Monthly Archives: December 2009

More Maxed Out Credit Cards

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I’m always sharing my experiences at the store with you, and by now you are probably thinking, “This frugal guy sure spends a lot of time in the store!” I assure you that’s not the case. Rather, when I am occasionally in stores, it seems like something usually happens to trigger a post topic. Tonight’s shopper with a maxed out credit card experience was such an occasion.

So there I was, standing in line at Office Depot with a buy one, get one free set of gift tag stickers and a buy one get one free sample of tissue paper (yes, it is time for teacher gifts at the kids’ school, and guess who didn’t have all the gift bag materials the night before?).

While waiting to buy $4.26 worth of Christmas goodies concealment supplies when the guy ahead of my swipes his card with no luck. He tosses the merchandise back at the store employee and storms out after being told the card was declined. I sort of apologized for him to the young girl, who calmly replied, “No big deal – it’s been happening a lot the last couple weeks. I guess people are just maxed out.” Indeed. And I wonder if we’ll have a problem paying for it, collectively, in the New Year.

The Frugal Roundup

What My Grandparents Taught Me About Money. Steve does a great job at looking back at his family history towards money and comparing it to his beliefs today. (@Brip Blap)

Do You Deserve to Spend? Is It OK to Splurge Even When We Don’t Have the Money? Learn how to fight the urge to splurge. Sometimes you just need to sacrifice things to get ahead financially. (@ Bible Money Matters)

How I Escaped the Rat Race. Check our Bob’s inspiring story about how he went from doing just something to doing something that he loves. (@ Christian Personal Finance)

Is Your Money Distinguishable From Your Parents? Trent shares a story about an old friend with a small income but a large wallet (his parents). (@ The Simple Dollar)

Best of the Rest

Affordable Home Security Techniques

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A couple weeks ago our quiet neighborhood was turned upside down by a burglary in broad daylight. It seems a trio of opportunists broke into the back of a home and were in the process of loading up the content of the house into their car before a neighbor spotted them and notified authorities. It is unknown whether or not the homeowner had a security system, but it was a great reminder for neighbors that this is the time of year when many break-ins occur, which means it is time to consider home security.

Beware of Dog Sign

Cheap Home Security

One of the things that turns many frugal homeowners off from signing up with a security company are home security prices. Plans range from those with cheap, self-installed components to high-end plans with 24/7 monitoring.

Home security plans can certainly be a big deterrent to would-be burglars, but there are several affordable home security measures you can implement to your home safe.

1. Get a dog. Not only do they make a great companion, but dogs also make a great deterrent. As for the type of guard dog, the noisier the better! While a great big attack dog might scare away a prowler, most guys would be just afraid of a loud chiahuaha. In this case it really is the bark, not the bite, that is most important.

2. Avoid putting large boxes by the street around the holidays. This really applies any time of the year, but it is something I see most often around Christmas. People place two or three large boxes from a new plasma screen, a computer, and a stereo system down by the street. Looks pretty inviting to someone driving through the neighborhood looking for a target.

3. Make sure all windows and doors are locked. Sounds like good common sense, but it seems like nearly every crime report you hear says burglars entered through an unlocked window or door, often times on a second story or basement level. Just because the window is difficult to access, don’t assume the bad guys won’t take the time to try it rather than making noise breaking glass or forcing open a door.

4. Consider adding window and door alarms. In terms of affordable home security components, these might be the cheapest things available, and the most effective. All you are really looking for is something to generate a lot of noise. When the seal of a door or window is broken, these alarms squawk a deafening alarm which alerts you, and nearby neighbors, that an alarmed entry point has been breached.

5. Get a gun, learn to use it, and store it safely. So this one isn’t so cheap, but I fully believe in the right to possess a gun in your home. I also believe that gun owners have a responsibility to make sure they know how to use them, they are kept out of the reach of children, and made safe at all times.

Oddly enough, guns are one of the most sought-after items in burglaries, so it makes sense to keep them somewhere safe like in a locked safe bolted to the floor in a closet. Because they must be kept locked up tightly, you may not have time to access them in an emergency, so don’t ignore other home security methods just because you own a gun.


Are We Ever Done?

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The following post is from Neal of WealthPilgrim.com. After reading the article, be sure to sign up for free at Wealth Pilgrim to receive more from Neal. Also, be sure to check out Neal’s free “Holidays Without the Headaches” program for families. Great stuff!

When are you “done” financially?  Are you ever “done”?

When do you kick back, sip lemonade under a shady umbrella and just relax?

I asked myself this question after reading a post by Frugal Dad several weeks ago.

You may remember the post. FD wrote about his family becoming debt free. And he mentioned that his next mission is to work on savings and retirement.  He said that he planned on dealing with these issues with the same fervor that he did debt.

I, along with all the other faithful readers and supporters of FD cheered him on.

But that post really got me thinking.  At certain points of my life, I’ve been convinced that once I accomplish a certain goal, I’ll be able to relax.  But I soon find myself with a new goal and I often approach that new goal with the same intense energy.  I’m convinced that this new goal is mission critical – just like the prior goal.  It creates a lot of stress.

Let me give you a few personal examples:

When I first got married, I was certain that if I could just hold on (financially) long enough until my daughter grew out of diapers, I’d have it made financially.  (Do you know how much Pampers cost?)

Then, when we bought our first home I borrowed money from anyone who could fog a mirror to do it.  I told myself that if I could just repay those people, I’d be in great shape.

Within a few years – I had a different goal.  I wanted to save a certain amount of money in an emergency fund.  I was sure that once I achieved that goal, I’d be satisfied.

Now, the goals are bigger.  But I’ve approached each one along the way with great determination.  I stayed focused-which is good.  But I didn’t relax until my goal was accomplished. And I only enjoyed that relaxed state for a very short period of time.

I think I’ve been way off on this.

The truth is, nobody is really ever really satisfied – and that’s a good thing.

Heck, even Bill Gates and Warren Buffet work full-time.  They probably actually work more than full-time.  Maybe they aren’t trying to acquire more money, success or power for themselves, but they are still striving for something.  Right?

It seems to me that the trick is to enjoy the progress and process rather than focus on the end result.  At least that’s what occurs to me.

I don’t really know how to do this.  I’ve always been “bottom line” focused rather than “process” focused.

I believe now that the only way any of us to be truly happy is to understand that their will always be another hill to climb and we have to learn to focus on doing the best we can and enjoy the process because that’s really all we have.

Am I happier now that I can afford Pampers and I’m out of debt?  Absolutely.  But I just don’t want to tie my peace of mind to achieving yet another financial goal – because it’s a lie.

Do you struggle with this like I do?  How have you come to terms with the long list of goals you have?  Are you waiting to be happy until you’ve checked those off your list or have you found a way to enjoy the journey?

MyFICO Promotional Code

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Over the weekend I completed one of my year-end financial checkup tasks.  I visited MyFICO.com and pulled a current copy of my credit report. This exercise was even easier this year considering the MyFICO promotional code that gives 30% off of their products between now and the end of March (just provide the promotion code “myFICOis9“ when ordering your FICO score report).

I was pleasantly surprised at the bump in my credit score since the last time I checked it. Since paying off all our credit cards, our FICO score has increased about 40 points. It wasn’t bad to start with, but was in the “average” range, and has now moved to “very good.”

Getting our updated credit score was nice, but the real reason I request a credit report at the end of the year (and again in the summer) is to check for any suspicious account activity – new accounts that I didn’t open, balances or personal information that I don’t recognize, etc.

If it has been a while since you last pulled you credit bureau report, I suggest taking advantage of this opportunity offered by MyFICO.com.

How to Save 30% On MyFICO.com Products

1. Visit MyFICO.com

2. Choose “FICO® Standard” in the right sidebar

3. Click the “Buy Now” button

4. Select the credit bureau(s) you’d like to receive a report from

5. Log in or create an account

6. On the “Customer Agreement” page, enter the promotional code “myFICOis9″

7. Verify your discounted order and finalize the purchase.

MyFICO Promotion

Simply click the button above to take advantage of this promotional offer from MyFICO.com.

Roth IRA Withdrawal Rules

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Did you know contributions to a Roth IRA may be withdrawn at any time, without penalty? It’s one of the lesser-known Roth IRA early withdrawal rules. It is also one that I do not plan to take advantage of, but knowing it is there makes maxing out Roth IRA contributions a little easier. Here’s why.

Let’s say you are still working to build a fully-funded emergency fund, but only have one month of expenses. You manage to scrape up a few thousand dollars to save near the end of the year (a bonus, an inheritance, whatever), and would like to open a Roth IRA. If you are like I was, the thought of locking that money away in a retirement account terrified me. What if I have a big emergency two months after I open my Roth, and before my emergency fund is fully funded?

Never fear. If you do have a big emergency soon after contributing to your Roth you can simply withdraw your contributions without penalty. The rules here are different from other tax-deferred retirement savings plans because the money you invest in a Roth has already been taxed. However, the earnings in your Roth IRA have not been taxed, and therefore must be left untouched, unless you meet one of a few exceptions for withdrawing earnings tax and penalty free. Here’s the language from the IRS.gov website, Publication 590, related to making early withdrawals of your contributions from a Roth IRA:

Are Distributions Taxable?

You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s).

So there you have it; straight from the horses mouth. Withdrawals of regular contributions made to your Roth IRA are not counted towards your gross income. Does knowing you can withdraw Roth IRA contributions early without penalty make you more likely to max out your Roth IRA contribution for the current tax year? It did for us. For the first time in our married lives we maxed out my Roth IRA contribution (currently $5,000), as well as my wife’s spousal IRA (another $5,000).

In the event of an emergency larger than our emergency fund could handle, that $10,000 would be available to us (assuming the market doesn’t tank again). And that is something to consider. I would not suggest using a Roth IRA as your only source of emergency funds, because chances are your investments inside the Roth are exposed to more risk than traditional emergency fund savings.

However, Roth IRA funds could certain supplement your emergency savings, or some other savings goal, such as parking money to be used for a down payment on a first home (by the way, this is one of the qualifying events for which you can withdraw Roth IRA earnings tax free, assuming the account is over five years old).

With compound interest being such a close personal finance ally, the sooner you start investing in retirement funds, the better. Remember, you cannot go back and invest in a Roth IRA for previous tax years. It’s now or never. So go ahead and set aside some money in a Roth, and try your best not to withdraw those contributions. But remember Roth IRA withdrawal rules allow withdrawal of contributions, penalty free, if you absolutely need them.