Monthly Archives: December 2009

Santa’s Workshop: A Kids and Money Lesson Even Adults Could Benefit From

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Last week my kids participated in a unique budgeting exercise at their school, carefully disguised as a Santa’s Workshop. The idea was the kids were to visit the workshop a few days in advance of its official opening to develop a shopping list for friends and family, along with a Christmas shopping budget.

Our daughter came home with a pretty good estimate of what she’d need to complete her shopping. $32, to be exact. Most impressive? That included gifts for five or six family members – even her little brother! We negotiated a small advance allowance along with a few extra chores to work on over the weekend and handed over some of the shopping cash.

That morning, the kids were allowed to visit Santa’s Workshop before classes started and were allowed to select a number of gifts up to their budgeted amount – not a penny more. Imagine if we shopped under such strict guidelines. Spend the cash you have available for Christmas and leave the store. No credit cards; no layaways; no 90 days same as cash.

As parents, we don’t have to wait for Santa’s Workshop to teach these same lessons. Rather than buying gifts for your kids to give to siblings and friends, give them a budget and allow them to do their own shopping (with your assistance, of course). Here are a few ideas to reinforce with kids around the Christmas shopping season:

  • Start saving for Christmas way before the decorations are going up. We save for Christmas all year around, in a dedicated online savings account at ING Direct. Simply divide your annual Christmas budget by 12 months and move that amount to savings. The ultimate budgeting challenge for kids would be for them to set aside a little allowance each month throughout the year for this very purpose.
  • Have a list, check it twice!  Whether you are shopping for groceries or toys for kids, it’s always a good idea to have a list. Stick close to the list and you improve your chances of staying close to your budget.
  • We don’t shop with money we don’t have. In my roundup post the other day I mentioned seeing customers in front of me charging Christmas presents on credit cards. My daughter is also old enough to notice this, and often gives me a knowing look when we witness it together. Remind your kids that buying stuff on credit cards is a bad idea, because you usually wind up spending more up front, and paying more for each item when interest charges are tacked on.
  • Don’t forget giving. We do not give gifts with the anticipation we will receive them. To reinforce this idea, have your kids give a little of their own money to a cause they are interested in, or a local church or shelter. The more personal, the better.

We’re In Debt: $150,679 In Debt, To Be Exact

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This article was originally posted by Chris, a contributor at Your Money Relationship, in July. We are reposting it here so that you can learn his family’s story. Chris will be contributing to Frugal Dad on a weekly basis sharing his struggles with debt.

Let me introduce myself. My name is Chris and I am a twenty-something male married to an amazing twenty-something woman. I work in the health care industry and my wife works in education. We currently live in northern New Jersey and have a combined income right around $90,000. Over the past few years, we have racked up an astonishing amount of debt. Granted, most of the debt is in student loans but that is no excuse for our lack of sound financial discipline.

Here is how our debt breaks down:

  • His Car Loan: $7,279.19
  • Her Car Loan: $8,673.10
  • His Student Loan: $66,070.88
  • Her Student Loan: $48,763.88
  • Best Buy Credit Card: $1,468.90 (0% until August 2010)
  • Personal Loan: $1,922.68

GRAND TOTAL: $150,679 (I updated our debt numbers at the end of October and will be doing it again for November soon)

The car loans are at pretty low rates because they are at our credit union. If I had to guess, I would say that our cars are worth a little bit more than we owe on them. The student loans are also at very good rates. About $40,000 of the loans are private loans. Since general interest rates are low right now, they are too. The personal loan is also at our credit union and it is at 12.9%. That is our highest interest rate on our debt.

The loan that bothers us the most is the family loan. A family member offered to pay off our credit cards as long as we agreed to pay them back. It just makes us feel bad that we owe them this money and we cannot wait to pay it off.

So, there you have it. Our debt story is unique but I can imagine that there are people out there in the same type of position we are. We look forward to giving you an inside look into our struggles with debt and how it affects our lives.

From Frugal Dad: I’m looking forward to Chris’ contributions here. We both agreed the timing was perfect since the Frugal family recently completed our journey out of debt, to highlight another family going through the same challenges. I can’t wait to watch those debt balances fall (especially the credit card debt and personal loans) as Chris and his wife dedicate themselves to a frugal lifestyle. It takes a lot of guts to admit that number, even on a blog, and I know readers will appreciate Chris’ candor.

Weekly Roundup: Christmas Spending Edition

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Recession? What recession? I avoided the stores on Black Friday, but did venture out later in the weekend looking for a few deals. And the stores were absolutely packed. I know local economies vary significantly across the country, but I was a bit surprised to see all the shoppers out.

My surprise ended when I hit the checkout line. The plastic was flying. Of course, these days it’s hard to tell the difference between debit cards and credit cards, but the person in front of me used a Discover on about $600 worth of electronic goodies. Made me wonder if she had the $600 to pay off the bill when it arrived.

Which brings me to the larger question: Is all this positive spending really just Americans running their credit card balances back up, and our savings rates down? And so it goes, it seems, in the land of conspicuous consumption.

The Frugal Roundup

Stop Procrastinating and Start Kicking Butt. Need a swift kick in the butt? Try out these great tips. (@My Super-Charged Life)

What’s On Your Financial Dashboard? Having all of your financial information in one place makes a lot of sense. (@The Wisdom Journal)

6 Mistakes of New Earners and How to Fix Them. Most of us can relate to these early career financial mistakes. (@My Dollar Plan)

Making Buyers. Here is a quick lesson on the powers of advertising. If you leave your kid if front of the TV, they are going to walk away wanting something. (@The Simple Dollar)

Best of the Rest

Sears-Kmart $50 Gift Card Giveaway: Two Chances To Win

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This contest is now closed. Congratulations to the winners, Lara (comment #67) and Tricia (comment #180)!

Sears and Kmart are offering FrugalDad.com readers the opportunity to win a $50 gift card, redeemable at Sears, sears.com, Kmart, kmart.com, Lands End, and landsend.com, among others. With the various store options, you’ll find a wide variety of brands to choose from, which most single-retailer gift cards don’t provide.

HolidayGiftCard

They were even nice enough to toss in a $200 gift card for the Frugal family, for us to do a little shopping at a local Kmart or Sears store. We decided to check out Kmart with Christmas lists in hand. Here’s a sampling of the items we picked out using our gift card:

  • Craftsman magnetic bowl (great for holding nuts, bolts and washers when putting together Santa’s toys)
  • Towel rack for our bathroom (ours got a little beat up in our recent move)
  • Up on DVD (for our next frugal family fun night)
  • Monsters vs Aliens DVD
  • Troop Beverly Hills DVD
  • Soccer Mom DVD
  • A couple Christmas ornaments
  • Chess board (my daughter is learning the game)
  • Christmas tree skirt
  • 8 qt. stainless steel mixing bowl
  • Paula Deen cooking utensils
  • 2 Mylar emergency blankets (for the car emergency kits we’re putting together)
  • 3-pack Trident gum
  • Pocket knife (every frugal person should have a small pocket knife on them)

Whew! And after all that, I still have $15-$20 to head to Sears and pick up a tool I’ve been needing. I know, enough about my shopping spree. You are ready to learn how to win your own $50 gift card, right?

How To Enter

Entering is simple. Leave a comment here sharing your favorite holiday tradition. Maybe it’s a Thanksgiving Day family football game, or opening one present on Christmas Eve (my mom used to let me do this). Your tradition counts as your entry. if you are short on traditions, tell us one you’d like to start, or one you enjoyed growing up.

When the contest closes this Saturday night at 11:59pm EST, I’ll use random.org to select two winners who will receive a $50 Sears/Kmart gift card.

Again, the contest closes this Saturday, December 5th at 11:59pm EST. Get your comments in now, and be sure to leave a valid email address where indicated so I can notify you if you are one of the lucky winners. Good luck!

Money School for Couples – Product Interview with Neal Frankle

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Neal over at Wealth Pilgrim has been a regular guest contributor to Frugal Dad.  He came out with an unusual e-product yesterday.  I found it interesting and wanted to learn more.  In the following post, I asked him several questions about his new project.

Neal, what is Money School for Couples?

It’s a series of 10 videos, exercises, downloads and white papers to help couples make money a non-issue in their relationship.

Why did you create it?

Over the last 25 years advising clients, I’ve seen so many people worry and fight about money when they really didn’t have to.  That’s a real shame if you ask me.

You had it pretty rough financially and emotionally growing up.  Did that have any impact on this project?

Probably….but not consciously.  I grew up in total financial fear. Both my parents passed away when I was in high school and I was homeless for a short time.  Even when I started having financial success, I stayed stuck in fear.  I made myself, my wife and my children absolutely miserable. In my case, having money didn’t solve any of my problems….it just changed them.

Those experiences remind me to be grateful for all the great gifts I have in my life. Do I need money?  Yes.  But I have to stay balanced.  Working for money has a cost too.  So if I spend and work wisely, I can have a great life.  It’s not just about spending.  It’s not just about making lots of money either.

I think it’s easy to lose sight of our gifts and sometimes, money really gets in the way of having a full and happy life.  At least that’s been my experience.  It’s about balance.

Why do couples argue about money?

One third of the problem is caused by not really understanding how money works.  How to budget, spend, get out of debt, save etc.  This is simply an issue of understanding. When one or both people fail to understand how money works it often leads to huge mistakes and arguments.

Another third of the problem is caused by not being on the same page with each other. This is a communication issue.

The final third is caused by not taking action.  Lots of people know what to do but for some reason they just don’t do it.

Neal, with all due respect, there are plenty of books that address each of these issues.  What makes Money School different?

I think there are three main differences.  First, I present the material in several 5 to 10 minute videos that are designed to be watched by the couple together.  It’s one thing to throw a book at your husband and tell him to read it.  It’s quite another to sit down together and go through the material.  In fact, the very first video has the couple give each other a signed commitment to work through all the exercises together.  What book does that?

The second difference is that each module has exercises which are designed to get the couple into action and on the right path moving forward.

The last difference is that Money School for Couples recognizes that folks often know what to do and still don’t get it done.  The program offers solutions for those problems too.

In short, it’s the only program I know of which deals with all three obstacles – and you have to deal with all three if you want to really make progress.

Can you give me an example of a couple who might benefit?

Sure.  In fact, I wrote about this couple on Wealth Pilgrim not long ago.  They are in their 30’s.  The husband is very tight-fisted and his wife is miserable. He wants to save everything he can for retirement. His wife also wants to save for the future but wants to enjoy life today too.  What they need is balance.  They can fight all they want…they’ll never convince the other who is right and who is wrong.

Money School will show them how much they need to save to achieve their goals and how much they can comfortably spend.  The program will allow them to learn together and come to joint decisions.  This is a perfect example of who this program is designed for.

I read in your blog yesterday that you had some real ambivalence about introducing this product to your readers…why?

Right.  I was really concerned about sending a marketing e-mail to my subscribers.  They never signed up for that so I just couldn’t send them one.  That’s why I’ve opened up the pre-launch program for anyone this week. I wrote about the product on my blog and anyone who is interested can take advantage of the pre-launch price this week. That goes or Frugal Dad readers too.

It’s also a bit weird for me to sell anything on my blog or through the internet.  I’ve never done that before and I just had no idea how people would react to it.  In the end, I just decided to do it but be as transparent as possible.  We’ll see what happens.

Thanks Neal.  Good luck with Money School for Couples!