Wednesday, March 5, 2008

Lights...Camera...Money Saving Action!

There's something special about movies. Whether it's a comedy you can relate some awkward moments too, a sci-fi or action adventure movie to escape to another world in, or maybe a drama to get the ol' waterworks going, movies are a great way to unwind, relax, and have some fun. The problem though, is to go out to a theater, you need to either get a second job or perhaps get a third mortgage on the house. A family of four could easily spend $80-$100 for a night at the movies...between tickets, popcorn, candy and drinks.

There is always the home rental end, which while it lacks the "energy" of being in a theater with a crowd, has many benefits. No talking moviegoers, no one kicking the back of your chair, and no stepping on something on the floor you're afraid to look at. Plus, you won't miss anything if you have to head to the toxic wasteland of movie theater restrooms. But, it can get expensive as well, though it is cheap, compared to going to the theater. Our local video store charges about $5 a rental, but you do get to keep it for 5 days, so it comes out to about a buck a day, but still, there has to be a way to save more money. Below, you'll find several options on enjoying the movie experience, while keeping your wallet happy.

The two biggest movie by mail are Netflix and BlockBuster. Both offer plans that allow you to create an online list of movies you want to watch (they also have tv series on DVD), and as those titles are available, they will send you the dvd. there is no late fees or cost for returning...both companies include a postage paid return envelope when you are done. When the movie is returned, they send another one on your list, up to the monthly maximum your plan allows. Netflix has a plan starting at $4.99 a month, but it is only one dvd at a time, with a monthly maximum of 2 dvd's. You also get 2 hours worth of movie watching you can watch on your home computer. They have other plans,where you can get up to 4 dvd's at one time, and have unlimited viewing of movies on your pc. Blockbuster has a plan starting at $3.99, with one dvd out at a time, with a limit of 2 dvd's a month. Other plans allow for more dvd's out at a time, with the benefit of in-store exchanges. Some of the in store exchange plans limit you to a set limit each month, while others allow unlimited exchanges. Just figure out how many movies you watch a month on average, and figure out which plan suits you best. The only real downfalls to the plans are that you get your selections in random you may be in the mood for a comedy, but what you got was a romance. Still, if you watch a lot of movies, it's a great deal to maximize your monthly entertainment allowance.

Next you have Red Box and The New Release. Both are dvd vending machines you can find at your local grocery store, like Wal-Mart or Kroger. Basically, you pick what you want from the touch screen display, then all you do is swipe your debit or credit card, and it dispenses the movie for you. Just return it to the machine whenever. At a cost of only $1 a day, it's hard to beat, especially if you remember to return it the next day. No late fees, and your card doesn't get debited or charged until the movie is returned. This is what my wife and I use the most, as we can choose what we want, and not get a selection by random. However, keep the dvd too long, and they will charge you as a purchase.

One way to catch some movies, without spending a lot of money, is to check out your local pawn shops or hobby stores. Our local ones take movies in on trade or loan, and then they can be bought for a dollar or two, sometimes a little more. Also, our chain rental store sells excess copies after the new release stampede wears off, and you can get a decent used copy for less than what it cost to rent it This way you can build your own library at home, without spending more than you would have rented that same title for.

Finally, check out your local library. Ours has a large selection of classic and new release movies for kids, teens, and adults...spanning every genre. And the best part is, no rental fee (other than our taxes, which we have to pay anyway), and we get to keep the movie for a week. I find this a great place to check out a movie that may be kind of cheesy, and not worry about whether or not I'm getting my money's worth.

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Wednesday, February 27, 2008

Let's talk life insurance

Another one of those topics people do not like to talk about, much like the need for a will . For some reason, we just don't like to think of our own mortality...even though it is guaranteed. Whether from old age, or an accident at a young age, it WILL happen, and we need to prepare for it - especially if we have any family or loved ones. Part of this is some form of life insurance.

There are two basic types of life insurance, term and whole. There are other types, but for the most part, they are similar to whole (also called universal). First we need to define what each is, than we can look at which is best.

Whole is a type of insurance that can build cash value, that you can borrow against (and if you cancel the policy, what you get refunded). It is often promoted as an investment or retirement vehicle, as the amount of money you put into it grows. Sounds good, right? Not so can you be sure you know what the rate of return on them is, and never mind the high commission fees and costs of the "investment". Not to mention, often the commissions paid can eat up the first year or two's premiums (in other words, the money you pay every month for a year or two goes to pay the agent their commission, not in building any value in your policy). They're right when they say it is a retirement account...but whose? Yours or the insurance agent's?

Term is a type of insurance that only pays upon the death of the insured. It is usually set for a distinct period of time (hence the "term"), which can range from a few months to 20-30 years. The premiums are set (the younger and healthier you are when you start, the cheaper it is). You build no cash value to borrow against, but the premium savings are astronomical.

Here is an example I found from Smart Money :

To get a real sense of the value of term, let's compare a term policy and a universal life policy. Say a 40-year-old nonsmoking male has a choice between a $250,000 Met Life universal policy with a $3,000 annual premium and a same amount of renewable term coverage with a 20-year fixed premium of $350. At the end of one year, the universal policy, assuming it paid 5.7% per year, tax-deferred, would have a cash value of exactly zero (cash value is the amount you would get back if you canceled the policy). But say he had instead invested $2,650 (the difference between $3,000 and $350) in a no-load mutual fund that averaged a total return of 10% annually. At the end of the first year, he'd have $2,841, accounting for taxes on the earnings at a 28% rate. At the end of 10 years, he would have accumulated more than $46,000 in after-tax savings in the mutual fund. Over the same period, the cash value of the policy would have climbed only to $31,819.

See that? That right the end. The difference is almost $14,000, in ten years! That number will only get bigger with each passing year, due to our best friend compounding interest! Why would you let someone else get that money that you worked so hard for, by paying high commissions and fees, when that money can work to make YOU more money?

Now what about when the term runs out, then what? Okay, so it runs out...if you planned correctly, and saved and invested, you should be fine. Over the 20, 30 or even 40 years, you have (or should have) been developing a nice retirement account. Life insurance is there to provide a cushion in the early years, mainly your working years. It is there to replace your income, in the event you pass away, and your family needs to continue to be provided for. A good rule of thumb is to get a term amount of ten times you annual salary. Say you make $50,000 a year, get $500,000. If you or your spouse dies, the interest you would receive off the payout would be close to the salary that partner made while alive. While nothing will replace the loss of a loved one, knowing the income level won't change much is one less thing the family needs to worry about. By the time of term ending though, with a properly funded retirement account, an income won't need to be replaced...the retirement funds should already be providing the income, so when one partner dies, the income won't disappear, because the income is no longer dependent on the work of the person who is gone, but it comes from the investments.

So, when considering insurance, first know, you NEED it. Then choose the best vehicle...namely term. Then with the difference you save between term and whole/universal insurance, invest that money, along with your other investment strategies, and prepare for when the term runs out. You'll be able to save more money, and make more money, when it is all said and done.

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Wednesday, February 20, 2008

It's all about the Benjamin's, Baby!!

That's's a all about the Benjamin's...Benjamin Franklin, that is. Ben was pretty smart in his own right, and had many thoughts - often humorous - on a host of issues. Money was no exception. Check out some select quotes and thoughts from Ol' Ben, and you'll soon realize why he is on the $100 bill.

A penny saved is a penny earned. Any money saved, is money earned...but Ol' Ben was on the right track.

Beware of little expenses. A small leak will sink a great ship. Things like that coffee latte, cable tv, eating out for lunch, that new pair of shoes, etc...these are little expenses. The great ship is your financial life and freedom.

Buy what thou hast no need of and ere long thou shalt sell thy necessities. Keep buying stuff you do not NEED, when you do not have the cash in hand to buy it, after all other necessary expenses are met, and you'll be selling that stuff to make ends meet...either voluntarily, or at a sheriff's sale.

By failing to prepare, you are preparing to fail. This applies in all areas of life, but if you don't plan on how to make your money work for having a budget, and "pre-spending it" through the will fail at being debt free, and financially free.

Content makes poor men rich; discontent makes rich men poor. Being content with what you have is the key...whether rich or poor. Desiring bigger and better things, is not bad in is when you want it so bad, you get those things when you can't truly afford them. Putting them on a loan doesn't count. This is why so many are in debt...they are not content with what they have now, and can't wait to save to buy what they want.

Creditors have better memories than debtors. Do I need to say more? Well, a little bit. Very true words, but when you do pay off a debt, keep a record of it. How long do you keep it? FOREVER!! Sometimes creditors have memories of things that haven't happen. Not to mention they forget sometimes, too.

He that can have patience can have what he will. PATIENCE...the key to saving and building wealth. If you can wait to save up the money to buy something, you can pretty much have what you want, without going into debt.

If you know how to spend less than you get, you have the philosopher's stone. Can't say it any better than that...spend less than you make, and you'll never be broke or in debt.

It is the eye of other people that ruin us. If I were blind I would want, neither fine clothes, fine houses or fine furniture. Keeping up with the Jones'...take a second to evaluate where you are in life right now, financially speaking. How much of your "stuff" and debt stem from things you bought, in order to impress other people. Be honest with yourself. I was, and I realized just how much I was letting what I thought other people would think of me, dictate what I bought. Funny thing is, most people are busy enough with their own lives, what you thought they were thinking about you, they weren't thinking, because they were worried about what other people were thinking about them. Ok, there is to much thinking going on right head hurts.

Our necessities never equal our wants. The "wants" will keep you wanting, financially speaking.

Remember that credit is money. Just very expensive money, and money in the lender's pocket. Don't look at it as a way to get something now, and pay for it later. Look at credit as a more expensive way of buying things. Think about the interest, and how much extra you are paying over the term of paying off that item. Either way you are paying cash for it...either upfront for the actual cost, or long-term, to the lender...with interest.

The Constitution only guarantees the American people the right to pursue happiness. You have to catch it yourself.
Not to get too political here, but I think this is a key point. many people here in the US have an entitlement mentality. They feel they "deserve" something, for which they have not worked. They think because they want it, they should have it...NOW! Sorry, folks, but we are not guaranteed happiness in any form...just the freedom to pursue it. Whether we catch it or not, is up to us.

The definition of insanity is doing the same thing over and over and expecting different results.
Keep living the way you live, keep getting what you've got. Eat bad food, get bad health. Spend money foolishly, get in debt. If you do not like where you are in life, whether it is money, work, or anything else, it is up to YOU to one else can do it for you. Complaining about it, or blaming other people for you problems will not solve your situation. Only you, can improve your life. Make a change...even a small one.

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Friday, February 15, 2008

The power of saving and discipline

I wanted to share two motivational stories today. I often hear that it is too hard to save, or that wealthy people get the breaks or are lucky. Some people tell me that no matter how hard they work, they can't seem to get ahead (while they are sipping a latte, as they get into the brand new fleeced...I mean car they just got. Well, these two stories show what you can accomplish, if you have the right mindset.

Our first one is the story of Adam Shepard. Adam decided to try an experiment after graduating college. He wanted to see if the "American Dream" was still alive. Adam moved to another city, with the clothes on his back, and $25 in his pocket. His goal was to have an apartment, a vehicle and some money in savings, all within 12 months. Part of his experiment included the restrictions of not using and friends or family or previous aquaintances for help, nor did he rely on his college education, as he purposely left it off any job application.

Adam lived in a shelter for over two months. He worked odd jobs, and worked his way into a steady full-time job. Two months before his twelve month deadline, he surpassed his goal...Adam had an apartment, a vehicle he owned, and several thousand dollars in his savings account. Adam showed that by living within your means, and saving, you can get ahead. The key, is living within your means, which means living on less then what you make.

Story two focuses on Lance Roberts, of Houston. Lance is worth several million dollars now, but he was homeless to begin with. He lived out of his pick-up truck for two years, parking behind a fitness gym at night to sleep. Now, he works as a radio talk show host and money manager. His advice is to pay yourself first, and save 40% of your income, and live off 60%. Strong advice, and not easy, but a worthy goal to shoot for. Lance actually lives on less than 40%, and saves 60% (but granted, it's easier to do, when your worth several million dollars). His next piece of advice is to get rid of credit cards...the debtor is slave to the lender. Can I get an amen? Lance also makes a great point, using watches as an example. As much money as he is worth, he says he will never buy a Rolex. Why? Sure, he can afford it, he says, but he doesn't need is a waste of money. A $20 watch tells times just as well as a Rolex. Lance points out, most people, when they make more money, spend it. They buy bigger homes, nicer clothes, and newer,bigger cars. If you live the same way, you'll never make it, but if you keep and maintain a lifestyle within your means, and put that extra money into savings or paying off debt (while not creating more debt), you will get ahead.

So what can learn from these two examples? People who struggle with money, as a rule, are not held down by the government, some evil corporate entity, or a string of bad luck. No, the thing holding people back, is something closer to home...themselves.

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Wednesday, February 13, 2008

Well, which is it?

Today, I was checking out my homepage, which I have set to MSN, and noticed to headlines that really grabbed my attention. Both were under the "money" section. The first, "Why you'll never own a home" is kind of misleading. When you click on the link, the title of the article is actually "Why you MIGHT never own a home"...a bit different from never, but hey, they need a catchy headline, right? The second one,"Whats busting your budget?" focuses on "essential" indulgences. Funny how they don't see the solution to one problem in a published article is staring them right in the face in the next published article.

In a nutshell, the author of the first article claims you'll never own a home, because they are just priced out of reach for the average middle-class family. What the author fails to take into account is, that while prices are artificially high now, they will come back down to what people can afford. It is simple supply and demand...once you have enough homes that are not selling, the prices will keep dropping until they do sell...prices will come back into balance. My whole take on the article was all gloom and doom about how the current young generation will not be able to afford the "American Dream" if everyone will be living in apartments. And how it isn't the fault of people who can't afford the payments. One woman says she fears for her son (who is 29), that he won't be able to buy a home...but he has a nice car and an iPhone. Well, gee, get rid of the car payments and the iPhone, and you could save a nice down payment rather quickly. The article continues on, talking about how the mortgage industry helped push people into more home than they could afford, yet the author never really hits on the LIFESTYLE of the middle-class. The author seems to miss that little...well, actually, BIG...factor in why many people will not be able to buy a home.

But lo and behold, the same author, writes another piece on what is breaking the budgets of the middle class...the "essential" indulgences. These are items that are not necessities, like lattes, designer clothing, new cars, spa treatments, and such. While these things are nice to have, you don't need an iPhone, when the low end free phone you can get with your cell phone contract makes calls just as well. For that matter, you don't NEED a cell phone. Same with satellite and cable tv...they are nice to have, but you won't die without them...but go to a run down trailer park, and you'll be hard pressed to find one residence without a satellite dish. The author hits the nail on the head with this article...the modern standard of what we "need" has changed, and that is what is breaking our budgets. Getting a pedicure may feel great, but getting one every week is not a need. Buying "organic hand wipes" for $10, as the author admits to doing, is crazy, when you can buy a package for about a $1. If people would look at their lifestyle, and get rid of the indulgences they "need", then they would have no problem buying a house. Sure, a 5,000 square foot McMansion may not be what you can afford, but do you need a 5,000 square foot, 5 bedroom, 4 bath house? I didn't think so.

The reason the middle-class is having a hard time living like the middle-class, is because they are trying to live like the high upper-class. If the middle class would learn to stop being so self-indulgent, they would have more money to save and invest, which would allow them to start living like the upper-class, because they will BE the upper-class.

The author has the answer to her own concerns, between the two articles she wrote. So, which is it? Is the housing market outpacing the middle-class, or is the middle-class over-indulging itself? My vote is for the latter.

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Sunday, February 10, 2008

The Slight Edge

Today is a review of a book that covers a concept that will propel you to advancement in whatever you choose to do, if you apply the principles. The book is, "The Slight Edge", by Jeff Olson. Jeff is a successful business owner and mentor in the direct sales industry. His theories are applicable across the board, and know no boundaries, regardless of what the reader does in life.

The slight edge is doing the little things that many people overlook or fail to do, and do them consistently over time. Take two people and have one eat an apple a day, and have the other eat a cheeseburger a day. You probably won't see any difference the first day, or maybe even the first few months, but over time, those small things we do, add up and compound overtime (like interest).

Another way to look at it, is reading a book. The average person, after high school, will read one book a year. What if you read one book a month? What about one book a week (my personal goal)? In a ten year span, who do you think has a slight edge, the person who has read 10 books, or the person who has read 120, or even 520 books? It is that small action, over time, done repeatedly, that will set you above others.

Whether at work, or in your finances, it is easy to set yourself apart from the average. You only have to do a little more than everyone else, and you will soon be far ahead of them. Whether it is doing a little more work for your employer, or saving and extra couple fo dollars a day, and investing them, you will soon be where many people only hope and dream they can be.

From personal experience, I can attest that it works. I have been applying the principles that Jeff has been teaching, for several years now, and I find I consistently excel and see growth in all areas of my life, where I focus on getting the slight edge. Remember, something that is easy to do, is also easy not to do, and many, many people easily choose not to do those small things...therefore it is easy for you, to set yourself apart from the masses.

Get the book, and get the edge!

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Thursday, February 7, 2008

Assets or liabilities?

The key to financial freedom, and true wealth. What do you have? Do you even know the difference? Can something be both at the same time? Is your head starting to hurt from thinking that your about to get a lesson in accounting? Don't worry, it's not that bad.

Simply put, an asset is something that makes you money, while a liability is something that costs you money. That wasn't so bad, now was it?

The problem people have is they have more liabilities than they do assets...if they even have any assets. Sure, if you are a homeowner, you might think of your home as an asset, but rethink probably will appreciate over time, but so do the costs of owning that home. You have taxes, lawn care, repairs, routine upkeep, and on and on. There is quite a bit of expense associated with owning a home. This does not mean I am telling you not to buy a home, as I own one myself, and frankly, we have to pay to live somewhere. I would rather pay for my own place, and have a pretty good chance I'll build some equity, versus renting, where I build equity as well...but for the landlord. This is one of those things that can be both an asset (through appreciation over the years) and a liability (expenses of owning a home). Just remember, that equity is not liquid (unless you sell the home), or you take out a line of credit against it - but then it becomes another liability.

Liabilities will always be a part of our lives...the wealthy and financially free, know how to reduce their liabilities. We have taxes, we have utilities, we have necessities like food, clothing, education, transportation and such. Some of these liabilities we just can not do without. Liabilities like credit cards, satellite tv, and Starbucks we can do without.

Assets on the other hand, will put money in your pocket. They are a vehicle that puts your money to work for you. They can be anything from a profitable business you own, paper investments (stocks, bonds, mutual funds, etc), interest bearing savings, rental real estate properties (I don't consider one's primary residence to be an investment, per se, as it is not liquid, nor is it throwing off cash every month, like a rental would), etc.

True wealth comes, as well as financial freedom, when you have assets throwing off more money than you are spending with liabilities. Let's look at Mike and Joe. Mike works for a very large company as a regional sales rep. He makes over $500,000 a year in commissions. Mike and his family live a very extravagant lifestyle...they have a huge house, the newest luxury cars. They wear the finest clothing and travel to the most luxurious vacation destinations. They also spend more than they earn, and are financing almost all of it. Joe on the other hand, has $500,000 in investments, and is averaging an annual return of 10%, or about $50,000 a year. Joe is also debt free, except for his home, which is nearly paid off. Joe does not live extravagantly, but neither does he live like a pauper. He has two very nice used vehicles, dresses well (but not name brands), and saves to go on vacations. He also saves for things he wants to purchase, instead of financing them. Joe's total yearly liabilities are approximately $30,000 a year (between food and other living expenses, taxes and mortgage, etc). So who is wealthy? Mike, making over $500,000 a year, or Joe, making about $50,000 a year.

Joe is the wealthy one. Why? He does not have to work, because his assets are making more money than he is spending on his liabilities. Wealth is not a dollar amount, it is a state of being. If most of us would stop trying to keep up with the Jones' lifestyle, more of us would be able to surpass the Jones' lifestyle.

Saving money can be hard at first, especially for spenders like me. But it gets easier as you go along. It actually becomes fun. A close friend once told me, "If you do today what other's won't, you'll have tomorrow what others don't". There is wisdom in those words.

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Wednesday, February 6, 2008

Kids' college or retirement? Retirement!

I'm sure I probably just lost a few readers with that one, but let me plead my case, please. A hot topic with any parent, is their kid's future, and I won't argue with that. As a new dad, I want only the best for my son, and any future children I'll have...but paying for my kid's college education is not one of them.

Before I lose anymore readers, and before someone reports me for being a bad parent, let me say I believe education and learning is vital to success. I went to college, and i paid my own folks wanted to help out, but couldn't. I saved, and took out student loans. I worked three jobs. I drank pallet loads of Mountain Dew to stay awake. And while the experience was great, funny thing is, like most college grads, I'm not working in the field I got my degree in. Personally, I think a lot of employers just look at the fact that you graduated college, as opposed to what field you studied (unless it's a technical field, like engineering, medicine, etc). But, I'm heading down a rabbit trail, so back on topic.

Lately, in the news, there has been quite a few stories on grads moving back in with mom and dad (not a good idea). Probably kind of tough on everyone involved. But as a parent think about would you feel about having to go to your kids when you retire, and say, "Hey, I need to move in, and have you support me...because I spent my money on your college education, instead of planning for my retirement!"

What do you think is going to be the outcome of that situation? Not a good one, I would wager. This is why when it comes to your retirement, or your kids' college education, you need to be selfish, and lookout for yourself. Your kids have a lot more time ahead of you to get financially stable. If they are young enough, teach them how to properly manage money and make it work for them...they can have a nice college fund of their own to start out with, by the time they reach college age. Teach them to save a portion of their allowances, money gifts, and wages as they get older, and they'll be fine.

Keep in mind, college tuition assistance will always be available, through programs like grants, scholarships, and low-cost loans (last choice). On the retirement end though, unless you plan for it, it won't be there, and if you believe Social Security will be there for you, I have some waterfront property to sell you in Arizona...
Seriously though, Social Security won't be there, and even if by some chance it is, it won't be enough to cover your living costs. And if your kids are following your example, and they are trying to save for THEIR kids' college funds, they probably aren't planning for their own retirement, and they sure as heck can't afford to pay to support you.

So, to recap, take care of yourself first! Make sure YOU have savings and investments for retirement, so you can live after you retire...without asking your kids if you can move into their basement!

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Saturday, February 2, 2008

SAVING is not spelled S-C-A-M!

"A fool and his money are soon parted"

This may seem harsh, but it is a reality. But sometimes, the ignorant and their money are also soon parted. People will fall for pretty much anything, and it is either due to trusting someone too easily (the elderly are a good example of the ignorant types), while others are too greedy (want to make a fast buck with little effort...the fools). This often makes them easy prey for scammers. There is not much hope for the fools, but the ignorant can be helped. I don't mean ignorant in a demeaning way, either. I simply refer to those who are unaware of something, not informed or educated, not savvy to something. Savvy?

Now, before everyone gets all huffy with me, let me say, there are many folks who do innocently get scammed. With the huge rise in identity theft, phishing, and spyware, many people will inadvertantly become victims of scams, through no fault of their own.

One scam, that will catch many innocent people off guard, is already barreling down the highway. Clark Howard talked about this on Thursday. We have all heard about the rebates that are going to be sent out later this year, in an attempt to stimulate the economy (that is another topic in and of itself). Well, the scammers are already hitting people from this angle.

You are probably thinking, "Gee, they are going to try to get my rebate check? I won't fall for that!" Slow down a's more nefarious than that. The scammer will contact the victim, and pretend to be from the IRS. They will advise the victim they need to verify the account number at the victims bank, so they can make sure the rebate gets electronically deposited. They verify that is the right account (duh!), and thank you for your time. And then nothing happens. Yet.

What they do then is watch your account...and watch it...and watch it. Not for the rebate check, though...they want bigger fish. They wait and see when you typically have the most money in your account. Basically, they are looking for that paycheck to deposit, or the social security check to credit, or that pension to drop in...then they nail you, and drain your account. Once they figure that out, say good-bye to your money, cause it's on a fast plane to someone else's wallet.

In a nutshell, be very wary of anyone asking for your soial security number, your checking or banking account information, or any credit/debit card account information...legit companies won't ask for them by phone or email.

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Friday, February 1, 2008

Super Emergency Fund

Recently, I have talked about having an emergency fund in place, and paying off your debt (minus the mortgage) as soon as possible. But what about after getting your debt paid off, and you have a fully funded emrgency fund? This where you create a SUPER EMERGENCY FUND (SEF).

An SEF is an emergency fund on steroids. It is there to protect you in the event of something catastrophic, such as a job loss, prlonged illness, or even a disability. Typically, most financial counselors will recommend saving 3-6 months worth of expenses, but I tend to be more conservative, so if possible, I say go for 6-9 months worth of expenses saved up, or better yet, a year.

I hear it now..."Whoa, wait a second! 6-9 months of saved expenses? I can barely make my payments now!". Keep in mind, this is after you pay off all debts except the mortgage. I'll use myself as an example...after paying all our debts off (minus the house), we will have a total of about $700 (as we pay off each debt, the extra goes to the next smallest debt balance, to pay it off faster). Our personal goal is to have $15,000 saved in a SEF, which would take us approximately 21 months to accomplish. Looking at that way, it won't really take that long to accumulate a nice SEF, for a REAL rainy day. Even better, having it in a MMA or mututal fund will help it grow faster, with interest. Using the MMA we use now for our regular emergency fund, we would have about $16,000 with the interest earned.

The peace of mind the SEF gives you, will do wonders for your relationship with your spouse, not to mention your overall quality of life. Not fighting over money, knowing if something happens, you'll more than likely be able to cover it financially without going back into debt is priceless. My wife cinfided to me how much more secure she felt, knowing we had an emergecny fund in place, for those "what-if's" (and fellas, if I had known what THAT would have done for our relationship, I would have had an emergency fund YEARS ago!). Knowing that if you lose a source of income through layoffs or worse, an injury or sickness, you will have enough time to replace that income, or receive disability (disability insurance is very cheap, and should be a part of your overall financial plan, even if not offered through your employer. The SEF will help you get through until your long-term disability kicks in), because of the foresight you had to plan for that big bump in the road we call life.

Go ahead and get that super rainy day fund saved up, for those monsoons life sooner or later is going to send your way.

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Wednesday, January 30, 2008

Save money with FREE digital prints

As a fairly new dad, I've come to appreciate the value of taking photos...alot of photos. So many though, it's going to be expensive to have any significant portion of them devleoped (and you know how I am about spending money). Yeah, we use a digital camera, and it helps being able to post them or email them to friends and family, but sometimes, you want a hard copy. This deal is going to help.

I was surfing around on Saving Advice, and aneta posted this great deal. Get up to 330 free digital prints. The link she provided actually takes you to Cheap Stingy Bargains ( a new site I'll be sure to look at more closely for future money saving ideas). From there, there is a list of links to various online sources, like Shutterfly, SnapFish, and Kodak, with deals ranging from 10 to 50 free digital prints. Between all the links, you can get up to 330 prints total. That's an avaergae savings of about $30. Not bad.

After this week with the baby and grandma and grandpa, and great-grandma, we'll definitely be putting some of these offers to use.

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Monday, January 28, 2008

Just an FYI...

Just wanted to let eveyone know I'm headed out on a little vacation for a week, so postings may not be everyday. Today, we'll be heading out shortly on what is normally an 11-12 hour drive for us, but with a 4 month old and a dog, things could be interesting this time...wish us luck! :D

End of post.

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Sunday, January 27, 2008

Manna from heaven? No...but close!

I am pretty sure I'm not the only one who has noticed the recent increase in food costs. In addition to being an ice cream addict, I'll admit I'm a chipoholic as well. I LOVE potato chips! And so, this is a pretty easy example for me to give. Potatoes are relatively cheap...potato chips are not. A year ago, I could buy a 6oz bag for $ I can buy a 2oz bag for $0.99, and a the 6oz bag for $1.59. But wait, what is that!?!? The 6oz bag,, is only 4oz!?! The bag is the same size, shape and design, but they've reduced the now I'm paying 50% for 30% less? My addictions are killing my wallet!

Seriously, though, food has gotten more expensive. There are many reasons for this...fuel costs, added taxes, increased labor force costs, etc. There are not so many ways to save on your food purchases. Besides clipping coupons, or playing The Grocery Game, there isn't a whole lot one can do.

Well, you can possibly add one more thing you can do. Get food from Angel Food Ministries. I first learned about them from my mother-in-law, who said her church is a local distribution point. What they do is call food manufacturers, and negotiate low-cost food purchases, or even donations, of food. These are the same manufacturers that provide the foods you find in the grocery stores. You pre-order as many food boxes as you like, at a cost of of $30 a box, and the contents would have an average retail of $60. Each month features a different "menu", so your not getting the same food each month. This is open to everyone, not just low-income families, as the food is provided based on the number of you are not taking a box away from someone who may be in a financially harder place than yourself.

A sample box might contain :

1.25 lb. Bacon Wrapped Beef Filets (5 x 4 oz)
4 lb. Individually Frozen Chicken Leg Quarters
2 lb. Lean Hamburger Steaks (4 x 8oz.)
1.5 lb. Boneless Pork Roast
1.25 lb. Meaty Beef Short Ribs
20 oz. Supreme Pizza
10 oz. Deli Sliced Turkey Breast
3 lb. Fresh Apples
35 oz. Crinkle Cut French Fries
16 oz. Frozen Green Beans
16 oz. Onion Rings
14 oz. Fancy Ketchup
26 oz. Pasta Sauce
16 oz. Pasta
16 oz. Pinto Beans
7.5 oz. Macaroni and Cheese
Dessert Item

Now granted, most of the food is frozen, so you'll need some freezer space to keep it, but it's a great way to make your grocery dollars stretch. They will deliver to central location (you can find the drop-offs on their website) once a month, and you bring a box, or something to carry your food home in, and that's it. For US residents, they also accept EBT (food stamps). Check them out, and see if they come near you.

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Saturday, January 26, 2008

Get MAD!!

I have been re-reading a book by Dave Ramsey titled The Total Money Makeover. It has some great info in it, quite a bit of it from his personal experience from going from millionaire to bankrupt, and back. His examples range from humorous to downright heartbreaking, but they all get you thinking and put a lot in perspective.

One quote that stuck out was "Get Mad!!" I pondered what he meant about that statement for a minute before moving on. Why should I be mad about money? Money is amoral, it does what you want it to. You ultimately control it, by mastering it, or being mastered by it, by the choices you make, but they are your choices!

Reading further, he expounded a little. There are basically two ways to look at your financial situation, especially if it is a bad one, where you are drowning in debt. You can either look at it logically, or emotionally. Which one is the correct way? Most people would say logically.

That obviously makes sense, to look at something logically, because you are being unbiased (logically). True, you need to take a cold, hard, analytical look at your finances, but logic never propelled someone to action, or spurred them on. No, logic doesn't do that. Emotion does.

Everything I can think of that drives great accomplishments, is emotion. That is the fuel for the fire, the "why" that gets you going. It is your motivation for doing what you need to do. Logic will put the NEED into focus, but only emotion will get the train moving, in getting it done. You need to "GET MAD" at the debt you have, and get sick and tired of being sick and tired. That emotion will propel you into action, and will help sustain you, until you reach your goals. Every time you want to borrow money, think back to how much misery that consumer debt has caused much it has robbed you of, when it comes to truly enjoying life.

Get mad, and get free.

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Friday, January 25, 2008

How saving money can buy you a car

Buying a car (or any other vehicle) is almost a rite of passage. In a way, it says, "welcome to the adult world". I still remember my first vehicle was a 1980 Ford F100 pick up truck, two tone red over silver, with an orange pinstripe. I'll always remember that truck. I paid $1200 for it, and I paid with cash, something I had been saving for since I had started my first job. Wish I knew then what I knew now.

You see, I started off right, I bought the truck with cash. I saved my money to buy it, and I saved the interest by not financing it. So far so good, but I stopped there. If I only knew what I should have done next.

Here is what I should have done. If I had continued to save my money, even $100 a month, I would have had a head start down the road, when I needed to replace the truck. But, I was young, and carefree, and I had a truck! I had a whole new world of things to do, open up before me. Well, my truck died, and soon, I was caught in the cycle of car a car, finance it, trade it in, roll the balance into a new purchase, and make payments, and on and on.

What I should have done, is kept putting a car payment every month into some sort of investment account. Let's say a growth mutual fund that is averaging 10% (not uncommon). Let's use the average car payment of $400, and a term of 60 months, as that is the most common here in the US. Let's use a current finance rate of about 7.5% for a used car loan. Well, you look at the payment and the term, and you think, "Gee, a $24,000 car for $400 a month, that's not bad..." Wrong, because of interest, to get that $400 payment, you'll only be getting a car that sold for $19,500. So you just lost $4500 worth of car you could have bought, because of the interest payment. Also, don;t forget, this cost did not factor in sales tax, registration, title and inspection fees, either.

What if you bought a clunker (or as we like to say where I live, a "hooptie") paid in full with cash, and you saved that $400 a month for 60 months. Right off the bat, you've got that extra $4500 that would not have gone to interest. But if you had invested those monthly payments in that growth mutual fund at 10%, you would have about $32,000 at the end of 5 years. There is quite a bit of difference in car you can buy with $32,000, compared to $19,500...$12,500 more.

But, it can get better! What if your still really frugal, and you buy a nice, used vehicle at $20,000 cash (and you can negotiate some great deals when you hold a wad of cash in front of someone). That will still leave you $12,000 in your growth mutual fund. Well, pretend you have a car payment, and keep adding it to the mutual fund each month. In another 5 years, you'll have about $51,000 ready for your next car purchase. What kind of car can you get then? Say you splurge, and buy a used vehicle at $30, still leaves you with $21,000 in your fund. Follow the process one more time, and you'll have about $66,000 for a car. Now, you'll never have to pay for a car again. Why? First, keep buying your cars in the mid $20,000 range (you can get really great used vehicles at that price). If you keep $40,000 in that fund, and never add to it after that, every 5 years you'll be back to about $66,000. Also, keep in mind that you will have a vehicle to trade in or sell, as well, which will bring you several thousand more dollars.

In a nutshell, you've saved tens of thousands of dollars in interest payments you would have otherwise paid the bank, you earned some great returns on your investment, you've had some nice used vehicles, and in 15 years, you would have saved and invested enough money that you'll never have to use any of your own money again to pay cash for a car. And this with money you would have been spending anyway, for something you need. So the next time you go to buy a car, ask yourself if you can wait a while longer, and start putting that money into an account that will make you some money...and head down the road to never paying for a car again.

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Thursday, January 24, 2008

Legal service plans - are they worth it?

The other day, on the topic of wills, I mentioned that I have a legal service plan, and that is the low cost option route we used for our wills. Today, I'll talk a little bit about them in general, and the reasons I picked the company I did.

First, a legal service could be considered similar to an HMO, but for your legal expenses. Basically, you pay a monthly, or yearly fee, to have access to an attorney or law firm, for defined benefits. Some have no further expenses to them, others have deductibles. Some are worth the money, others are nothing more than scams.

Almost all of them offer some type of consultation services (by phone or in person), letters written on your behalf, wills, traffic ticket defense, document/contract review, and discounts on other more intricate legal procedures. Some will even offer civil, and in certain cases criminal, lawsuit defense, as well as IRS audit help. I know of at least one company that even offers identity theft restoration services.

Now, I'm sure you're probably thinking, why would I need this, I've never used an attorney before. Am I right? Most people think that, not because they did not need one, but because they were priced out of being able to afford one for their situation. Most people have had to make a financial decision, not a legal one. But what would you do, if you could pick up the phone and talk to an attorney about any legal question you had, and did not even have to pay extra for the phone call itself? Would you use an attorney more often? I would think so...I know I have. Take for instance a long distance telephone bill I had, and I KNEW I did not make the call. My phone service would not remove the charge. It was only $14, but it was the principle of the situation. I did not owe, so I wasn't going to pay it. Most people would, because it was so small, and you are not going to pay $100+ for an attorney to handle a $14 problem. It just doesn't make financial sense. Well, I called our law firm through our service plan, spoke to an attorney, and they sent a letter out to the phone company, and the charge disappeared. It cost me nothing extra, other than the monthly fee I was paying already.

"Okay, but I'm sure the monthly fee cost more than the $14 you saved, right?", you are thinking to yourself. True, but remember that will? My yearly cost for the membership is less than what it would cost me for one will, never mind the second one for my wife. So in essence, the other services are free, because the service has paid for itself for at least two years, on the will benefits alone.

Ever signed a contract? I guarantee you have. Whether a lease, rental, mortgage, car loan, cell phone contract, or what ever, you've signed one somewhere. What if you could have an attorney review that contract before you sign it, to make sure you are not being taken advantage of? I did, when I bought our car, and the attorney caught a mistake the lender made, which would have cost me about $2000. Well, that just paid for the membership for another 5 or 6 years.

Traffic ticket defense is another great service. Many times an attorney in the court room, can keep the points off your license, and get a reduced fine or fee (if not dismissed completely). That not only saves you money on the front end, but think about the long-term cost of your insurance rates going up for several years, because of points on your license.

I could go on and on about the benefits of having the service, but the post would be too long. I'll just say having the service has saved me thousand's of dollars since I've had it, and it has paid for itself for at least the next 10 years, in what I've saved. Now I do want to make clear, the law is not always on your side, and you may not like what the attorney has to say (this has happened to me once or twice), but I would rather know where I stand, than wonder "what if...?".

Alright, now you are interested, and want to learn more. Who sells them? Well, most of them are available through an employer as an employee benefit. Some you can buy individually. Some of the companies that sell them are AIG, Arag (the number two legal service company in Germany), and Pre-Paid Legal Services, Inc., among others.

My wife and I chose Pre-Paid Legal (PPL), for several reasons. Cost, portability, no rate hikes on existing customers, it is a publicly traded company (NYSE:PPD), it covers our whole family at no additional cost, and what is called a closed panel system. The other companies we looked at gave you a list of attorneys to call. You had to pick the ones you wanted. But what if you were the first person under that plan to call the attorney? Do you think the service would be good? Do you think he would give you a lot of attention, especially at a reduced rate, if you are the only one who has contacted them through that service plan? With a closed panel system, PPL uses one law firm in each state, that handles all initial calls. They may refer you to a local attorney (usually at no additional cost to you) for some things like traffic ticket defense. But they control who you talk to, so they can make sure you are getting great service. Not to mention by paying one law firm a yearly fee to serve their members, the law firm has a huge incentive to give great service. Would you rather have the attorney who is giving a discounted rate, and you are his first client through that particular plan, or would rather have the law firm who is being paid MILLIONS of dollars a year (through group buying power), to handle your issue as best as they can? That is why we chose PPL.

I am sure you ave seen this phrase in a few of my posts : SAVING MONEY is MAKING MONEY. I often tell you ways to cut back on your spending, in order to save your money, so suggesting you look for a service that will add a monthly cost for you, seems out of place, right? I have learned through the years, that sometimes though, you need to spend a little money, to save some money. This service is a great example of doing that. I estimate we have saved almost 10 times more than we have spent, by having this service for the past 6 years. Ten times!! That is huge! And it's worth the peace of mind to know that legal help is just a phone call away.

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Wednesday, January 23, 2008

Love ice cream? Check this deal out!

My wife is a card carrying member of ice cream addicts anonymous. She really tries hard not to eat a lot of it. She is afraid of gaining weight. At 115lbs, I don't see that being an issue. But, alas, her evil hubby, me, is constantly pulling her off the wagon, back into the dark despair and hopeless grip that sweet, frozen confections from cows have on one's soul. But hey, it's ice cream, and it's worth it...especially when there is a great deal on it like this one.

First, you need to be near a Food Lion. This week, they are having a sale on Breyers ice one, get one free. However, apparently the deal will still ring up at half price, if you only buy one. Add to this the printable coupon from here or here, and save $2.

Now, obviously prices will vary by region, but a half gallon of Breyers at my local Food Lion costs about $5. With the BOGO deal, I can get one for $2.50. Add the $2 coupon, and now it only costs me $0.50 (plus tax) for a half gallon of Breyers ice cream!! The second coupon link should give you 8 printable coupons. Make 8 separate transactions, and you can have 8 half gallon boxes of ice cream for around $5, with taxes. Eight cartons for the price of one!!

Time to slip into the dark oblivion of ice cream addiction. Don't forget the toppings!

Thanks to sunset0703 at Slick Deals for the info on the sale.

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Tuesday, January 22, 2008

Recommended Blog : Mommie's Home

There are so many sources of information on the web, it is easy to get lost in a sea of junk, looking for content worth your while. A new feature I'll be adding is an occasional blog or site review, when I feel they have worthwhile content that will benefit you, my loyal readers.

The first one will be a review of a great blog over at Mommie's Home is touted as "... a place for all moms to get together, learn, share or just hang out. So grab a cup of coffee, pull up a chair and surf away (even if you only have those precious few moments when the kids are sleeping)!" Do not be scared away guys, there are several of us that participate in the comment threads as's not just for women only.

Mommie will post about a wide variety of topics - anything from being a stay at home mom and the pros and cons of using cash or debit cards, to the grocery game and her experience with online surveys. You will also find a mix of personal stories from the adventures of a stay-at home mom raising an infant and a kindergartener (many of which i can and my wife can relate to, as we are new parents as well).

Mommie does a great job in showing ways that she has been able to be frugal, and will get your brain juices going, getting you to think of ways you can save as well. Be sure to check her out, and say hello - you'll be glad you did.

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Monday, January 21, 2008

Make the most of your money when buying health insurance

I will admit it, health insurance is expensive, but the alternative is even more expensive. But what are people supposed to do, when the costs keep soaring, but our paychecks stay relatively still? Here's what I did.

The first important step, is to have an emergency fund established. My wife and I currently have a couple thousand dollars saved away. Once this is done, it makes the next step easier (you can skip the emergency fund step, if you want to, as you will probably be able to save money faster, but it does come with a little risk, if you get sick or injured prior to having enough saved up).

The next time that open enrollment comes to your employer, take a good look at the difference in your monthly costs, with a high deductible plan. When I say high deductible, I mean like $1000+. When I started my current job, I looked at each deductible available, and what my employer contributed, and what I would have to contribute. The $1000 deductible caught my eye, as I had nothing to pay for it, as my employer contribution paid the entire premium for me. This was looking good, plus I had the money in savings, in case something big came my way, health wise. But, did it really make much financial sense?

Closer examination showed it did. If I were to take a $250 deductible, I would have had to contribute about $125 a month, whether I ever used the insurance. It was gone, money I would never get back, all for the psychological benefit of having a "low deductible". So here I was, looking at a $1500 expense, just so I could say I had a low deductible...and if I needed to use the insurance, I still had to pay that first $250, so my total yearly cost for my insurance would be $1750.

By having the $1000 deductible, I had no monthly premium to pay, so I took what would have been deducted from my paycheck, and saved that each only took me 8 months to save my deductible. That's an extra $500 a year I was able to save for something else, compared to what I would have paid with a smaller deductible. Add to that the fact that I would not have the additional deductible of $250 as well, so I saved $750. In addition, if I was not sick that year (I wasn't), that extra money I would have paid was not lost to me...I still had my deductible of $1000 sitting in an account, just waiting for me, if I ever needed it. So that second year, I saved $1750, because I did not have to pay anything for my premium, nor did I have to save my deductible up again. I also put that money to work for me. By putting it into a high yield money market account, I also had what would be used as my deductible, should I be sick, working to make me some money as well, in the form of interest earned.

As I mentioned earlier, this is much easier if you already have an emergency fund saved up, as you don't have to worry about coming up with your deductible in the event you are sick. That said, it only took me 8 months to save up the deductible based on what I saved monthly from not having to pay premiums. So if you need to go this route, because you don't have an emergency fund yet, it won't be that long that you go without a fully funded deductible sitting there waiting for you to use it.

I will also mention health savings accounts and medical savings accounts. Both are savings accounts for approved medical expenses (ie deductibles, etc) that you can make tax-free contributions to. MSA's will let you roll over any unused portions to the next year or withdraw unused funds at the end of the year, as taxable income. The HSA's will allow basically the same thing, but tax you on undocumented medical expenses, plus assess a 10% penalty, unless you are over 65 years old. Personally, I figured it was easier to just have it in my emergency fund, where I could get to it for what I needed, when I needed it, without having to worry about whether or not it was an "approved" expense, or making sure it was rolled over properly, etc. I did not mind being penalized for this, in the way of having my emergency fund filled with post-tax monies, but that was a personal may not be right for your situation.

So, the next time you get to change your insurance, take a good look at it, and see if you won't actually come out ahead, by having a higher deductible.

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Sunday, January 20, 2008

Save money by writing a love letter to your family

How much do you love your family? Most people would say enough that they would probably die for them. So what happens if you do die - are you ready for it now? Have you prepared for it properly. In talking with people, I would say 9 out of 10 have not (and the 10th one is probably lying) prepared for it, by writing the ultimate love letter for their family...a will.

Yeah, I said it, a will. I think most people do not do it, or want to think about, because somehow they think it will jinx them into an early death. I know that's kind of how I felt. "I'm young", "I'm not gonna die anytime soon", "I don't need a will"..."heck, I don't have anything to leave anyone anyway" - all are common responses I get when talking to people about wills.

I can tell you stories for hours, of people whose lives were torn apart by fighting with family members over something as simple as who gets a particular spoon set. Do you really know who holds what type of emotional attachment, to something you would never think would cause problems? People will fight over the apparently (to you) silliest things, which can leave lasting wounds to family relationships...all while dealing with the loss of a loved one.

Another aspect, is children. Not just what is left to them, but who they are left with. The chances of both parents being killed a the same time are relatively small, but the risk is still there. Actually, about three weeks ago, two streets down from my home, a couple was killed, and their 20 month old daughter seriously injured, when a suspended driver crashed into them (the other driver died as well). The parents were just returning from the hospital, where they had their infant treated for a fever. I would be pretty certain in saying, they most likely did not have a will in place, saying what to do with their daughter and other children, should they both die. It's been reported that the grandparents on both sides want custody, and now the state gets to decide who gets the kids, if the kids stay together, or if they even get to go with a relative at all. What if the state ends up awarding custody to a relative you would never want your child(ren) to be raised by? Sorry, you only had a chance to take care of that while you were alive.

What about remarriage? With so many mixed families, who gets what? Does dad's estate go to his biological children, or to his wife? Speaking of wife, is it the current one, or the ex? Don't laugh, a personal friend of mine broke down telling me about her husband, who died in California, on business. His life insurance and estate went to his first wife. My friend fought it in court, and lost. She now has over $20,000 in legal bills as well. What about unmarried partners? How will you know your final wishes are carried out, if you don't have a will?

There are many ways to get one. First, you can hire an attorney, and pay for it. Actually, you can pay a lot for it. Local attorneys in my area charge a flat $800-$1500 fee for a basic will, others charge hourly. A bit steep if you ask me, and that doesn't include services for more intricate planning like trusts and the like.

You can subscribe to a legal service. These charge monthly or yearly membership fees, but include basic legal services like phone consultations, letters written on your behalf, and will preparation. My wife and I went this route (I'll cover the service itself in another post), for other reasons, besides the will. We each got a will, and a living medical directive (gives us each the power to make decisions for the other should we be unable to make those decisions for ourselves...Terry Schiavo, anyone?), and were able to fill out a short survey on what we wanted our will to do. When we had questions, we called and spoke to an attorney who specialized in wills and estate planning, and had our questions answered. We sent in the survey, and received our wills in a week or two. Only thing we had to do was have them notarized. We also get them updated and reviewed each year at no real cost (about $20)

The lowest cost option, is to do it yourself. There are quite a few "do-it-yourself" will kits out there, and I am sure most of them are pretty good. Next time you are in the store and see one though, read the small print. Every one that I have looked at has some disclaimer about the need to still consult an attorney. Remember my friend whose husband died of a heart attack? After marrying my friend, he decided to do one of those "do-it-yourself" will kits. He had the foresight to get it done, and for that I commend him...he wanted to take care of his family. Something happened friend told me that when he finished the will, and had it executed, he only had two witnesses sign it...the state in which he was residing required three witnesses...something the "do-it-yourself" kit forgot to mention, or something he overlooked. When he passed away, because that newer will was not executed properly, the one he had with his first wife was the one still in effect. That is how the ex-wife inherited all of his estate. That is why it is important to consult with an make sure little things like this, do not become big things down the road.

In addition, without a will (and often even with one), an estate will often have to go through probate. This is beyond the scope of this post, and I am sure you can imagine, it is not cheap. A will can protect against this, or at the very least, help minimize the costs associated with probate.

So, now I'll ask much do you love your family?

Enough to write them a love letter?

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Saturday, January 19, 2008

Patience, patience, and yes, more patience.

Most of us need it. Very few of us truly have enough of it. Doctors have lots, but not the kind we're talking about. It truly is a virtue, even when it comes to building wealth.

We need patience. It will obviously help us in every part of our lives, but especially when it comes to building a firm financial foundation for yourself. Wishing about being financially free and wealthy, will not get you there. Playing the lottery will most likely not get you there (and if it does, it's been reported the majority of them are broke within 5 years). You need the patience to let the money work for you.

First a disclaimer. I am NOT a stockbroker, or financial planner. I am not telling you to buy any investment product, or a particular stock, mutual fund, or bond. For that, you need to consult a licensed broker and/or planner. What I am trying to do, is show a concept that hopefully you, my readers, might not be aware of...and hopefully put to use.

Let's use the stock market as an example (I know some would argue against this, but that is another topic...this is merely a simple example, and not advice to invest in an index). There is a lot of talk right now about it. The last few days, there appears to be a downward spiral of stocks. There is talk of a recession coming, if it isn't already here. Here is where patience would pay off.

The natural inclination is to sell your stocks (if you have any), before they lose more money. Realize there is an ebb and flow to the market and our economy. There will be bad years, and there will be excellent years, and a lot of years in between...just have the patience to know the long-term average is in your favor, and let it sit.

The S&P 500 averaged 11.8% from 1982 to 2001. If you had invested $10,000 in 1982, and let it sit all the way through, and NEVER touched it, you would have in the neighborhood of $93,000. What if you decided to sell based on a bad year? What if by doing so, you missed some of the BEST performing days? How much money would you have made with that $10,000 investment? If you missed the 10 best days...$56,000. That's a $37,000 difference. What about the 30 best days? You would have about $28,000...or a $65,000 difference. And the best 50 days? Not looking so good...about $16,000, for a difference of $77,000. All for not having that money in there for a relatively few days. Have patience.

Another problem quite a few people have problems with, is letting compounding work it's magic. Ask a kid if they would rather have $1000 a day for 30 days, or a penny doubled everyday, for 30 days, and they go for the $1000 a day, every time. So do most adults. But this shows the magic of compounding. Take the first option, you have $30,000. Take the second, and after 15 days, you have $163.84. Ouch, $164 to $15,000...what was I thinking? But wait, keep going. On day 30, that penny is now $5,368,709.12! Still think the $30,000 was the better deal? The magic of compounding takes time, and happens near the end...but a significant number of people do not have the patience to let it get to that point. Back to the took it 22 days to catch up with the $1000 a day...but it took off from there. In 8 days it went from $22,000 to over $5 MILLION!! That is the power of compounding (remember I always say, SAVING MONEY is MAKING MONEY?)! Now, realistically, will that happen to you? no, you won't get those kinds of returns, but it is great example to grab you eye, and show how compounding will work for you.

Here is another example ( a VERY basic example). You put $100 into a high yield money market account(MMA), of say 5% annually. At the end of the first year, you'll have $105 and some change (for this example, I'm using rounded numbers). The second year, you will earn 5% on the $105 (you are compounding, because you are making money in the form of interest, on the money you made in interest the first year). At the end of year two, you have $110. Year five leaves you with $135, and year 30 leaves you with $450. Granted this is a small amount, but in my example, other than the first $100 investment, nothing was added to the principal other than earned interest. What if we added $5 a month? Adding a total of $60 a year, would leave you with almost $4600 in 30 years. Want more, just increase your monthly contribution. Ten dollars a month can turn into $8800...$20 a month will get you $17,000. Get the picture? ANYONE can find $20 a month to invest...ANYONE!! You can have any amount you want, if you are willing to cut a few unnecessary purchases out of your monthly budget.

The only other thing you'll need, is a little patience.

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Friday, January 18, 2008

Free movie rental

Got this tip from kimmie628 over at Sign up for their newsletter, and be able to print off a coupon on your printer for a free movie rental from Hollywood Video. You can use the store locater service to find one near you, if you are not already a member.

I would guess you could get multiple coupons, with different email addresses. If you don't want to use one of your own, go to for a free disposable email address. Just click the link in the confirmation email, and print off your coupon.

Enjoy the movie, knowing you paid nothing for it. And don't forget the popcorn!

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Thursday, January 17, 2008

Rent a car

Here's something I just saved several hundred dollars on, and thought I'd pass it on. The family and I are taking a trip in a few weeks, to go see my folks for a belated Christmas visit. This year, instead of me and the wife, and one small beagle, we have me, the wife, the new baby boy, the beagle, and a rather rambunctious retriever/dalmation mix...not to mention all the accessories that come with a new baby (stroller, car seat, diapers, etc), that take up a lot of room. Add to that Christmas presents we're taking with us, and gifts we'll be bringing back. Not going to be making a 12 hour drive in our 4 door sedan with all that. Plus, all the wear and tear on our vehicle for a trip like that. What to do, what to do?

Well, we decided to rent a minivan. We found a great deal for a week, with unlimited mileage, and it will hold everything we need. It was kind of pricey though, first looking at the prices (one rental company wanted almost $800...too much!) Anyway, being the frugal, deal minded guy that I am, I started my hunt for the elusive, outstanding car rental discount deal.

I spent a good amount of time searching, and finally found a huge, fairly comprehensive list of discount codes, at Slick Deals. It's broken down by most of the major rental companies. Now, it might take some time to sift through them, but it is well worth it. Also, be sure to read the terms of each company. I found an AWESOME deal on renting a Suburban (that was my first choice), which was less than the minivan...but it only had limited mileage for a select few states, and since we would be leaving those states, the cost per mileage, made it too expensive. Just make sure you look, because some codes give a cheaper price, because of some restrictions like the mileage. Read the small print.

So, we ended up getting the van, after using a code I found, and we saved about $200, and have unlimited mileage. Again, it might take a little leg work to sift through the codes, as some are no longer valid, but you can find that one, that will give you enough savings, to make it all worthwhile.

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Wednesday, January 16, 2008

Turn your pocket change into wealth

We all have it. Loose change. All those pennies, nickels, dimes and quarters - even the occasional $.50 and $1 coins - weighing our pant's pockets down. Never mind that all that loose change might make you look like a plumber, but it is not doing you any good just sitting there in your pocket. Put it to work for you!!

The other day I posted about not spending your dollar bills. If that is too much to start with, narrow it down to one $1 bill, or just take your loose change, and put it into a jar. Try to do this everyday. Some days you may have more, some days you might have less, but you should be able to average $30 a month. At the end of each month, pop it into an investment account (IRA, Roth IRA, mutual fund, MMA...something!). There are a good selection of excellent funds out there, that average 10% returns...find them, and use them.

So, what will $30 at 10% get you? Quite a bit. If you are faithful with putting that $30 a month into your account, and you average the 10% return, you'll have just shy of $70k in 30 years, with a total amount actually contributed by you of about $17K. Pretty neat, having that $17k work for you, and make you around $50k. This is the whole idea behind my belief that SAVING MONEY is MAKING MONEY. The little areas in life that we can cut back on, and save a little bit here, and a little bit there, can then be used to make you more money, helping to secure your financial future.

It doesn't stop you find more ways to save, you can invest more into your accounts. You can invest $60 a month, and make over $130k in the same 30 year period. What about $100 a month? Over $200k in 30 years. Geez, that cable bill with all those premium channels is really looking to be more expensive than you thought, isn't it?

Do the thing today, that others don't, and you can have and do the things tomorrow, that other's won't.

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Tuesday, January 15, 2008

Save some money by switching your car insurance to...

Ha!! I bet you were expecting me to name that insurance company with the reptilian mascot with a really bad Australian accent (Australian accents are way cool, just not the one with the little green guy). Sorry, but I don't want to get sued (definitely not going to be saving money that way, right?). Ok, seriously though, car insurance is something we all need, and in most states, are required to have. So how do you get the most chitty-chitty bang-bang, for your chitty-chitty buck-buck?

There's a couple things you can do. First, be a good, safe driver, and do not have any teenagers in your house that can drive. Those two tips alone will save you hundreds, if not thousands of dollars. But, I see how most people drive on a daily basis, and sooner or later, most people will have a teenager, as they are an almost inevitable by-product of a very popular and enjoyable activity that I don't see anyone stopping anytime soon. So how else can you save some money on your car insurance?

Start by shopping around. Keep in mind though, you want lowest possible premiums, for highest possible coverage. Also, do not go by discounts alone. You might get a lot of discounts from one company, but still get a lower cost from another one that doesn't give discounts. Take some time to shop around online. While you may not get a personalized quote, without giving up some personal information, you can get a rough idea on what the average person is paying at each of the different insurance companies. Just remember, yours may be higher or lower, based on coverage selected, driving history, credit history, claim history, type of vehicle, age of vehicle, and a myriad of other factors. Just use the online quotes as a means of creating a baseline, to point you in the right direction.

Having a higher deductible can save you some significant money (and SAVING MONEY is MAKING MONEY!!). A lot of people opt for the lower deductible ($250, for example), thinking that if they need to use the insurance, they will pay less out of their pocket with the lower deductible. If you have an emergency fund established, try for a $500, or even $1000 deductible. With a higher deductible, you'll save more - sometimes 15-40% more. If you pay $1000 a year, and you saved 40% by switching to a $1000 deductible, your savings would equal your deductible in about 30 months. By staying with the lower deductible, after 30 months, you would be paying an extra $400 a year for the convenience of only paying $250 out of your own pocket, if you are involved in an accident? That makes no financial sense at all.

Consider the age and condition of your car. Perhaps even have it appraised. If it is older, and well used, it may not be worth having the comprehensive and collision coverage on it. No sense paying extra to replace your car if it's totaled, if it's a $1000 beater.

Check with your employer to see if an insurance company will offer a group plan through your place of work. Also, ask your insurance company if they offer discounts if you carpool, or drive fewer miles per year than the average driver (less time driving, means less chance of being involved in an accident).

Check out companies that offer multiple lines of insurance. If you combine homeowner's/renter's/life/disability/etc insurances with your auto insurance from one company, you may be able to get reduced premiums on all of them.

Finally, just ask for discounts. Find out what they offer. Some companies may offer discounts for no accidents or speeding tickets in a set period of time; students with good grades; completion of a defensive driver course (and not a court appointed course...take it BEFORE you get a ticket); certain safety equipment (air bags, ABS brakes, etc); anti-theft devices and so on. You won't know until you ask, and it just might make your wallet happy!

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Monday, January 14, 2008

Save some SERIOUS money - quickly!

I assume we have all heard the old adage, "Watch your pennies, and the dollars will take care of themselves", right? Not a bad piece of advice. But there has to be a faster way of getting those dollars, right? Yep, and I actually heard about it from a very unlikely source.

I don't want to talk politics here, as this is not what the blog is about. However, I do listen to Neal Boortz occasionally. Sometimes Boortz has me saying "Right ON!", and other times he makes me want to tear my hair out. But he's almost always good for a laugh, regardless of which side of the political fence you sit on...maybe because he just doesn't care who he offends. Anyway, I digress...

So I happened to catch a few minutes of his show one day, and he talked about some advice he had gotten from someone when he was younger. What astounding, life changing advice was this? Do not spend your dollars. Huh? Say what? Don't spend my dollars? What kind of crazy idea is that. Well, Boortz went on to explain, and that light bulb over my head turned on (albeit, dimly). Simply put, do not buy anything by using dollar bills. Use change, use fives, tens, twenties, etc. Just do not spend a dollar bill...anywhere. If you buy a cup of coffee, use a $5 bill to pay for it, and put those $1 bills you get back as change into a savings account or investment account. If you use a $10, keep the $5 for another purchase, and save the $1's.

I thought about this, and actually realized there is a two-fold benefit to it. First, the actual $1 bills you physically are not spending but saving or investing. The second benefit is you'll stop making unnecessary purchases of "splurge", items if you say disciplined enough to save the $1's. Imagine buying a $1 cup of coffee, and basically putting $4 of your cash out of play for ever, since it will be invested where you can't spend it.

So, to recap, you will end up saving more, by not spending the $1's, plus you'll save more by actually reducing the amount of spending you do on "splurge" items.

That Boortz guy is pretty smart.

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Sunday, January 13, 2008

Avoid overlimit, overdaft, and NSF fees, with a money bumper

Today I've got a few really quick tips, that are easy to do (but also can be easy to screw be careful). I was responding to a comment from Mariam at Money Relations, and it reminded me of this simple trick.

If you have a checking account, try this out. Just a precaution, you have to be disciplined not to "add" it as money actually in your account. Think of it as "phantom". Put and extra $100-$200 into your checking account, and FORGET it is there. The key is FORGET it is there. I can not stress this enough, FORGET it is there. Did I mention to FORGET it was there? Deposit it into your checking account, but do not record that deposit into your register. Keep it there as a "bumper". On the chance you might make a mistake in your balancing, you will have a little buffer there, to cover any small overage or miscalculation, and it will save you overdraft/overlimit fees, and NSF fees from the merchant end. The problem a lot of people seem to have with this trick, is they "remember" it is there, and end up spending it. They see something they want, then rationalize the fact they "know" they have the extra money in their account, so they spend it, fully intending to pay it back. But, life usually happens, they forget to pay it back, then they overdraw for whatever reason, and their "buffer" money is no longer there to protect them. Just put it there, and forget it...spend your other money as if you DO NOT have the buffer money there. I know a lot of banks will offer a line of credit (usually like $500) that will cover those overdrafts, but almost everyone I talk to, end up spending it like a credit card, then they keep overspending anyway, plus they now OWE more money. Keep the cash in there, you get the same protection, and if you do spend it, it's not debt.

A little tip on saving that extra money as a buffer, is when you make a purchase, make sure you round up to the next dollar amount when you record it in your register book. Say you buy an item for $4.50. When you write the purchase down in your register book, write it as a $5 purchase. It will keep the $.50 in there as a buffer. This will add up fast...I saved up almost $600 in a year, simply by doing this. Not bad for rounding up a few cents here, and a few cents really does add up quickly.

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Saturday, January 12, 2008

Playing games

Well, I was browsing through some new blogs of like-minded folks, and came across Mommies Home. She has a cool little post called the "Grocery Game". This caught my eye, as I personally challenge myself to save as much money as possible while grocery shopping each week. So, just what is this "Grocery Game"?

Well, I google the site, and check out the Grocery Game website. It's a pretty cool concept actually. For a small fee ($10 every 8 weeks), you get a store list, where they post upcoming sales at your area grocery stores, and then match those sales to manufacturer's coupons. Basically, you are paying for them to do the leg work to sift through the sale and coupon flyers, so you can maximize your savings.

Like I said, a pretty cool concept, and one I'm going to try out (you get a 4 week trial for $1). If I can save 25% off my grocery bill each week, that would be well worth it. But check out an example they give of an actual receipt with savings. To go from a $40 original total, to less than $2 is pretty phenomenal (albeit I assume rare). But still, if you can save $20 every 8 weeks (which you should have no problem doing), and it only costs you $10, that is still a decent savings, and comes out to $60 bucks a year...not a huge sum, but $60 bucks here, and $60 bucks there can add up fast...and SAVING MONEY is MAKING MONEY!!

I'll post in the coming weeks to let you all know how it works for me. Thanks again to Mommies Home.

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Friday, January 11, 2008

Do you and your spouse speak the same money language?

Sharing finances...probably the biggest cause of stress in relationships. Why? I would say the two key elements involved - communication and money.

When two people decide to start sharing their lives, money obviously is going to be a central focal point on which the relationship will hinge. If you have two savers, you'll probably be ok from the get go. Two spenders...not looking so good. A spender and a saver, here come the fireworks.

We are all raised with certain views on money. Combining those views with those of another can be a challenge. I'm a spender by nature, and my wife is a saver (she finally brought me to the light a few years back). I would spend, spend, spend, and tell her not worry about it, I had it covered (in credit card debt). When she found out we didn't have it, things were not happy in our household. Especially after I realized I had wiped out her $3000 savings account. Ouch! This caused some stress, to say the least. Ok, it caused a LOT of stress. Our first mistake was not communicating.

What we should have done, is sat down, and had a really thorough, and honest, discussion about each other's views on money. This was not only to find out where we differed, but where we agreed, so we could use that as a foundation of common ground to build on. From there, we really should have agreed, in writing, what we were going to with the money, and how it was spent. Again, this can lead to stress, but it's good, because it will help you work through it, and result in less stress later on in life. Some would say we, I say we had "intense fellowship".

Second, we needed to define what role money would have in our life. Would we master it, or would it master us? Sadly, I have to say, it mastered me most of my life. But when we started to communicate, and I realized I didn't know everything (my wife had been trying to tell me that for years now), especially about money, I realized I was a slave to the benjamin's (I know, a bad attempt at inserting pop culture references into my posts). That was my Spartacus moment. I rebelled against the role of master that money had taken, and led a financial revolution in my house. To quote Darth Vader, "I am the master now..."

Now, my wife and I talk about our finances more openly. We talk of ways and share ideas, on how to save more money, and get better deals. We set goals together, and encourage one another in accomplishing them. We sometimes compete to see who can find the better deal on something we need or want (after saving the cash to buy it, that is). It's actually become fun, and we have very little stress in our marriage, due to money. Why? Because we communicate.

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Thursday, January 10, 2008

Keep a financial journal

Tonight's going to be a short post, but one I think that will be powerful. Just like good things come in small packages (though my wife would say I'm a good thing that came in a big package, as I stand 6'5"), sometimes powerful words come in short posts.

Today's tip for saving money is to keep a financial journal.

A what?!? Yeah, you heard me, a financial journal. And no, it doesn't have to have a cute little heart on it, with a small locking clasp and really small key, that you have to keep hidden from your nosy little brother.

Personally, I had problems spending money. By nature I just LOVE to spend. I could not for the life of me find anywhere to cut corners on though, when i made the decision to cut back and save where I could, so I could have money to put into savings, so I could invest, and so I could get out of debt.

This is where the journal came in extremely handy. By simply writing down what I spent, when and where I spent it, and what I spent it on, I started to see patterns. I also started to tally the amounts up, and started to see some pretty significant figures. All those purchases were starting to hurt...they felt like a thousand cuts (ok, that was a shameless, gratuitous plug for yesterday's post).

Alright, now I have the information, you say, what do I do with it? Simple...look it over, and find the one spending pattern you can do without (we can really do without most of them, but we think we can't...that's why we spend in the first place), and stop spending that way. Whatever it is, make a small change in your habits, and focus on that one change, until it becomes a POSITIVE habit. When you have control over that spending habit, choose the next easiest one to give up from the remaining list. Sooner than you realize, you will have knocked that list down, and changed your spending habits, and you'll have stopped making your wallet thinner (wouldn't it be nice if we didn't have to focus on keeping everything thinner?).

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