Illustration by OConnorCartoons.com
This is a post by BargainBabe.com writer Yazmin Cruz.
Reader Gabrielle wins my review copy of “Cash, Credit, and Your Finances: The Teen Years,” for her funny comment about needing the book not only for her spoiled children but her husband as well. She wrote:
My teenager, you mean my hubby. I need this for my teenage like husband! HAHA!! No, but we have two pre-teens whom my mother-in-law has spoiled to no end & ruined any attempt I have put in to teach them about money, saving, & spending when needed instead of on any little thing they can afford.
Gabrielle, I love your honesty about your kids being spoiled. It is my hope that this book helps them learn about money and the importance of saving. Although the book is aimed at teens, I’m sure your husband will also learn a couple of things. When reading the book, I was reminded I had to set money aside from my freelancing paychecks to pay for federal and state taxes when the time comes around. I’m no longer a teen but the learning never stops.
If you missed my review of the book, author Jill Russo Foster says that teaching teens about money is the key to avoiding debt. Her easy-to-read book includes information from creating a budget to avoiding identity theft. This book is the first in a series of three books on personal finances by Foster.
Gabrielle, email me to claim your prize and include an address where I can ship the book to.
If you didn’t win my review copy and would like to get the book for your teen or you’d like to brush up on the basics, Amazon has it for $15.25.
If you are the parent of a teen and have been looking for the right time to talk to him or her about money – now is the time. Jill Russo Foster, author of “Cash, Credit, and Your Finances: The Teen Years
I’ve come to believe that financial education is the key for everyone. The sooner you start learning about money and personal finance, the sooner you can take control of your own finances. This book will start you off in the right direction and teach you how to build good financial habits.
Foster, who is now in the mortgage industry, started her financial career right out of college when she began working as a bank teller in an affluent neighborhood. She recounts that most people she saw at the bank wore designer clothes, had the latest car and were also on the overdraft list.
In the book, Foster uses examples of five teens that were given her book to read and later tells of the changes they made to change their money habits. The teens’ stories and her own – she admits to having 27 credit cards at one point – make the book easy to read. Your teen will be able to relate to the teens’ stories and learn from their success and failures.
This 84-page book will teach your teen about the basics of managing their money – think allowances and babysitting money – while thinking of long term goals like saving for college and short term goals like buying an iPod. The book is divided into five chapters that are filled with worksheets and practical examples for teens to understand. The chapters include information on creating a budget, the banking system, establishing credit, strategies for paying for college, avoiding identity theft and making major purchases.
This book is the first in a series of three books on personal finances by Foster. If you would like to win a copy of “Cash, Credit, and Your Finances: The Teen Years” for your teen, leave a comment explaining why your teen needs to read this book. If you can’t wait to get a copy, you can buy it on Amazon
Buying a copy supports BargainBabe.com.
By Bobbi Burger Brunoehler of Bobbisbargains.
HikingArtist.com/Flickr
I have just 25 minutes to speak about budgets at an upcoming conference – such a short period of time. As I started to prepare my talk I realized staying on budget and out of debt has only five key points.
1. You have to want it. No seminar, book or popular online money management software will help you to stay on budget unless you really want to. It’s like quitting smoking cigarettes. You must make a firm and true decision to DO IT!
2. Spend less than you make. Oh so easy to say but that is the bottom line. Somehow you have to increase your income and/or decrease your outgo until you are spending less than you make. It’s simple math.
3. You have to spend time looking at actual numbers. Our finances have become so automated that you can get paid, buy your food, pay your bills and transfer money to your significant other’s account without ever having to actually confront your economic condition. I spend at least one day a month going over my finances with a fine tooth comb. I examine all the receipts and evaluate where we are spending money. I balance every month’s statement and earmark money for upcoming expenses (like my daughter’s birthday or a new mattress.) I do most of my accounting with pen and paper. Bargain Babe has a 15-minute budget that is fairly simple.
4. Spending should not be an emotional decision. I don’t buy something (like a $750 leather jacket) because I “just HAVE to have it” or I “can’t live without it.” If I want it so badly, I should plan for it. Most often, all the items you buy on impulse won’t stand the test of time. Of course, I have a slush fund built into my budget that allows me the luxury of buying a little something (like a pretty hair clip) for myself when I see it – IF I really want it.
5. Ensure that the entire family understands and agrees with the above four items. It is vital that everyone is on the same page when it comes to budgeting. If necessary, have family meetings to go over these points until you have agreement. It just won’t work if everyone isn’t on board.
I’d love to hear any of your budgeting tips.
Casey Serin/Flickr
I get a lot of financial snail mail that I’m not sure if I should keep or not. I’m not talking about monthly bills – almost all of those I receive and pay electronically – but monthly statements, prospectuses, agreements about and changes to my investment account, and disclosure pamphlets. I get the feeling my bank is required by law to send this info to me, but if I read each of these brochures I would be up until 2 a.m.
My area of expertise is in everyday finance, not high finance. Instead of picking up the phone and tracking down an expert for an interview, I wanted to ask the BargainBabe.com community for their opinion.
What financial snail mail do you read? What do you keep? Is it necessary to shred everything I toss?
This change is weighing me down.
Grab your wallet and examine the contents. Are you carrying around things that make you vulnerable to identity theft? Are you needlessly carrying around receipts and cards that weigh you down? Are you missing important documents should you get into an accident? In my case, the answers are yes, yes, and yes.
Here is what’s in my wallet:
Vitals – license and current insurance card
Money – $41 in cash plus $4.91 in change
Plastic – main credit card, debit card, and AAA card
Plastic money – gift cards to Starbucks, TJ Maxx, Jo-Anns,
Plastic that is occasionally useful – loyalty cards for FedEx Kinkos, The Body Shop, Club Bev, Anthropologie, and the Ocean State Library system
Paper – 18 receipts, 8 coupons, two business cards, and a sticky note with two ID numbers I use for work
Lists – contents of boxes that I put in storage and carried in my cheap cross country move
Personal – two pictures of me and friends, two bobbi pins, half of a picture frame mount
My excavation was promoted by an email I received from a women’s personal finance site called LearnVest.com. According to the site, there are only 10 things you should carry.
1. Your main credit card—only.
2. $25 to $50 in cash.
3. A.T.M./debit card.
4. Driver’s license.
5. Insurance card for both health and auto insurance.
6. Transportation card, such as an unlimited rail pass.
7. Reward cards for stores you visit frequently (grocery, drug store, etc.).
8. Gift cards.
9. Membership cards (such as to your gym).
10. Airline cards.
Now for what not to carry in your wallet.
1. Personal information like your PIN (although a first name and phone number is OK in a note to someone who find’s your wallet)
2. Account numbers
3. Social Security card
4. Back up credit cards (they belong in a safe place at home)
Opps! I made three mistakes. Carrying around two ID numbers for work could make me vulnerable if someone know how to also log into that account. My receipt load is way too high; it’s time to sort out what I need to file and shred the rest. And I took my health insurance card out a few days ago and forgot to put it back in, which is a no no.
How did you do?
A bank vole captured by blackclough/Flickr
I recently switched banks for a higher interest rate on my checking account. My new bank is nontraditional so I had to consider what behaviors would let me take advantage of the account fully.
1. My bank does not have their own ATMs. However, all my ATM fees are refunded to me on a monthly schedule. As crazy as it seems, this is probably cheaper for the bank than maintaining thousands of ATMs across the country. I try to use the ATM only once a month so I don’t rack up a lot of fees, even though they are reimbursed, because I figure the bank factors the expense into other services.
2. My bank does not have traditional branches so I do not have access to bank tellers to make large cash withdrawals or deposits. This is rare for me, but uncomfortable if it comes up. The branches accept check deposits or I can mail in deposits.
3. The branches are few and far between so I do the vast majority of my banking online, through the mail, or over the phone. The bank website is great, I can request free deposit envelopes through the mail, and the US-based phone service is excellent.
4. I have free checking as long as I have a debit card for the account. This is my first debit card ever and I usually use it for small purchases. It does not feel as safe as using a credit card, however. I think that is just me.
5. My other bank services are free as long as I have a brokerage account, which I use to fund my ROTH-IRA. I like having my checking, savings, and IRA all through the same bank, though I’m worried it makes me more vulnerable if my identity is ever stolen.
All told, I’ve had to adapt my banking habits slightly to take advantage of my new nontraditional bank. But I think I made the right decision because I pay no monthly bank fees and my interest rate is higher that my previous bank. Knowing this, would you bank with a nontraditional bank?
Anthrocopy/Flickr
Reader Diane sent me a darn good question via a comment on my post about approaching the end of my credit card ban. “When the experiment is over, will you go back to spending as before or will you make some changes,” Diane asked. “Either way, why?” My month-long cash-only spending experiment definitely changed the way I will spend money. Going forward I’m going to make three changes.
- I’m no longer going to rely strictly on credit cards because I scrutinize purchases more with cash. My goal is to use cash for everything under $50, which are the purchases that have the most wiggle room. Think I’m giving up a ton of credit cards perks? During the past seven months I earned an average of $16 in cash-back rewards each month. With cash I spent $200 less. That’s a much bigger perk!
- I’m going to strictly use cash for groceries because I spend so much more carefully with greenbacks. My dollars are finite no matter how I pay, but using cash makes my limits feel more apparent.
- I’m going to leave my credit card at home unless I specifically plan to use it. The more I pre-think about purchases before I leave home, the more likely I am to spend less.
Before the experiment I used to use cash for about 10% of my purchases and credit for the other 90%. Now I think my ratio is going to be closer to 60/40. What’s your ratio?
Clemson/Flickr
I was tempted to use my credit card four times this month, despite my pledge to spend only cash. None of the purchases were hard to push off or say no to. (I also put off purchasing airfare and making a hotel reservation for a blogging conference in July.)
1. A letter from my Alma Mater asking for money prompted me to pull out my credit card. Then I remembered my self-imposed ban. The letter is in my queue for May.
2. A coupon to renew my BargainBabe.com domain made me seriously consider breaking my credit card ban to get the discount. But the URL does not expire until June, so I can re-up in May.
3. A deal for a haircut (which I’m in need of) and hair coloring (which I’ve been contemplating) for $95 (orig. $225) landed in my inbox via SocialBuy, a new Groupon-type site for Los Angeles deals. I’m glad I passed, however, because a few days later I got a recommendation for a woman in Glendale who gives cuts for $20. My appointment is next week. (Full disclosure: SocialBuy’s founder is a friend of mine and is helping me improve my site).
4. Last year I forked over a whopping $400 over carelessly losing my iPhone. Ouch. A friend told me insuring an iPhone is super cheap, and indeed AppleCare costs $69 for hardware and software support, battery fixes, and phone support. The policy lasts for two years from the purchase date, so if I buy it in May I’ll get 19 months of coverage, which is less than $4 a month. The policy does not include damage from negligence, loss, or theft, however, so I may pursue other policies.
Frankly, I’m surprised that not a single purchase that required a credit card came up in April. I fully expected to confront 2-3 transactions that required credit. Is credit necessary after all?
Dplanet/Flickr
The day of reckoning is here. I sorted through my receipts and tallied my discretionary expenditures during my month-long cash-only experiment. The tally below does not include fixed bills like rent. (New to my forward-thinking budgeting system? It takes 15 minutes to set up.)
Overall, more than a third of my discretionary spending – 35 percent – is unaccounted for because I forgot to ask for a receipt. That means a picture of my spending provided below is woefully incomplete. This is also why some of my category totals, like meals out, seem low.
A number of seemingly random items sucked up my dollars – like bike repairs and gear in preparation for a triathlon May 1. I say seemingly random because unusual expenses like these pop up every month without fail. This is the main reason I created a forward-thinking budgeting system.
My totals for each spending category include tax.
Groceries: $172.22
Meals out, including coffee: $21.12
Drugstore items: $43.10
Bicycling gear and repairs: $169.38, including $100 to ship bike across the country and back
Business supplies: $15.86
Ski trip: $95
House and garden: $45.52
Gas:$41.57
Camping: $40
TOTAL accounted for spending for April: $643.77
TOTAL ATM withdrawals: $1,000
Cash left in my pocket: $11 (to last me until Saturday)
Total unaccounted spending: $345.23
Total rebates and gift cards earned: $29.69
Percent of spending unaccounted for: 35 percent!
My month-long cash-only experiment has taught me a lot about money. I dipped into savings only once, and that was to cover a $533 emergency mattress purchase. I’m telling you it really was an emergency! Grocery shopping takes longer because, with a finite supply of cash in my pocket, I add up the cost of each item I put into my cart so that I have enough money at check out.
By Bobbi Burger Brunoehler of BobbisBargains
Evil_Erin/Flickr
Although cigarette smoking has become less cool than it used to be, there are still millions of people who are addicted to a $5-$8/pack a day habit. You have already heard smoking is bad for your health. I’m here to tell you it is bad for your budget, just as BargainBabe.com blogger Mike Barclay did last month. This post is for anyone who is a smoker or knows a smoker who really wants to stop.
First of all, let me tell you that I was a THREE pack a day smoker. How can anyone smoke that much? If you live on cigarettes and coffee and have a cig burning at all times. I know about smoking and quitting smoking.
A recent study found the cost of cigarettes nationwide is $5.28, plus local taxes. There are places online where you can buy them for less (no…. I am NOT going to put a link.) How much does your pack-a-day habit cost?
365 x $5.28/pack = $1,927
Egad! I’ve has passed out from excessive waste of money. Over twenty year’s time, that would be $38,544 or enough to put a 20% down payment on a $192,720 home.
I wouldn’t write this if I didn’t know about a solution. Allen Carr wrote a book called The Easy Way to Stop Smoking
Carr’s book has sold over 12 million copies so you can certainly find a copy for free through Freecycle or a paperback swap site. Carr’s website has celebrity testimonials on the power of this simple, yet extremely effective method to quit smoking. Check out Carr’s website and book if you truly want to quit smoking.
Have you quit smoking? What method worked for you?
Don Hankins/Flickr
This post is brought to you by Mint.com, a destination for budgeting software.
A friend needed quick advice after discovering – gasp! – fraudulent charges on her combo credit/debit/ATM card. She wrote:
Someone in Massachusetts has taken money directly out of my checking account for shoes and McDonalds! F—–s! I will get the money it back – eventually – but I’m still mad. It has woken me up. I HAVE to stop using an atm/debit card. It’s just an accident waiting to happen. Any suggestions Ms. Bargain Babe?
Yes! Here are seven steps to take if your identity has been stolen.
1. Call your bank immediately and cancel the card if fraud is evident.
2. Call any one of the three credit reporting agencies and ask them to put a fraud alert on your credit report. TransUnion is at 800-680-7289. Equifax is at 800-525-6285. Experian is at 888-397-3742.
3. Call your other credit and debit cards and check for suspicious charges. Ask the company to raise the identity theft awareness level and be very wary of new purchases, especially ones out of state or abroad. Internet purchases often show up as out of state, so ask if they can distinguish in-person charges from online purchases. For example, my friend can prove that she wasn’t grubbing on McDonald’s in Massachusetts so she will be able to get her money back. If you have travel plans, call and make them aware. (This is wise anytime you plan to use your card abroad.)
4. Request a copy of your credit report to make sure no new accounts have been taken out in your name. You can get one free each year through the FTC.
5. Try to figure out how your identity was stolen. It’s possible the thief has not used all the information s/he has. Change your passwords for all your banking accounts and others that may have been compromised.
6. Consider purchasing identity theft insurance or monitoring protection. Shop around to find what fits your needs and budget.
7. The FTC recommends you file a police report in the area where the theft occurred and you file a complaint with the FTC. You can start both of those steps here.
UPDATE: My friend took some of these steps and found out how her information was stolen.
Katrina.Tuliao/Flickr
I just got word of a new web series from MSN.com that is looking for financially stable individuals and families who want financial investment guidance to appear on the show. If selected, a bunch of experts will help you out to address problems, set goals, and make plans to meet them!
The show, which will be shown online, is casting in New York, Los Angeles, Chicago, Portland, Denver, Miami, Omaha, and Dallas. Submit the following info by March 26, 2010 via email to investorcasting@gmail.com.
Your email submission should include your name, location, contact info, and a recent photo of you and your family. You must be 18 or older to participate.
Here are the types of people they are looking for.
1. A NEW INVESTOR with POSITIVE CASH FLOW who will explore riskier investments
2. A seasoned and CONFIDENT INVESTOR who has SIGNIFICANT SAVINGS (i.e. 2 years salary)
3. An active RISKY INVESTOR who has a very LARGE PORTFOLIO
4. Someone who does most of their TRADES ONLINE who wants ADVANCED investment skills
5. A CAUTIOUS INVESTOR who wants INDEPENDENCE from their broker
6. A person in their PEAK EARNING years who needs an UPDATED financial plan
7. Someone with HIGH FUTURE INCOME potential who wants ADVENTUROUS YET SAFE investments
If you purchased an annuity as a retirement savings plan, chances are you never imagined that you might one day want to sell it. But circumstances change, your financial needs may be different than you imagined and an annuity can be a viable source of money if you choose to cash it in. If you’re considering selling and need to calculate the cash value of an annuity, there are a number of factors to consider.
Cashing in vs. Selling Your Annuity
Some annuity contracts come with a built-in option to cash them in before their term is up, and receive a cash amount instead of the full annuity. This might seem like the easiest option for those who want to receive the cash value of an annuity, but it does come with some consequences.
This isn’t possible for many annuities and when it is permitted, the insurance companies will only give you a fraction of the remaining total. This can severely devalue the annuity and cause a significant loss of funds.
The other option is to sell your annuity to a factoring company, like J.G. Wentworth, that purchases annuities in exchange for a lump sum of cash. You will receive your money within a few weeks of filling out the necessary documents and at the best rates available.
This is paid content. Want to take out an ad? Read my advertise page.
orphanjones/Flickrp
This post is brought to you by Plumbing Q & A, where you can get all your plumbing questions answered.
When deciding whether to do a home improvement project yourself or hire someone, it’s useful to know how much money you earn in an hour. The April issue of Real Simple shares this two-part calculator.
Part 1 Income
Your monthly take-home income after taxes:
Add up all your costs associated with working.
Coffee runs with coworkers:
Commuting:
Clothing:
Dry cleaning:
Unreimbursed business meals:
Child care:
Subscriptions:
Business supplies:
Other:
Total work expenses:
Real monthly income (income minus work expenses):
Part 2 Hours
How many hours do you work in a month (40 hours per week times 4 weeks = 160 hours per month):
How many hours do you spend commuting (round trip commute x 20 days):
Additional hours spent on work (reading, continuing education, travel):
Total work hours:
Your hourly wage rate (real monthly income divided by total work hours):
Use your hourly rate to determine if it is a better idea to hire a professional or do the work yourself. But remember, just because hired help may be cheaper per hour than your hourly rate does not mean you have the money to spare!
This post is brought to you by CouponCactus.com, a great source of online coupon codes for taxes, groceries, and more.
Woman are better at riding out stock market crashes, while men are more likely to sell during lows, says the Sunday’s New York Times. “There’s been a lot of academic research suggesting that men think they know what they’re doing, even when they really don’t know what they’re doing,” said John Ameriks, a Vanguard exec who co-authored the study. (Kind of like how men hate asking for directions…)
Men’s overconfidence led them to trade stocks nearly 50 percent more often than women. “This added trading drove up the men’s costs and lowered their returns,” the story said.
It is interesting that the story and the researchers interpret men’s propensity for selling in a volatile market as overconfidence and not emotional weakness. I bet many people – men and women – who sold stocks as the market fell last year were motivated by fear. Fear that their investments, their retirement, and their future would be dashed if they didn’t do something about it.
The emotional pressure to survive a falling stock market may have been felt greater by men, who carry a societal burden to be breadwinners. That could be a factor in why men mistakenly sold off stocks more often then women. If there’s one thing I’ve heard about being a good investor, it is that you can’t make financial decisions based on emotions and come out ahead.
Men’s overconfidence, however, also led them to take greater risks than women, which can mean bigger returns. Women feel safer with the slow and steady earnings from bonds, apparently.
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It’s unclear how significant these differences are, and the reasons behind it. Nature? Nurture? Or…? Researchers are studying how our emotions effect our finances and are looking at ties between testosterone and risk-taking. In the meantime, I’m holding onto what I’ve got.
