Monthly Archives: December 2010

Weekly Roundup – Facebook Tips Edition

Posted on by  at  10:09 am
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This week, I began sharing a few money tips on the Frugal Dad Facebook page, along with other links I find interesting outside of the weekly roundup collection. If you are on Facebook, but haven’t yet joined us there, I encourage you to follow us.

If you’re wondering what to get me for Christmas this year, sharing a few of these tips with fellow Facebook friends to help spread the message would make for a nice stocking stuffer!

The Frugal Roundup

It’s tough to measure financial progress, particularly the progress of others. Those with the most toys often have the most debt, and those with huge incomes often spend most of it each month.

This is a good description of what peer to peer lending is and how it works. I’m a big fan of Lending Club, and have managed a 10.85% net annualized return on my investments there. Take that crappy savings rates!

With the kids out of school over the holidays, it would be a fun time to host a holiday cookie swap!

There is a frightening possibility that you could be legally forced to pay someone’s bills, someone other than your spouse. Yes, this is for real.

The Digerati Life shares 5 ways to deal with holiday stress and Christmas blues, two things I’ve been struggling with myself this year.

With all the hype about Christmas shopping, it’s easy to forget the real reason we celebrate. To help get closer to that memory, remember to give to charity this holiday season.

As 2010 draws to a close, it’s time to start thinking about taxes – here are some year-end tax deductions you don’t want to overlook.

Health care costs are on the rise. This post details how a Health Savings Account can help you save money.

A nice collection of real, practical, non-spammy ideas for making extra money from home – jobs for stay-at-home-moms (and dads).

Best of the Rest

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What to Tell Your Kids About Money Before They Leave for College

Posted on by  at  5:00 am
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This guest article was written by SuretyBonds.com as a part of their Surety Bond Education Program. SuretyBonds.com is an agency that issues surety bonds in all 50 states. The agency works to provide both consumers and professionals tips for achieving financial success whether at work or at home.

Your kids are moving out of the house to strike out on their own, and you’re understandably apprehensive about the situation for a number of reasons. We all know that some are more financially independent than others, but no matter how responsible they have been so far, there are a few things they need to understand about managing money—whether it’s theirs or yours.

Student Loans

While the temporary non-accruing interest can be appealing for students looking for some extra spending cash, insist that they borrow only what they absolutely need.

Maxing out non-interest bearing student loans may be an easy way to access additional funds immediately, but getting into this habit can mean your student might be paying back $100,000 or more in loans over a 20 year period once the interest starts to kick in.

Credit Cards

Tell your student not to worry about keeping up with the Jones’. They’re probably going to meet a lot of people their age who have a lot more money than they do, and that’s fine. That’s how the world works.

There’s a time and place for being flashy and making excessive purchases, and that time comes when you’ve established yourself as a successful professional who makes a consistent income—not when you’re in debt and unemployed.

The credit card situation becomes more complicated when you throw in the unemployment factor. Some students may not be able to hold jobs during college due to the nature of their studies (such as those who study law or aspire to get into a top medical program).

You’ll need to discuss the reality of whether it’s acceptable to get into debt now with the intention of paying off debt once a high-paying career has been established.

Paying Bills

Tuition. Rent. Utilities. Cable. Insurance. And of course potential student loans and credit card bills. You’ll want to be on the same page with your student about who is paying for what before they leave.

Maybe you’ll pay for tuition and rent, but they have to earn their own spending money. Or maybe you’ll give them a set monthly allowance for them to use as necessary and require them to come up with supplemental funds.

Prioritizing and Budgeting

How students choose to spend their money in college can affect the way they view money for the rest of their lives. When shopping, advise your student to ask themselves whether they actually need an item. If they think they need it, ask them to consider whether they could live without it.

Although they probably wouldn’t want to, asking these simple questions when shopping—even if it’s just for groceries—can be beneficial.

Another spending trend among college students—and many Americans, for that matter—is to overindulge within the few days of getting paid. This can lead to a lack of funds for the rest of the month, which can be uncomfortable to say the least. Introduce them to the concept of a no-spend weekend to help their limited funds last longer.

Saving and Investing

Nobody likes living paycheck to paycheck, and getting into this habit is especially easy during the college years when so many students are more concerned about having a good time than planning for the future.

Even though saving during such a financially restricting time might seem out of the question for your student, remind them that even saving a little is better than nothing at all.

Encourage them to get a summer job and then help them invest some of the money in low-risk options that allow them to access their money should they need it.

Should I Use a Debit Card or Credit Card?

Posted on by  at  5:00 am
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It’s time to talk to the man in the mirror: are you a credit card or a debit card type of guy (or gal)? Using plastic for transactions is inevitable in this day and age, so it’s important to take a hard look at your financial habits and make sure you are using the right type of card for your purchases.

Debit Cards—The Pros

A debit card withdraws funds directly from your bank account, which encourages responsible spending. You see your ledger account balance declining with each purchase, which offers an accurate (or sobering) picture of your spending habits.

Debit Cards—The Cons

If you do not keep a weather eye on your balance, you might overdraw your account. Most banks offer “overdraft protection” for debit card accounts, but this “protection” might come laden with interest charges and onerous fees. Be sure to read the fine print on your debit card agreement so you are aware of the bank’s policies on overdrafts.

Credit Cards—The Pros

If you are responsible in your use of credit cards—which means spending within your means and paying off credit cards completely each month—they can be better than debit cards in a few ways.

First, a credit card allows you to spend money you don’t have. I know this may sound like a slippery slope…but within reason, it’s justifiable. For example, if a major appliance is on sale early in the month, but you won’t be paid until the 15th, you can take advantage of the sale by using the bank’s money for the purchase. As long as you intend to pay off the balance at the end of the month, you come out ahead.

Second, many credit cards have great rewards programs. You can funnel all your expenses through your credit card, amassing loads of points that can be used for airline travel, free hotel stays, discount programs, or cash-back plans. As long as you still pay off your bill at the end of the month, you reap the rewards without losing anything.

Note, some excellect reward debit card programs are cropping up now, too.

Third, credit cards offer superior consumer protection. If your credit card is stolen, in most instances you will not be held responsible for the charges, save the first $50 (most issuers don’t even charge customers for this).

Read more on what to do if your credit card is stolen.

If you have a dispute with a vendor, the credit card company can withhold payment and mediate the complaint. This service is backed by Federal law, which empowers the credit card holder. Don’t recognize charges on your current credit card statement – here’s how to dispute a credit card charge.

When renting a car, many credit cards offer coverage for collision, loss of use, and towing charges. This can save you a bundle on car rental fees—just be sure to review the credit card company’s policy before declining or buying rental car insurance.

Credit Cards—The Cons

We are all familiar with stories of individuals and families struggling to overcome crushing credit card debt. We piled up a bit of debt ourselves a few years ago on excessive shopping, school tuition and related expenses.Fortunately, we kept our noses to the grindstone for a couple years and paid off our credit card and school debt.

Used irresponsibly, a credit card can blow up in your face like a personal finance grenade. Credit cards with high interest rates can turn inflate the costs of your purchases significantly as you pay for them over an extended period.

Be aware that credit card companies can raise your interest rate after your card has been issued. This practice has been reigned in somewhat by legislation enacted in mid-2010, but if you are late or miss a payment, the card issuer still has the ability to sock it to you. Check your monthly statements carefully to make sure your rate has not changed.

Self-Awareness Is the Key

Take an honest assessment of your spending habits, and then determine which card is best for you. In many cases a combination of credit and debit cards is the wisest choice, to maximize the benefits of each.

Do You Still Send Out Christmas Cards?

Posted on by  at  5:00 am
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We have slacked off the last couple years and not sent out Christmas cards. This year, we’re trying to sit down and send them out proactively to friends and family, rather than only responding to ones we’ve received.

I got to thinking – do less people send out Christmas cards than used to?

The Frugal Roundup

Still think it is impossible to buy a home without a mortgage? You may have to get a little creative, but as the article points out, it can be done.

It’s very obvious from this post that Leo is against buying Christmas presents, but he certainly isn’t against celebrating the true meaning of Christmas.

We often focus on the frugal-friendly side of the income vs expenses equation, but J.D. reminds us that income is important when determining your cash flow.

Trent offers a good suggestion to bank some low cost meals by making extra batches of your favorite foods when ingredients are on sale.

Reminds me of the often misused phrase, “Money is the root of all evil.” It’s the “love” of money that is, in fact, evil. As the post on loving money mentions, this love can never be satisfied.

It’s not too late to claim energy efficient home improvement tax credits – Some home improvements can net you a tax break but you have to hurry in order to save on your 2010 taxes.

Who would have thought work wasn’t the place to get work done (video). Actually, I think it makes perfect sense, and explains why we are all more productive when no one else is in the office.

Best of the Rest

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Holiday Safety Tips for Home and Away

Posted on by  at  5:00 am
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The Christmas holiday season is one of the most anticipated times of the year. Unfortunately, criminals also look forward to the season as more people are out shopping and leaving their homes unattended during holiday travel. Combine this season of opportunity with yet another holiday in a bad economy, and crime rates for things such as burglary, theft by snatching, etc. are particularly high.

Here are several holiday safety tips to protect you and yours this holiday season, and into the new year.

Safety Tips Around the House

Before traveling, contact your local law enforcement agency and ask to have your home placed on “vacation watch.” Most municipalities offer this service. The nearest patrol officer will ride by your home for a safety check once during their shift. Be sure to notify authorities when you have returned. Note, please do not call 911 to discuss this service. A non-emergency number should be listed in your phone book.

Try to make your house look lived in while you are away. Consider picking up some inexpensive timers for lights and radios, and have them come on at times when you are normally home. I even suggest staggering the timers so that living room lights come on and off early in the evening and bedroom lights come on later. This is consistent with most schedules, but adapt it to fit your family’s routine.

Ask a friend or neighbor to pick up your mail. And while they’re at it, maybe your newspaper and garbage can, too (if you left it by the curb). It is possible to have your mail and paper delivery held, but doing do may just be another tip off that you are away. Don’t forget your neighbor’s act of kindness when shopping for souvenirs.

Do not broadcast your plans to everyone. You may be proud that you are taking your family on a week-long cruise over the holidays, but don’t brag too much. You never know who might be taking note of your travel plans. Don’t mention your trip on Facebook or Twitter until you have returned. Ask kids not to discuss holiday travel plans at school.

Leave a spare key and emergency telephone number with a trusted neighbor or friend. In an emergency it may be necessary for someone to enter your home (water heater leak, etc.), so it is a good idea to leave a key with someone local.

Pay someone to rake up leaves and/or blow off your drive way. Tall grass in the summer and down leaves in the winter are a sure sign of an unoccupied house.

Silence the ringer on your home telephone. One trick of the criminal trade is to stake out a house and call the phone number. If the phone rings and rings with no answer it is a safe bet no one is home. If the phone doesn’t ring at all, crooks may suspect they are dialing the wrong number, or someone is home and using the phone. Do not mention your travel plans on voicemail or answering machines.

Remove garage door openers from cars parked in the driveway. It is a good idea to leave a second car parked in the driveway, but be sure to remove the garage door opener. Burglars can easily bust out a window and open your garage with the click of a button.

Lock garage entry doors. If you live in a home with an attached garage, lock the door from the garage to the home when leaving for Christmas vacation. Garage doors have been known to malfunction, or be manually forced up, allowing access to your home.

Trim shrubbery and trees close to your home. Overgrown shrubs provide the perfect cover for a burglar working to pry open a window.

Do not leave remnants of Christmas morning by the curb. Large appliance boxes and containers are a sign Santa was really good to someone in the neighborhood! They are also a sign to thieves that the house just got a new plasma television for Christmas. Break down boxes and put them in cans or black garbage bags to conceal the products that were inside them.

Holiday Shopping Safety Tips

Use the buddy system. It is always a good idea to shop in pairs as thieves are less likely to target two or more individuals.

Lock your gifts in the trunk. An electronics store bag filled with goodies sitting on the back seat in plain view is tempting for a smash-and-grab burglar.

If shopping at an outdoor mall or outlet stores, consider moving your car when you drop off presents. No one likes to lug around too many items from store to store, so most people return to their cars several times to drop off purchases and resume shopping. When you do this, consider moving your car a few lanes away. Thieves like to stake out parking lots for people leaving purchases in their car and returning to stores. If they see you get in and drive away they will likely assume your shopping trip is over and look for another target.

Don’t flash your cash. I love to see others shopping with cash instead of plastic, but I don’t like to see their entire wad of cash when paying for a $15 DVD at the electronics store. Remember, others are watching. Leave your cash envelope locked in the glove box of your car and only take into the store what’s necessary, or keep some cash in your pocket and the rest in your wallet, so you don’t have to show your entire hand at the register.

Ask for a security guard escort. If you approach your car and see an unsavory character staked out nearby, return to the store and ask for someone to walk you to your car. Most store security personnel are used to this, so there is no need to feel embarrassed. Besides, better to be safe than sorry!

Keep credit and debit cards close. One of the most popular forms of counterfeit credit card fraud is to swipe a credit card in a “dummy” reader to capture the magnetic strip information before swiping in a legitimate card reader. A counterfeit card is then produced offsite using this electronic data, and before you know it, you are shopping the streets of Thailand while the real you is home in Nebraska. This is much easier to pull off if you hand your card over to a restaurant server, or a clerk who has to “go to the back” to run the charge. Consider using cash, and if using cards, alert your credit card company to any suspicious behavior by merchants.

Have keys ready, and don’t take your time getting in your car. There is nothing I hate to see more than a single woman approaching her car while digging through a purse for her keys. With her head down and her attention diverted she is such an easy target. Find your keys before you leave the store and have them in hand. Walk quickly and confidently to your vehicle, and unlock, enter and lock the doors in quick fashion. Once safely inside you can verify receipts, store your purse, etc.

Park in well-lit areas. If you know you will be shopping for a long time, anticipate coming out into a dark parking lot and look for light poles to park under. Besides providing light, light poles also serve as a reference point in a crowded parking lot to remind you where you parked your car.

Parents, park next to the shopping cart return area. When you are finished shopping it is nice to put Junior in the car seat and return the shopping cart one lane away, rather than walking fifty feet away with Junior alone in the car, or you toting him and three bags of groceries.

These are just a few things to keep in mind while out and about this holiday shopping season. Actually, they are good tips for any time of the year, but especially during times when criminal activity is high.

Have any additional holiday safety tips to share?