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Posted by DebtKid, Jul 31

Staycation

Earlier this morning Mike brought up the "staycation," an increasingly popular concept with gas and airline prices near all-time heights. Here are 7 tips for how to make your staycation both frugal and fun.

1. Lock up your electronics

Gather up computers, cell phones, and other electronic distractions that could keep you in your daily grind. The whole point of a vacation is to give your brain and body a refreshing change from daily life. Give your computer to your neighbor for the week and don't let him give it back to you during that time, even if you beg. If you must keep your cell phone on, set predetermined times when cell phone use is allowed (30 minutes in the afternoon for example).

2. Hire some help

Hire a cleaning service to take care of your home during your staycation. You'll feel more relaxed and the extra cost will be minimal compared to what you’ll be saving.

3. Plan activities

Plan a hike for the afternoon, then cooking s'mores in the backyard (or fireplace) and games in the evening. Set a strict schedule and stick to it. Depending on if you're looking for an active or more chill "getaway," schedule your book-reading/pool/lounging time accordingly.

4. Document your trip

Just like on a normal vacation, you'll want to remember your "staycation" through photos or videos. Plus, you'll definitely want to get a picture of your family piled in the tent in the backyard!

5. Explore your town

When tourists visit your city, where do they go? Take a day or two of your staycation and devote it to discovering or revisiting some of the top destinations in your area. Sure, you may feel like a tourist… but that's the point!

6. Order in

Forget cooking, you're on vacation! Have your meals delivered during your staycation so you won't need to worry about cooking. Or, hire an aspiring cook as found via craigslist or a local university for the week. Give them a budget and have them handle your meals as well as shopping.

7. Act the part

A true staycation means you don't pick up your cell phone. Don't check your work email or make "just one call". Sleep in. Don't set an alarm. Splurge on sorbet or ice cream. Go for a bike ride. Read a book for fun. Sunbathe.

The biggest key to a successful staycation is convincing your brain that you are really on vacation. Follow these tips and you're on your way to a frugal and fun vacation!


Posted by DebtKid, Jul 24

light bulb

I remember two things from the "Personal Finance" class taught at my high school:

  • It was taught by the shop teacher.
  • It was a complete joke.

I'm not alone in finding primary education severely lacking in teaching smart financial skills.

With Americans now saving a paltry $354 a year, we need a radical change in spending, saving and investing habits. "Good times" don’t last, and my generation (in high school during the dot-com boom) is experiencing its first financial shock.

So, how do we deal with it? Also, how do we prepare future generations to avoid the mistakes that we've made? If we're going to reduce our dependence on debt, improve our financial literacy, shun materialism and give our children a better future, we have to get creative. We have to get radical:

1. Mandatory Classes Before Your First Credit Card

Before a personal bankruptcy is discharged, you are required to a take a personal finance course. The course can be taken on line, and the curriculum isn't complete fluff. I should know. I had to take the class last year. While my personal finance transformation was already in progress, the class was useful.

So if the government makes debtors take a class once they've hit rock bottom (and file for bankruptcy) why not require people to take a finance class before they can get their first credit card?

Is it really so absurd? Teenagers must pass both a written and driving test before getting their learners permit, yet they can get a credit card without having any clue as to what they are getting themselves into. Why not have credit card companies require first-time credit card holders to pass a credit literacy test?

2. Subsidize Personal Emergency Fund Accounts

Many employers, including the federal government, have great 401K and other plans to entice employees to save for retirement. Many will match employee contributions by 100% or more. Regardless, many financial disasters occur well before people hit 65 years of age.

Why not have employers or government matching emergency fund accounts? We should be encouraging all Americans to have a fund set up for the unexpected. For every dollar saved up to a set limit (say $1000) it would be matched.

Why is an emergency fund so important? It can mean the difference between staying afloat and entering a deadly financial crisis. Half of all bankruptcies are due to medical bills, mostly from average Americans with health insurance. If you have a fund to cover a huge bank overdraft or unexpectedly large medical bills, you've just avoided a potentially huge setback.

3. Require New Hires to Complete a Budget

When a worker starts a new job, they should be required to complete a basic personal finance course before they receive their first paycheck. It could be done completely online. Don't finish the course = Don't get paid. It's simple.

The course could easily be tailored to with the new employee's salary or pay information. At the end of the course the new employee would have a basic budget set up, including their new salary.

4. Stop Watching Commercials

I don't care if you have to pay a little extra on your cable bill. Get a DVR or Tivo so you can skip commercials. Weather you realize it or not, the constant bombardment of advertisements on TV affects your behavior. If you can't skip commercials, take a lesson from my super financially savvy grandparents: Hit the Mute button.

What radical ideas do you have for how to cure our low financial literacy?

Leave your best and most radical ideas in a comment below.

Photo by apesara.


Posted by DebtKid, Jul 10

no pain

Saving money doesn't mean your life has to go back to the Stone Age. With the economy in the tank, everyone is looking to cut back. Some tips however, are just downright painful. I mean, no more Lattes... ever? Let's get real, people.

Here are 21 practical and mostly pain free tips to save cash now:

1. Reduce your cable package.

You can save $40+ a month by dropping those 200 channels you never watch. 24/7 Reality TV? That's just called “Life”.

2. Reduce your cell phone plan.

Take a look at your cell phone bill, if you're like many people you have way more minutes than you need. Drop your plan down. Make more calls in the evening and save $20 a month.

3. Plan your meals. Cook in bulk.

I was a boy scout for a year. It didn't work out for me but I did learn to "Be Prepared". If you plan your meals ahead of time you can cook in bulk and save money. Plus, who doesn't love leftovers?

4. Forget the theater. Get Netflix.

Two movie tickets and some popcorn can run you $30 today. Get a $20 plan from Netflix and catch up on some great TV on DVD (The Wire, The Office, Battlestar Galactica, Entourage, 24, LOST... so many great series)

5. Forget Netflix. Read a book.

To spend $0 this month on entertainment, hit up your local library. Not only do they have magazines, DVD, and books on tape, they have thousands of real books as well! It's incredible and 100% free.

6. Have a Picnic.

Instead of going out to a fancy dinner with your Significant Other, plan a romantic picnic. Not only will you save cash, you'll earn lots of points with your partner.

7. Buy local groceries, not corporate.

Can't live without your organic milk from Whole Foods? Organic food doesn't have to be expensive. You just need to know where to find it. Forget the big chains. Hit up your local Farmers Market where prices can be 50% what you'd pay at Whole Foods.

8. Carpool more.

Going out with friends? Does everyone really need to drive? Offer to pick up your buddies, and have them return the favor next time. Plus, you'll be able to get in the carpool lane without using that fake dummy of yours.

9. Keep your house cooler.

Keep your windows open in the morning. Keep lights turned off. You'll save electricity and keep your place cooler. More tips to keep your home cool in the summer.

10. Get a frugal battle buddy.

When you go through Army basic training, you get assigned a "battle buddy". Your buddy is there to make sure you make it. Get a frugal battle buddy and commit to frugal spending. Bonus: There are no push-ups in frugal boot camp!

11. Forget Vegas. Go camping.

Sure Vegas hotels are still cheap, but have you seen airfare prices? Forget it. Take a longer vacation in a state or national park. Your biggest expense can be food! Eat well, hike a bit, and enjoy the great outdoors. Sure, you can't bet it all on Red, but bring a deck of cards and you can always bet marshmallows.

12. Reduce sky-high interest rates.

Got credit card debt? Join the club. Call up your provider and ask for a rate reduction. Many will offer on the spot to reduce your rate (especially if you mention you're thinking of doing a balance transfer...). It's like asking a lady out, the worst they can so is no, right?

13. Refinance your high-interest debt.

If you're carrying over 5K in CC debt and have a credit score over 640 get a personal loan from Lending Club to refinance your credit card debt. You'll lower your monthly payments right away, and be debt free in a few years.

14. Walk to the grocery store.

Grocery store a mile away? Why not shop weekly ("real food" doesn't store!), and carry a light load a mile? It will be good for your health as well as your wallet!

15. Make your own lunch.

The brown bag is always a good way to go...just make sure and throw in a note to yourself just like Mom used to do!

16. Telecommute.

Ask your boss if you can telecommute one or more days a week. So them how you'll be more productive being able to work from home. You'll save gas as well as avoid peer pressure to eat out for lunch or happy hour.

17. Host a dinner party.

Don't feel like cooking? Why not just play host? Invite your pals over for a night of food and games. Just make sure everyone brings something! Everyone will thank you for hosting, and all you get stuck with is the dishes.

18. Become a Little League super-fan.

Want a great cheap source of entertainment? Hit up your local ball field and find a little league team to cheer on. I did this last summer, and it was a total blast. Sno-cones are cheap, and the higher level leagues play good ball.

19. Raise your deductible.

Are you pretty healthy? Don't visit the doctor much? Consider raising your health insurance deductible. You'll still be protected against a major medical event, but your insurance bill will drop.

20. Ditch Bank Fees.

Banks will eat away at your hard earned money if you let them. Analyze all your financial accounts for stupid fees. Switch banks or brokers if you need too, but don't pay fees you shouldn't.

21. Harness the Power of the Web.

Use comparison shopping engines (shopzilla.com, shopping.com, etc) to save on purchases online. Pickup dirt cheap steals on craigslist. There is no excuse for overpaying for that latest gadget.

Do you have any nearly painless tips to share, on how to save money today? Please share your best one!

Photo by kumanday.


Posted by DebtKid, Jul 3

U.S. Constitution

Our nation is no stranger to financial difficulty. Let's look back a few centuries...

During the Revolutionary War, funding severely hampered our efforts to fight the British. The Continental Dollar created during the Second Continental Congress in 1775 faced competition not only from states' individual currencies, but from British counterfeiters as well.

Needless to say, our nation did not start out on the most solid of financial footing.

As the British invaded the South in 1780, the financial situation of the fledgling Revolution got even bleaker. Britain continued to counterfeit the Continental dollar; states kept printing more of their currency. Inflation was rampant. Congress increasingly began to rely on domestic and French loans. The confiscation of property was even authorized.

Even after the victory over the British, it wasn't until 1787 when Congress met to completely revise the Articles of Confederation (with the Constitution of course) that some stabilization was achieved. Viewed from an economic standpoint, the Constitution was finally able to solve many of our early financial problems. It allowed regulation of interstate commerce, and the ability of a national government to tax and protect its growing borders in the West. Our Constitution is a very powerful financial document indeed.

So, why the history lesson of our nations early financial woes?

Once again, as a nation we are facing circumstances where our finances might hamper our ability to flourish. Only this time, we have no British empire to blame.

Our founding fathers faced financial crises creating a new country. We often face financial difficulty because of rampant consumerism and a culture of entitlement: We bought that big house, and we just had to have that new car. I imagine if the founders could see what modern-day Americans go into debt for, they would be flabbergasted. Getting a loan to finance a new business venture or to pay off high-interest credit cards can be good debt choices. The truth though, is that most of our modern-day debt is not "good debt". It's an accumulation of eating out every day, and of buying that latest gadget we "must have". It's the mentality that we not only can have - but deserve - whatever we desire at the drop of hat.

Our entitlement mentality needs to be broken. It's a mentality that is flawed. So as you celebrate our Nation's Independence this Friday, make a commitment to declare your independence from bad debt. It may take some time to get your new financial footing set, but at least you don't have to convene a Congress to get it done!

Have a great and safe 4th of July!

Source: eh.net
Photo by bootbearwdc

Posted by DebtKid, Jun 24

Banks now get an average of 27% of their revenue from fees. That's a lot of cash out of your pocket! In fact, a typical account fee of just $6 could buy you at least a 6-pack of crush. Mmm... orange goodness.

The good news is that even these 7 most aggravating fees can be Crushed.

What exactly is "Crushing a fee"? You see, Crush in a bottle is quite a sweet refreshing drink. This is exactly how you should first approach reversing any bank fee. But if sweet doesn't work, you'll need to knock some heads around, and thus the glass bottle comes in handy. This is just an analogy of course, but you get the point. Let’s move on to the 7 fees and how to "Crush" them...

7. The Teller Fee

Not as common as it used to be, some banks will still charge you to discuss certain transactions with a teller. It's like a bad 900 number...

Solution: Don't give your business to a bank that charges you to talk to a teller. There are plenty of options include credit unions that won't ever charge you to talk to your banker.

6. The ATM Fee

ATM fees can get you on two ends if you use an ATM that is outside your bank's network. The ATM itself can charge you anywhere from $2 to $5 just to make a withdrawal. On top of that most banks will charge you around $2.50 for making withdrawals from an out of network ATM.

Solution: Get cash from your bank's ATM. Plan ahead when you need cash, or try a bank that gives you a few free out of network ATM withdrawals a month (credit unions are great for this). Also, consider choosing a bank that has a branch or many ATM's near where you live and/or work.

5. The Account Balance Fee

Some accounts have minimum balances that need to be kept. If you fall below those balances, bam! Fee. The fee often outweighs any benefits you might receive from that type of account (minimal interest bearing, for example).

Solution: Get a minimal amount of cash in a free checking account. Stash the rest in a high-yield savings account that you can electronically transfer in and out quickly.

4. The Over Limit Fee

This applies to most bank credit cards or lines of credit. When you charge more on your credit card or line of credit than your available credit, you're gonna get hit with this fee.

Solution: Call your bank and ask them to decline any charges over your account limit. Or even better, watch your balances and make sure you always stay below your limit.

3. The "Paper Anything" Fee

Want paper statements? Fee. Want paper copies of checks? Fee. Pretty much anything not delivered electronically these days will get you dinged with a fee.

Solution: Embrace technology, dude. If you really need a paper statement, you can always request one from your bank (for a fee of course). Otherwise, stick to e-delivery, avoid the fees and make Captain Planet proud.

2. The Dormant Account Fee

Not using that account much? That's gonna cost you as well. When no activity is recorded for a certain amount of time (12 months is standard), many banks will charge you a fee for not doing anything. Yes, it's crazy.

Solution: Close the account if you're truly not using it much. Plus, the fewer accounts you have to keep track of, the simpler tracking your finances can be.

1. The Overdraft Fee

Easily the most common, and frustrating fee for consumers, the overdraft fee can be defeated. With many banks in the UK approaching $57 overdraft fees, learning how to avoid and combat overdraft fees is a must for any frugal American.

Solutions:

  1. Most banks will waive your first overdraft fee with them, but you have to give them a call or go into your branch to request this.
  2. If you get hit with multiple overdraft fees in excess of $100, you likely won't get them all removed, but a call can usually get them cut in half. Ask the customer service rep to get approval from a manager right off the bat for this type of request.
  3. Setup a small no-fee savings account to act as an overdraft protection account. If you do overdraft, you'll still get hit with a fee, but it will be in the $10 range vs. a typical $30-something overdraft fee.
  4. Avoid using your debit card, pay with cash or credit.

Do you have any fees that frustrate you? How did you Crush them?

Photo by darwinbell.

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