Monthly Archives: May 2011

Book Lending Options for Bibliophiles and Cheapskates

Posted on by  at  6:00 pm
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Last year, a friend of mine gave me an e-book reader, specifically a Nook from Barnes & Noble. I had been coveting Kindles and Nooks for quite a while, but was too cheap to spring for one. When I got one, I was delighted, but also dismayed at the high cost of e-books.

Unless Aesop’s Fables is your idea of a ripping good read, you will have to pay through the nose for electronic reading matter. Luckily there are a few ways to cut costs on electronic books.

Sharing e-books with Friends

Since my sister also has a Nook, I started looking into the book-sharing feature offered by Barnes & Noble. Lending books is the last thing that Amazon and Barnes & Noble want to promote, so they do it very grudgingly and with cumbersome restrictions.

Some books purchased from Barnes and Noble are categorized as “Lend Me” books. These books can be lent to another Nook user by logging onto the BN website and accessing the “My Nook Library” page. From there, it’s a few simple steps to lend a book to another user by entering their email address.

Easy enough, but books can only be lent once, and only for a 14-day stretch, with no option to extend. During the loan interval, the owner cannot access the book.

The Kindle lending process is essentially identical. Both Nook and Kindle apps are now available for iPad, iTouch, iPhone, Android, PC and Mac, meaning that you can also lend books to friends who don’t own a dedicated e-book reader.

Sharing e-books with Strangers

If you don’t have friend to swap with, don’t despair. You can tap into communities of readers looking to lower costs by sharing books on free sites such as ebookfling.com, booklending.com, lendink.com, and lendle.me.

There are also many book-sharing groups on Facebook. These sites connect lenders and borrowers and can reduce your book expenses by giving you temporary access to one free book for every “lendable” book in your e-library.

When sharing books with strangers, you will have to provide an email address in order to complete the trade. On the sites mentioned above, you can use an email address other than your Nook/Amazon email address for the transaction. It’s a good idea to set up a separate email address strictly for swapping purposes, as an added layer of protection against spam or fraud.

Sharing Printed Books

I know the writing is probably on the wall for traditional printed books, but I admit that I love the feel of the printed page, the heft of a good book, the smell of a musty tome. If, like me, you can’t completely let go of the printed page, then there are still some innovative cost-saving programs for the swapping of printed books.

The site booksfree.com has been around for quite a while, and is a Netflix-type book-lending program. Users add titles they are interested in to a queue the site sends you one, two or more books at a time depending on your plan. Books are mailed to your home and are returned using a postage-paid plastic envelope. There is no time limit or late fees, but they don’t send new selections until you return the old ones. Subscribers can even send in their own old books and accrue credits on their account.

The only downside is that the titles are mainly popular fiction; you won’t find deep repositories of history, literature, biography, and the like using this service. The least expensive plan ($14.49) allows users to check out two books at a time with unlimited rentals. This means that the faster you read, the more books you can rent per month. For voracious readers, this can result in big savings.

Bookmooch.com is a website that shuffles books between owners. This free service is based on a points system. Users post lists of books and accrue points by giving these books away to other users. The accumulated points allow users to request books from other members. The upsides of this site are that it gives a bonus for books sent internationally and has many foreign-language titles available. The downside is that you will incur postal charges for the books you send to other bibliophiles.

Bookcrossing.com is a cross between a book-lending site and a kooky sociology experiment, and was called “a modern-day message in a bottle,” by the San Francisco Chronicle. Users label books with unique IDs and then share them via a system dubbed “catch and release.”

The first step is to label a book with a Bookcrossing.com ID, then give it away to a “friend, a stranger, a strange friend, or a friendly stranger,” as the site says. Books can be lent to other users looking for a specific title (a “controlled release”) or be left on a park bench or in a coffee shop for a stranger to pick up (a “wild release”). The person who “catches” the book, can log onto the site and post and update on its whereabouts. Bookcrossing.com currently boasts over 7 million books floating around in 130 different countries.

Tapping into the Motherlode

Of course the public library is the most obvious resource for the frugal book addict, but if you live in place with an anemic or distant library, or worse, no library at all—like I do—then the options above can be lifesavers.

A huge boon for Kindle owners is also on the horizon: Amazon has plans to roll out a new feature called Library Lending later this year. Kindle owners (all generations) will be able to check out e-books from more than 11,000 libraries in the United States. That should be enough free nightstand material to keep even the most avid reader happy.

This article was written by contributing author Laurel Gray.

Why We Plan to Pay for Our Kids’ College Education

Posted on by  at  2:48 pm
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Over the years, my opinion on college funding has shifted a bit. I used to be of the opinion that kids should be responsible for paying for their own college education. After all, I paid for most of mine, and I was one of those parents that thought, “If I can work my way through school, then so can my kids.”

Well, that stance has softened a bit over the years, for a variety of reasons. The student loan industry itself has a lot to do with the way I feel, but the majority of my shift has been in the way I view the education of my children, both in a formal setting and through informal learning at home.

Our College Experience

My wife and I both struggled in college to meet financial obligations. I turned to student loans to finance my tuition, and after returning to school years later, I turned to Visa. My wife shared a similar experience, often struggling to cover rent and living expenses while in school.

My first year or so of college was pretty well covered by my mom, who somehow managed to carve out tuition, and room and board out of her own household bills. I worked part-time at a local fast food restaurant, then a vitamin store, and finally a sports retail store in the local mall. I spent the summer after my freshman year working for a landscaper – mowing lawns and digging trenches for in-ground sprinkler installation.

It was tough working and going to school – no doubt about it. I remember one particularly bad time during a winter quarter when the old car I took to college quit running and I had to walk to work off campus, at night, in the cold, and yes, it was uphill in both directions (or so it seemed)!

I spent much of that time feeling sorry for myself, which did little to help the situation. Of course, later I realized it was a good experience. The part-time work covered my groceries and incidentals, and Discover covered the rest, since they were nice enough to give me a credit card application at a football game in exchange for a free t-shirt.

Those student loans, and the college credit card debt, haunted me for much of my early 20s, but I had nowhere near the average student loan debt most college graduates have these days (around $25,000, according to the latest figures). In fact, total outstanding student loan debt now exceeds credit card debt.

The Gift of Education

I don’t believe college education is a right, and I do not believe my kids are entitled to a college degree. For that reason, I choose to consider it a “gift.” I’m not loaning the money to my kids, and I’m not asking them to take out loans. I’m not asking them to go into debt, either to me or the federal government.

We are gifting our kids money that we will have set aside their first 18 years of life for the purpose of obtaining an education in a field they are passionate about first, and will support their lifestyle, second.

That’s not to say they won’t have some skin in the game. They will be expected to work during the summer for their own spending money, and they will be expected to pay for certain items as high school students, either from an allowance and/or part-time work. However, it is my goal to get them through college, should they choose to attend, without accumulating debt.

What If My Kids Don’t Go to College?

If our kids decide instead to learn a trade, or start their own business, or take some other path, we’ll use the money to help there as we can (minus the tax penalty from withdrawing 529 money and it not being used for education).

That might look like investing in a mechanic’s set of tools for my son, or giving my daughter some seed money to start a business, or helping either of them with licensing or specialized training (outside of college) they may require to do what is they love to do. Who knows what that might be.

The Sooner You Start Saving, the Less You Have to Save

I recommend parents start saving for college early. Celebrate the arrival of your baby by opening up a 529 college savings plan and begin investing, even if only small amounts. Grandparents and aunts and uncles can contribute money as well. The longer you have to invest, the less you have to contribute each month.

As kids get older, encourage them to open their own savings account at a local bank, or somewhere like ING Direct, that now offers a savings product specifically for kids at a higher interest rate than most traditional banks.

Introduce kids to the magic of compounding interest. Help them learn the mechanics of banking – checking balances online, reading a statement, completing a deposit slip, and most importantly, balancing a ledger.

I would be remiss if I didn’t mention this final point. Be sure to take care of your own financial needs first. As they say in airline travel, in an emergency you should put on your oxygen mask before helping others with theirs.

Before heavily funding college savings for your kids, be sure you are socking away enough for your own retirement. It’s natural to want to put your kids first, however, if you don’t take care of your financial future you may become a burden on them later. After all, there are no grants or scholarships for retirement.

I’d like to get your comments on the idea of paying for college. How are you planning for the expense in your family? (Note, there is no wrong answer here, as everyone has a unique financial situation and value set).

5 Ways to Raise Money-Smart Kids

Posted on by  at  4:12 pm
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The following guest post is from Kyle James of Rather-Be-Shopping.com. Learn more about Kyle following this post and a sampling of the best coupons from his website.

Have you ever tripped over a pile of toys in your kid’s room? Toys that seem to multiply but yet never really get appreciated or played with very much. Or perhaps cleaned out the minivan only to find a toy under the seat that seemed so important to your daughter at the time you bought it for her, but was quickly discarded for the next best thing? Both of these scenarios happened to me and I knew there had to be a better way.

A better way to teach my three young children the value of money and the proper value of the “stuff” that money buys. One of my biggest concerns, as a Dad, is sending my three kids out into the real world with no money smarts, which leads to a life of zero savings, and worse yet, a life of battling credit card debt. Here are the five things my wife and I did to turn things around in our home.

1. Teach Them To Value Money – A couple years ago, my son really wanted a Nintendo DS. The sticker price of $150 was shocking to me. But I told him, “Sure you can have one, you earn the money and save up, and I will personally take you to the store to buy one.” I then planted the seed of recycling and turning in our cans and bottles for money. He jumped all over it. Not only did he save and sort our recyclables, he also hit up all his grandparents for theirs.

After he had a sizable haul, we would take them down to the recycle station and he would unload them and even sign the receipt. He finally saved up enough money for the Nintendo DS. It was a great experience for him and taught him that money does not just grow on trees. It has to be earned by hard work and dedication.

2. Give An Allowance – My kids are just now getting to the age where they can start earning an allowance by doing chores around the house. This is also a great way to teach the value of an earned dollar.

The psychology of money is amazing to me. I have noticed in my kids that when they earn money they are less likely to waste it on something trivial. They will want to save it in their dresser drawer for something special that equals the value they have put on the money. Whereas if I give them a couple dollars to spend at the store, they will buy some candy or toy that usually ends up on the floor of the minivan.

3. Savings Account – When each of our kids were born, my wife and I opened a savings account for them. We add birthday money and Christmas money from the grandparent to their accounts every year. When the statements come, I make a point of talking to them individually about how much money they have and how much interest they have earned. They get very excited with the news that they have earned $1.75 last month by doing nothing at all.

The idea of saving money for things like college, or their first car, has to be planted early and often. My hope is that it will help to remove the sense of entitlement that is so prevalent with kids today.

Editor’s Note: ING Direct, one of my favorite online banks, recently added a kids savings account offering that may be of interest to parents looking for a safe place to park accumulated allowance money.

4. In Order To Receive, You Must Give – It happened the other day in the car and it gave me goose bumps. My 6 year old daughter was whining about why she could not have some toy. Tired of her whining and without thought or hesitation I quoted Rich Dad, Poor Dad, “If you want something, you first need to give.” Silence. I let that thought just hang in the air for at least 15 seconds. I could see in her eyes through the rear view mirror that her mind was working overtime trying to understand the concept.

This led to a great conversation about giving, whether it be toys you don’t play with to a charity, or time spent teaching your sister how to ride a bike, and how these things will bring you much more in return than you could ever imagine. I then explained that by being generous, people are going to want to be generous to you. By taking time to help someone else, others are going to want to take the time to help you when you are in need.

5. Personal Responsibility – They are responsible for the money they receive from allowance and otherwise. When it’s gone, it’s gone. So I tell them that it’s their responsibly to save it wisely or spend it wisely if that is what they choose to do. And definitely don’t leave it laying around the house or it may end up back in my wallet!

The idea of personal responsibility carries over into other aspects, like “You say you want dessert tonight? OK, well, let’s look around the house and make sure all of your responsibilities are taken care of. Then we can discuss dessert.” You do this enough times and you stay consistent, they will take care of their personal responsibilities long before they come to you asking for something.

Do you have any tips to add when it comes to raising “money smart” kids? I look forward to our comments. Another aspect of being money smart is using coupons when you do make a purchase. Here are some of the better online coupons on my website right now. Thank you Jason for letting me contribute to the Frugal Dad blog.

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About The Author: Kyle James owns and operate a website called Rather-Be-Shopping.com which specializes in online coupon codes for over 700 stores, organized in 25 shopping categories. He also has a blog, where he writes about frugal living tips, creative ways to save money, and other musings about the adventures and mis-adventures of raising 3 active kids.

Foreclosure Activity at 40-Month Low, but No Thanks to a Recovery

Posted on by  at  8:37 pm
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A recent report issued by RealtyTrac® indicates foreclosure activity in the month of April was at its lowest point since December 2007. That might sound like good news, until you dig a little deeper.

The reduction in the number of foreclosures processed is largely due to the increase in the amount of time it takes to foreclose. The same report indicated it took an average of 400 days to foreclose in the first quarter of 2011. That’s up from an average of 340 days during the same period last year.

For some perspective, in 2007, foreclosures took about 151 days.

What does this mean for the housing market and those interested in buying a home? Well, as I’ve said before, I don’t have a crystal ball. However, if I were in the market and could afford to wait a few months to buy, I might consider holding out, unless you think the opportunity is just too good to pass up.

I think we’re going to see a wave of foreclosures hit the market between now and the end of the year. This could be especially true in states such as Massachusetts, New Jersey and Nevada.

Unfortunately for sellers, this probably means home valuations are headed lower again. Simple economics tells us that as supply increases, the price decreases (all other factors being equal, of course). Again, bad news if you are planning to sell, but potentially good news if you are in the market to buy.

Interest Rates

The “X” factor in this discussion is interest rates, which are hovering at around 4.5% for a 30-year mortgage. I believe the Fed has kept rates too low too long in an effort to help a sputtering housing recovery. They know if they raise rates while potential home-buyers are already on the fence, the housing recovery could completely stall.

I recognize it is a delicate balancing act, but I think the pendulum has swung too far for too long.

The benefit of low rates is that borrowing money to buy a home may not be cheaper for a generation. The downside is inflation; as we’ve all experienced at the grocery stores, gas stations and elsewhere over the last several months.

If interest rates begin to move up, as I suspect they will soon, a shaky housing market could cool even further. In a matter of months we could be looking at higher costs to borrow and a wave of new foreclosures hitting the market. Not a good combination for homeowners.

Real Estate Investors

This could make for a good time to buy an investment property, if you are so inclined, and your finances allow it.

In a recent post I discussed the dilemma of being out of debt and wondering how to allocate money to savings, investing, etc.

I’m not much of a market timer, however, I’m also convinced the market is just about maxed out in the near term and may backslide a bit in the coming months (particularly if this housing market gets any uglier).

Instead of piling cash into investments that may soon get the rug pulled out from under them, it might make since to invest in more tangible assets, such as real estate. Now, I have no illusions of fixing and flipping, rather I’d love to find a small property that I could rent out, using the cash flow to pay off the mortgage quickly and enjoy years of rental income.

Even if the house itself appreciates very little over the years, the earnings from renting could make real estate investing a profitable idea. Until the real estate market shakes out, I bet the number of renters increases significantly, increasing the demand for rental properties.

Of course, if you have enough cash, and enough patience (and savvy) you could even look at buying a foreclosure. I signed up for RealyTrac’s service some time ago to monitor the foreclosure properties, and other homes for sale, in my area. It’s a little expensive, but they do offer basic information for free and they have a 7-day free trial to check out their offerings.

If you aren’t up for land-lording, it may also be a good time to look at land – timberland, farmland, etc. Like my grandfather used to say, “They ain’t making any more of it.” I suspect land itself (improved or otherwise) will continue to appreciate more than home values in the near term. And of course with the news of food shortages, farmland has been a very hot commodity in recent months.

In addition to traditional investments such as stocks and bonds, I believe real estate, in some form, should be part of your overall investment mix, along with more conservative investments such as CDs, cash, and gold and silver. You can adjust the mix according to various factors such as your age, risk tolerance, etc.

Debt Free and Happy, but Where to Go from Here?

Posted on by  at  4:27 pm
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I normally like to think of myself as above average in financial intelligence. For the last several years I’ve read dozens of books on personal finance. I’m an avid reader of financial blogs and subscribe to the Wall Street Journal and several finance magazines.

But it has occurred to me lately that I know much less about the larger world of personal finance than I thought I did. At times I feel like a complete novice. I used to think the only thing holding me back was debt. “If I ever reached debt freedom I would become a millionaire in ten years,” I thought.

If only I were debt free. I’d throw caution to the wind; start my own business; invest in hot stocks that I missed out on while paying down debt. The truth is that paying off debt changed very little.

The anxiety I used to feel from the debt cloud hanging over me has been replaced by the anxiety I feel trying to preserve, and grow, what little bit of savings I have managed to pile up since then.

I worry about losing money. I worry about not earning enough money. I worry about losing my job, or getting sick, or being able to provide for my family in an emergency. Sure, those worries are not as intense thanks to debt freedom and an emergency fund, but they are still there.

It’s actually a little depressing. It reminds me of the feeling you had on Christmas morning, when after ripping open the large, red box in the corner, you realize that Santa Claus brought you that toy you have been wanting all year long. It’s euphoric…for a few hours.

By that afternoon you were tired of that new toy, and sad because it would be 364 days until Christmas came around again.

I don’t mean to discourage anyone from paying off debt. I think short of building a basic emergency fund, paying down debt is one of the smartest moves anyone could make right now, given continued economic and job market instability.

However, I also wanted to paint for you a very real picture of what life after debt freedom looks like. It’s not an absence of money worries. The worries just change. In fact, I would argue that certain worries intensify, because you no longer have debt as an excuse to get busy on your goals. I used to say things like,

  • “We’ll start saving for retirement after we get out of debt.”
  • “It would be nice to contribute to the kids’ 529 college savings plans, but we can’t while we are paying off credit cards.”
  • “We will pay cash for our next car, but for now we’ll have to borrow because I can’t save up that much cash AND pay down debt.”

It is almost as if debt became an excuse to acquire more debt, or not save and invest. Once the debt is cleared, you have to purge that thinking from your mindset. And that is hard.

It’s also hard to continue living on a slimmed-down “debt” budget when you no longer have payments. The increase in disposable income forces you to make decisions and engage willpower that wasn’t really required when sending most of your paycheck to banks and credit cards companies (assuming you were faithfully doing this for some time to get out of debt).

I know what you’re thinking. Increased disposable income, yeah, nice problem to have. And it is. But it also tests your willpower in ways it hasn’t been tested in some time. Actually, if you were like me, and in credit card debt as soon as you were old enough to sign up for one, your financial willpower may never have been tested at all.

Maybe this is why some people who pay it off go right back into debt. Or why lottery winners are bankrupt in only a few short years. Or why dieters who lose 100 pounds gain back 110 pounds. It’s because our behaviors never changed. Once the euphoria of reaching our milestone wears off, life begins to happen again. You are tested.

Preparing for Life After Debt

If I had known this ahead of time, I probably would have left some of the same tools in place that I used to keep myself in check while in debt. Instead, we took off all the restraints, and in a couple months found ourselves spending way too much on our credit card (we paid it off every month, but thanks to overspending it caused us to stretch and even dip into savings on one or two occasions). I wasn’t happy, and immediately worried we had returned to our old ways.

Fortunately, we were aware of what was happening and managed to keep the train on the track. These days, we are again focusing our attention on what we spend and trying to reduce that amount each month. We aren’t quite as strict about things as we were when we were in debt, but we make the effort to spend more intentionally.

My anxiety over investments and college savings and emergency planning, etc, etc. has subsided some as well. We’re saving for retirement, adding some to the kids’ college plans, and fortunately, have time to let all the dips and dives in the market work themselves out over the long haul.

We invest conservatively for our age, but it helps me sleep at night – a sacrifice I’ll gladly give up for a couple percentage points in returns.

If you are currently in debt, I hope you are working to pay it off and enjoy a debt-free life. As you move closer to your goal, begin to think about how your life will look once you are back to even.

Create a debt free “dream” budget to imagine how your expenses would look without any payments. Start researching various investment opportunities that might interest you when you have the money to invest in them.

Think back to all the things you wanted to do while still in debt and make plans for those things, too (take vacations, look for a more fulfilling job, donate to a charity that you feel passionate about, or maybe help a friend or family member).

Above all, remember it’s OK to loosen the reigns a bit, just be sure not to completely let them go.