window!
-set dollar limits. If you are going to buy a second hand car, electronics or an appliance, set a dollar limit and stick to it!!!
-buy generic, clip coupons, pinch those pennies!!! (roll them, too!)
-sometimes buying name brand is good, because you get the quality, like tennis shoes or tools, but again, set a limit. If there is a $50 pair of Nikes or Adidas or whatever, and a $100 pair, settle for the $50 pair.
-cook large amounts of food at a time from scratch, as well as several different meals. Prepackaged stuff costs a lot more and it's not as healthy, anyway. Freeze portions for meals later, during the week or when things in the pantry are scarce. This will also save time, and energy. Also, bake your own bread.
-grow your own! Make a garden! Not only is it fun for the whole family, you can save alot of money on produce.
-avoid shopping with your rich friends or friends who shop like they are rich! You will just try to keep up and end up buying things you don't really need and that you can't really afford.
-don't bring the kids shopping. Kids always make you spend more than you can afford!
-always think practical whenever you are shopping. Always ask yourself, "do I NEED this?", or ask yourself, "is this absolutely necessary?" If your answer is yes to either or both of these questions, then you are being practical, but you HAVE to be honest with yourself!
-make a budget and stick to it! Putting the numbers down on paper will show you just where all your money is going! Chances are that your family is spending a lot on entertainment. Another mistake we make when making a budget is we don't figure in emergency money, such as a trip to the doctor or car repairs, and annual or seasonal expenses like pool supplies, school supplies and clothes or uniforms, and Christmas! Plan ahead!
-make a list. When you go to the store, buy ONLY what is on your list!don't buy in bulk unless you have a secret hiding place for stuff, because buying more will only make your family use more of the stuff you buy. For example, if you buy a case of cookies, your kids will just eat more cookies.
-get rid of the credit cards. Keep one for emergencies if you must.
-watch less t.v. (no home shopping channels) and no buying online, no catalogs. All of these increase the temptation to buy, buy, buy!
-don't go window shopping when you are bored or depressed. You will buy more than the window!
-set dollar limits. If you are going to buy a second hand car, electronics or an appliance, set a dollar limit and stick to it!!!
-buy generic, clip coupons, pinch those pennies!!! (roll them, too!)
-sometimes buying name brand is good, because you get the quality, like tennis shoes or tools, but again, set a limit. If there is a $50 pair of Nikes or Adidas or whatever, and a $100 pair, settle for the $50 pair.
-cook large amounts of food at a time from scratch, as well as several different meals. Prepackaged stuff costs a lot more and it's not as healthy, anyway. Freeze portions for meals later, during the week or when things in the pantry are scarce. This will also save time, and energy. Also, bake your own bread.
-grow your own! Make a garden! Not only is it fun for the whole family, you can save alot of money on produce.
-avoid shopping with your rich friends or friends who shop like they are rich! You will just try to keep up and end up buying things you don't really need and that you can't really afford.
-don't bring the kids shopping. Kids always make you spend more than you can afford!
-always think practical whenever you are shopping. Always ask yourself, "do I NEED this?", or ask yourself, "is this absolutely necessary?" If your answer is yes to either or both of these questions, then you are being practical, but you HAVE to be honest with yourself!
-make a budget and stick to it! Putting the numbers down on paper will show you just where all your money is going! Chances are that your family is spending a lot on entertainment. Another mistake we make when making a budget is we don't figure in emergency money, such as a trip to the doctor or car repairs, and annual or seasonal expenses like pool supplies, school supplies and clothes or uniforms, and Christmas! Plan ahead!
Tuesday, June 3, 2008
6 Tips for Teaching Kids about Money
You may feel a little uneasy about this parenting task. After all, you may not be all that confident about your own money-management skills. But you probably know more than you think you do, and you will play a critical role in shaping your children's attitude toward money.
When do you start? As soon as a child can count and begin to distinguish between coins, she's ready for her first financial strategy: Don't eat the money. Here's how to teach about money at each stage.
Toddlers and Preschoolers
At this age children can sort coins, learn their value and begin to understand how money gets converted into "things."
5- to 7-Year Olds
By the time they start school, many children are ready to receive an allowance. The goal is to give your child the opportunity to budget, spend and save his own money. Most experts agree an allowance should not be linked to chores or grades. Extra money for special jobs such as cleaning out the garage is fine.
The amount of the allowance depends on which expenses the child is expected to pay, so sit down with your child and map out a weekly or monthly budget. One suggestion is to pay 50 cents per week for each year of the child's age.You can encourage saving by dividing the allowance among three jars. Money in jar 1 can be spent on whatever the child chooses. Jar 2 money is saved for a more expensive item, like a toy or book. Jar 3 is reserved for long-term savings, such as a college fund. Pay interest (even a few pennies at a time) to jar 3 money.
Children are fascinated when money makes money.
8- to 10-Year-Olds
Make a trip to the bank to open a savings account. Let your child fill out the deposit slip, and explain that the bank will pay interest.
Include your child in family discussions of finances, such as budgeting and planning for family vacations. Explaining how you decided to forgo the fancy sports car in exchange for a sedan and a family trip to the beach can teach about trade-offs and your family's values.
11- to 13-Year Olds
If your child shows interest in the stock market, choose a few stocks, such as McDonald's and Disney, and follow them for a few months. Stein Roe Young Investor mutual fund (1-800-338-2550) buys stocks of companies that produce products or services that children use. The fund sends workbooks, newsletters and other child-friendly materials.
If the child has earned income from a paper route or baby-sitting, for example, she can set up a Roth IRA that will accumulate a tax-free retirement nest egg. A $1,000 investment at age 12 can grow to over $150,000 at age 65.
When do you start? As soon as a child can count and begin to distinguish between coins, she's ready for her first financial strategy: Don't eat the money. Here's how to teach about money at each stage.
Toddlers and Preschoolers
At this age children can sort coins, learn their value and begin to understand how money gets converted into "things."
5- to 7-Year Olds
By the time they start school, many children are ready to receive an allowance. The goal is to give your child the opportunity to budget, spend and save his own money. Most experts agree an allowance should not be linked to chores or grades. Extra money for special jobs such as cleaning out the garage is fine.
The amount of the allowance depends on which expenses the child is expected to pay, so sit down with your child and map out a weekly or monthly budget. One suggestion is to pay 50 cents per week for each year of the child's age.You can encourage saving by dividing the allowance among three jars. Money in jar 1 can be spent on whatever the child chooses. Jar 2 money is saved for a more expensive item, like a toy or book. Jar 3 is reserved for long-term savings, such as a college fund. Pay interest (even a few pennies at a time) to jar 3 money.
Children are fascinated when money makes money.
8- to 10-Year-Olds
Make a trip to the bank to open a savings account. Let your child fill out the deposit slip, and explain that the bank will pay interest.
Include your child in family discussions of finances, such as budgeting and planning for family vacations. Explaining how you decided to forgo the fancy sports car in exchange for a sedan and a family trip to the beach can teach about trade-offs and your family's values.
11- to 13-Year Olds
If your child shows interest in the stock market, choose a few stocks, such as McDonald's and Disney, and follow them for a few months. Stein Roe Young Investor mutual fund (1-800-338-2550) buys stocks of companies that produce products or services that children use. The fund sends workbooks, newsletters and other child-friendly materials.
If the child has earned income from a paper route or baby-sitting, for example, she can set up a Roth IRA that will accumulate a tax-free retirement nest egg. A $1,000 investment at age 12 can grow to over $150,000 at age 65.
Why Minimum Monthly Payments Will Cost You Big
Sometimes credit cards make life a little too easy. How is that possible? By allowing us to make purchases we really can’t afford, and then giving us an unlimited amount of time to pay off the debt. It sounds great in theory, but ask a card holder who’s been paying off the same debt for years. They’ll tell you that extending your repayment isn’t as easy as it sounds.That is because of the amount of interest you accrue when you stretch out your debt over a long period of time. In fact, credit card companies count on card holders with revolving debt (debt that rolls over from one month to the next). Those consumers pay the fees and interest rates that keep the card companies so profitable.
As a card holder, minimum monthly payments are your enemy. Consider this: a fairly typical household with $6,600 of credit card debt, making minimum monthly payments, would take over twenty five years to pay off their balance – and that’s with a decent interest rate! It’s nearly impossible to make a dent in your debt by making minimum payments.Some card holders lament the fact that their debt actually increases each month when they make minimum monthly payments. I’ve seen this firsthand; fees for carrying a balance, combined with interest, can really overcome a minimum payment. My experience made a believer out of me, and since then I have always paid two or three times the minimum monthly payment in order to stay ahead of the debt.
Senator Dianne Feinstein of California is the proponent of a new bill that would require credit card companies to educate their consumers about the consequences of minimum monthly payments. This would be a huge boon to card holders, as it would illustrate just how long it takes to pay off a balance with minimum payments. Most card holders carry a balance from month to month, and 11% of them make only the minimum required payment. Many simply don’t realize what a poor choice this is.The best way to handle credit card debt is to prevent it. Pay off your balance in full each month. But if an emergency or special event has left you with a heap of credit card debt, there are steps you can take to reduce it quickly. Remember: the longer you take to pay off an interest-bearing balance, the more you will ultimately pay.
To get serious about paying off your credit card balance, pay double or triple the required amount each month. If you get a work bonus or a tax return, use some of it to pay down your balances. Transfer high-interest balances to 0% interest credit cards to make your monthly payments mean something. Just be sure to pay off the balance in full before that 0% interest period ends.
Minimum monthly payments might seem cheap at first, but they come with a hefty price tag. Get your debt paid off as quickly as possible to avoid throwing money away on fees, penalties, and interest.
As a card holder, minimum monthly payments are your enemy. Consider this: a fairly typical household with $6,600 of credit card debt, making minimum monthly payments, would take over twenty five years to pay off their balance – and that’s with a decent interest rate! It’s nearly impossible to make a dent in your debt by making minimum payments.Some card holders lament the fact that their debt actually increases each month when they make minimum monthly payments. I’ve seen this firsthand; fees for carrying a balance, combined with interest, can really overcome a minimum payment. My experience made a believer out of me, and since then I have always paid two or three times the minimum monthly payment in order to stay ahead of the debt.
Senator Dianne Feinstein of California is the proponent of a new bill that would require credit card companies to educate their consumers about the consequences of minimum monthly payments. This would be a huge boon to card holders, as it would illustrate just how long it takes to pay off a balance with minimum payments. Most card holders carry a balance from month to month, and 11% of them make only the minimum required payment. Many simply don’t realize what a poor choice this is.The best way to handle credit card debt is to prevent it. Pay off your balance in full each month. But if an emergency or special event has left you with a heap of credit card debt, there are steps you can take to reduce it quickly. Remember: the longer you take to pay off an interest-bearing balance, the more you will ultimately pay.
To get serious about paying off your credit card balance, pay double or triple the required amount each month. If you get a work bonus or a tax return, use some of it to pay down your balances. Transfer high-interest balances to 0% interest credit cards to make your monthly payments mean something. Just be sure to pay off the balance in full before that 0% interest period ends.
Minimum monthly payments might seem cheap at first, but they come with a hefty price tag. Get your debt paid off as quickly as possible to avoid throwing money away on fees, penalties, and interest.
Identity Theft: - 5 Tips to Protect Your Privacy
The Federal Trade Commission (FTC) estimates that as many as 9 million Americans have their identities stolen each year. This means that an identity is stolen every 3 seconds, costing the average victim nearly $4,000 and nearly 175 hours to straighten out their problems and their credit. How can you protect yourself from the dangers of identity theft? Here are some suggestions.
Conduct a Credit Check-up – Visit www.annualcreditreport.com to obtain a free credit report every 12 months. Review all three of your credit reports and look for any suspicious activity, unusual or inaccurate names or addresses, or any inquiries that were done without your knowledge. In many states, you may place a 90-day "Fraud Alert" on your credit report, which further restricts access to your credit information. Simply call one of the three main credit bureaus to activate the alert. Here are the toll-free numbers: Equifax 1-800-525-6285; Experian® 1-888-397-3742; or TransUnion® 1-800-680-7289.
Don't Give It Up – Avoid falling prey to phishing scams, both over phone and through email. In a phishing scam, identity thieves pretend to be someone from your bank or a credit institution and simply ask you for your personal information. If someone contacts you and requests any personal information, don't give it to them. Verify who is requesting the data and why, and then call the institution yourself. One extra phone call could save you a lot of trouble and money.
Stay off the Pharm – While phishing enables thieves to pilfer information from you, pharming is another kind of scam that consists of hijacking your computer and stealing your personal information. A pharming site is designed to look just like the website you're trying to visit. However, enter your information on this fake site and not only can it track your moves within it, it may also direct your computer to give up other personal information at a later time. Be sure you are visiting the correct site, that the address in the navigation bar is correct before entering any information.
Return to Sender – Some scammers simply fill out a change of address form and divert your mail to another location. Others simply steal the mail they want right from your mailbox. The key to avoiding this scam is to know your statement delivery dates and pay close attention to any unusual delays in delivery. A lot of identity thieves do things the old-fashioned way: They rummage through your trash to collect your information that way. Be sure to shred any junk mail or other documents that may contain your personal information before you throw it away.
Opt-out of Special Offers – Visit www.optoutprescreen.com to cut down on the pre-approved offers from credit card and insurance companies. It's also good idea to have your clients opt out as well, especially if they're thinking about buying a home. When people apply for a mortgage, they often become "trigger leads" to the credit bureau, who sell your clients' information to any number of companies. It only takes a few minutes to opt out, but it could spare your clients a ton of junk mail and could possibly save them from identity theft.
Conduct a Credit Check-up – Visit www.annualcreditreport.com to obtain a free credit report every 12 months. Review all three of your credit reports and look for any suspicious activity, unusual or inaccurate names or addresses, or any inquiries that were done without your knowledge. In many states, you may place a 90-day "Fraud Alert" on your credit report, which further restricts access to your credit information. Simply call one of the three main credit bureaus to activate the alert. Here are the toll-free numbers: Equifax 1-800-525-6285; Experian® 1-888-397-3742; or TransUnion® 1-800-680-7289.
Don't Give It Up – Avoid falling prey to phishing scams, both over phone and through email. In a phishing scam, identity thieves pretend to be someone from your bank or a credit institution and simply ask you for your personal information. If someone contacts you and requests any personal information, don't give it to them. Verify who is requesting the data and why, and then call the institution yourself. One extra phone call could save you a lot of trouble and money.
Stay off the Pharm – While phishing enables thieves to pilfer information from you, pharming is another kind of scam that consists of hijacking your computer and stealing your personal information. A pharming site is designed to look just like the website you're trying to visit. However, enter your information on this fake site and not only can it track your moves within it, it may also direct your computer to give up other personal information at a later time. Be sure you are visiting the correct site, that the address in the navigation bar is correct before entering any information.
Return to Sender – Some scammers simply fill out a change of address form and divert your mail to another location. Others simply steal the mail they want right from your mailbox. The key to avoiding this scam is to know your statement delivery dates and pay close attention to any unusual delays in delivery. A lot of identity thieves do things the old-fashioned way: They rummage through your trash to collect your information that way. Be sure to shred any junk mail or other documents that may contain your personal information before you throw it away.
Opt-out of Special Offers – Visit www.optoutprescreen.com to cut down on the pre-approved offers from credit card and insurance companies. It's also good idea to have your clients opt out as well, especially if they're thinking about buying a home. When people apply for a mortgage, they often become "trigger leads" to the credit bureau, who sell your clients' information to any number of companies. It only takes a few minutes to opt out, but it could spare your clients a ton of junk mail and could possibly save them from identity theft.
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