Author Archive

Sound money advice has no sense of irony.

Spending money in order to save money seems contradictory, inconsistent, and just plain wrong. Saving and spending are opposites. How could they ever be complementary?

Though it may seem impossible, practicing sound spending can save money in the long run. Skimping on purchases or decisions today can lead to bigger problems down the road, which is why a little preventative medicine and a few extra dollars could be a very wise investment. Still skeptical? Take a look at the following five ways that a dollar today saves ten dollars tomorrow.

1. At the car lot.

Car shopping is an expensive endeavor no matter the circumstance. You are often talking thousands rather than hundreds when it comes to car buying. In a sense, then, what difference will a little bit extra make?

The dent in your wallet will feel insignificant compared to the long-term results. Upgrading a car from a junker to less of a junker might seem pointless in the present, but when parts start failing and gears start creaking, you will be glad you did. Spending on a reliable used vehicle can be a sound purchase, especially when considering the consequences. Bills for auto repairs are steep, which is why it is best to ensure that you are purchasing a car that is in decent shape and will hold up as long as you’ll need it. That is worth the extra money.

2. At the veterinarian.

People love their animals, but they also like to skimp on their animals’ vet bills. An extra lab test or a harmless medication get shrugged off more often than you might expect.

It is these same owners who, a few months later, end up spending significantly more money on a problem they could have avoided in the first place.

Paying up front for extra services like blood work or flea treatment is a prudent decision. With lab results, a doctor can tell if there is a problem on the horizon or a necessary adjustment to avoid future issues. With simple medications like flea treatments, you can save yourself from the cost of a more serious illness or infestation. The money spent on preventative medicine is often far less than the money spent on emergency problems.

The same advice could be given to human medicine, too. Society is constantly concerned with researching and discovering the symptoms of disease, but when the rubber meets the road, people are often hesitant about ponying up for extra services at the doctor’s office. If it works for pets, it will work for humans. Knowing where you stand health-wise can save time, money, and headaches down the road. A few extra dollars at a routine check-up could help you avoid hundreds of extra dollars at an urgent return trip.

3. At Costco.

Fortunately, this lesson in pre-emptive payment is already pretty popular. Warehouse stores like Costco offer consumers the chance to load up with bulk products, which helps cut down on constant trips to the supermarket for the same, small item. Buying in bulk is chic; it is also forward-thinking.
Like the rest of the items on this list, spending at Costco is a perfect example of the “spend now, save later” tenet. Let’s say a vat of peanut butter costs $14.95 at Costco, and a jar of peanut butter runs $3.99 at the grocery store. Frugal Frannies might see the cheaper alternative as the better deal, but that would be short-sighted. While they are running back to the store for their tenth refill of PB, Costco shoppers are still dipping their ladle into their peanut butter kiddie pool.

Similar savings is everywhere at stores like Costco. Nearly every household item from the kitchen to the closet can be had in bulk at warehouse prices. The initial hit to the wallet might be steeper than at the grocery store, but the frequency of trips will make up for the difference.

4. At the appliance store.

Refrigerators, washers and dryers, stoves, and dishwashers are important everyday items that often get overlooked in a home. Until something goes wrong. When problems strike, the cost of repair or replacement all of a sudden makes a wallflower appliance very noticeable.

To combat this trend, you should consider paying for a quality product the first time. Rather than going the cheap route on a product that gets routine use, the better decision would be to find one that can stand a consistent grind and last as long as it’s needed. Constant repair costs will add up, and before long, the money spent on a handyman will exceed the cost of upgrading in the first place.
On top of the repairs, buying a quality appliance can have a positive monetary effect on utility bills. EnergyStar appliances are created to use less energy than other machines, which is not only great for the environment but is also great for consumer savings. Rather than having a dishwasher that gorges itself on your water supply, a high quality machine will use as little water as possible and still get your dishes looking great. The lesser utility bills should pay for the upgrade in no time.

5. At the dentist.

Dentists get a bad rap. No one likes to visit them because of all the awful things they do to people’s mouths. Drills and enamels and braces! Oh my!

Yet most of the ruckus they raise is a direct result of irresponsible clients. Taking a pass on regular check-ups is a big reason why people get cavities and other dental issues. Sure, the thought of teeth probing is uncomfortable, but compared to the pain and cost of a root canal, a tooth exam is downright exciting.

Spending the money on a regular check-up at the dentist will help you avoid having to come back with a more serious problem. Dentists can catch problems before they start and keep you from running into trouble down the road. They want you to have healthy teeth, and they want you to save money in the long run. Besides, you can’t avoid them forever.

Barack Obama and John McCain have a long road in front of them. All the better for opportunistic money-conscious citizens.

Presidential candidates, in addition to having the responsibility of leading a powerful nation and influencing society for generations to come, provide a unique example of fiscal management.

Their methods of fund-raising and spending may not be reasonable blueprints for every man’s money situation, but their campaign duties and their day-to-day experiences represent apt metaphors for provincial financial peace.

Presidential Ideals

Responsibility, unity, and integrity are just a few of the foundational principles of American presidential candidates (in theory, of course). Each carries credence in the world of personal finance, too. McCain and Obama will be must-see TV on every major news channel, but in some regards, they could be just as intriguing as leading men on CNBC, Bloomberg, and other financial networks. Despite appearances, their campaigns do have carryover into both arenas, starting with the current hot topic of choosing a running mate.

And the Vice President is...

A Presidential candidate would be nothing without his vice president, which is why the decision to pick a right-hand man or woman carries so much weight. Picking the right one might mean a windfall of support and votes come November, but choosing poorly might cost a candidate their shot at the presidency.

Such costly decisions also weigh on the minds of typical consumers. In particular, one of the most important, and therefore most VP-like, is the choice of credit cards.

In a sense, the credit card is a running mate to one’s standard savings and checking accounts. The credit card, should anything happen to the savings or checking, gains full authority on spending until the greater accounts can return. Credit cards supplement one’s money situation by offering flexibility and convenience with nary a hunting trip snafu.

Chose Wisely

However, choosing the wrong card can have serious ramifications. If consumers choose a card that does not have the right payment terms or has too many fees, then their decision could be costly. Interest builds up faster than many expect, so picking poorly in this area has a chance to shoulder Lieberman-like ramifications.

Fortunately, there are people to help with the decision-making. Presidential candidates, not unlike consumers, do not go the road alone. When they make decisions, such as picking a vice president or even picking a matching shirt and tie, there is a cacophony of aides, advisors, and staff to assist them. Successful candidates are able to lean on these resources to help the process go by much smoother, but at the same time, they are able to sift through the good ideas and the bad ones to maintain a focused, strategic goal.

Get The Facts. Not Propaganda

Consumers are no different. We do not make our credit card decisions alone. We rarely make our grocery decisions alone. There are always an infinite number of resources to help us find the perfect this and the perfect that for whatever it is we need.

We owe it to ourselves to know where these resources are. Magazines, Internet sites, newspapers, friends, and family all have an opinion on what might be the best alternative for any given choice. A decision made with copious amounts of input will have a much better chance of success than one made in with our partisan perspective alone.

Whether or not we choose to listen to the advice is up to us. Like a good presidential candidate, consumers need to be able to find out which words are sage advice and which are hot air. Finding the difference between the two is easier said than done, but it also gets easier the more practice one has at it. Listening to advice from others might seem like information overload at first, but before long, tuning out the white noise and soaking in the wisdom may become second nature.

For sure, presidential candidates do not always make the right decisions. For that matter, neither do presidential Presidents. However, when they do err, the best candidates are able to take responsibility for their actions and move on to the next challenge having learned from their mistakes and being determined not to commit them again.

We Don't Always Choose Wisely

Likewise, consumers do not always make the right decisions, either (Segways come to mind). Buying a money-pit of a home or investing in a failed dot-com company can be serious setbacks to a personal portfolio. However, they are not the end of the world.

Responding to adversity, as the corny motivational saying goes, is key to success. Just because the market on pork bellies tanked is no reason to pack it in completely. There are still a number of great opportunities to grab hold of and seek out. Consumers need to take note from their future commanders-in-chief: soldier on and be better off for it.

A campaign without mistakes is a pipe dream, and a campaign run without confidence is doomed to fail. Candidates exude several emotions during their barnstorming tours across the country: glibness, courtesy, tolerability, sympathy. The list could go on and on. But the list would be pointless were it not for a campaign run with confidence.

With Great Power, Comes Great Responsibility

Candidates need to believe in their goals and ideals, and they need to have faith in the people who vote for them. Similarly, consumers need to have faith in their own ability to create financial victory. (Warning: here is where it gets all-American cheesy.) We, the people, have potential and opportunity unlike virtually anywhere else in the world. We have banks that reward prudent savings. We have free markets that pay for wise evaluation. We live in a country that desires to see its people have successful, meaningful lives, and we need to show the confidence in our own ability to do so.

Speech writing, politicking, and kissing babies are other hallmarks of a presidential race. In the same way, check writing, penny pinching, and kissing frivolous spending goodbye are tenets of solid financial planning. Much motivation can be found in the campaigns of McCain and Obama, and for the next few months, we will have an opportunity to be reminded of them plenty.

Making a purchase with a credit card can be exhilarating and rewarding one moment and regrettable and binding the next. For many, the joy of that tiny square of plastic monetary freedom becomes a ball-and-chain of debt faster than you can say “discount sale at Sears.” Yet others maintain a responsible, reliable account that provides a rewarding experience.

To own or not to own—that is the credit card question. While credit card debt plagues millions of Americans, just as many thrive on the flexibility and ease of paying with credit. Obviously, the magic of the little plastic card is not right for everyone. Take a look at the following pros and cons for credit cards to decide whether or not you should make the swipe.

Credit Card Pros

Convenience.

Credit cards wouldn’t be nearly as popular as they are today if they weren’t so maddeningly convenient. Paying at the store, at the pump, or at the ballgame is significantly easier with a piece of plastic that takes no immediate bite out of one’s pocketbook.

The fact that most major stores (and most minor ones) accept Visa, MasterCard, and Co. only adds to the handiness of carrying around a credit card. Lunch tabs and Lamborghini rentals could both be taken care of by a simple swipe. You name it, and a credit card can purchase it.

Peer pressure.

Everyone has one. That reason was good enough to spark digi-pets, and it is good enough for credit card applications, too. Watching your friends pay for meals with their American Expresses makes you feel pretty worthless when you break out your US Bank debit card to foot the bill for your soup and salad special.

Owning your very own piece of plastic provides a sense of belonging, serving as a platinum membership card into the world of commerce and retail. For college kids, owning one is a step towards adulthood. For adults, having one makes you feel like a true American. Either way, the pressure to fit in has a big say in whether or not you make the plunge.

Rewards.

One of the greatest parts to credit cards (other than the personalized pictures; hello spring break ’06!) is reaping the rewards for your spending habits. You worked long and hard to find the last copy of Pirates of the Caribbean in that Circuit City bargain bin, and you deserve every purchase point you get from paying on credit.

Depending on your card, the rewards can vary, but the good news is that there is such a wide variety of options that you are bound to be able to find the right card to fit your lifestyle. There are cards that offer plane tickets, sports merchandise, and good old-fashioned cash. Others build up a stockpile of points for cardholders to use to get whatever their hearts desire. Ironically, points may be used to achieve Pirates of the Caribbean DVDs.

Building credit.

Spending has its benefits (new jeans, perhaps), but spending with credit has benefits that go beyond mere denim. Using a credit card—and using it responsibly—can help build one’s credit score, which could mean a better shot at a loan or a better mortgage down the road.

The key part to using a credit card to build credit is keeping up with payments. Having a credit card does no good if you fall behind on payments or rack up an unconscionable amount of debt. Acting responsibly on your account, however, will help you build a credit score that reflects dependability and accountability.

Credit Card Cons

Late payments.

By far, the most dangerous part of credit cards is not paying them off on time, and for many, this problem is a constant temptation despite its obvious negative consequences.

Once you fall behind by one payment, the climb back to a debt-free account becomes harder and harder. Late fees, interest, and penalties build faster than you would believe, and you may find yourself making monthly payments that only cover your charges and don’t even touch your principal purchases.

Debt.

Often as a result of late payments, many people find themselves sunk in credit card debt with no way out. Credit card companies are great at getting customers in the door, but once you fall behind with payments, the companies make it nearly impossible for you to climb your way out. Between fees and charges and piling interest, the matter seems to continually get worse, not better.

If you cannot keep up with credit card payments, then owning a credit card is probably not for you. The disadvantages to not paying on time are innumerable, and the odds of staying debt-free are not in your favor.

Hidden fees.

Many times, credit card companies will say or do whatever it takes to get you to sign your name on their application. Of course, once that ink has dried, they’ll suddenly remember to tell you about start-up fees and processing fees that you never saw coming.

Annual fees are a big one, too. That credit card that earns you frequent flyer miles every time you buy might seem like a good idea, but for $100 a year, the right to own it may be too much.

Always check the fine print of a contract before you sign and ask if there are any extra fees. The free t-shirt just for signing up might be nice (and long-sleeved!), but the $50 paperwork fee isn’t.

Over-spending.

One of the most overlooked negative aspects to credit cards is the ease with which cardholders overspend. Really, the psychology behind this is simple. You purchase items without ever exchanging actual money, so you hardly feel like you’re paying anything at all.

But the joke is on you. Not only do you have to pay for everything at the end of the month, you may end up paying for far more than you ever intended. Without fail, people look at their month-end statements and are blown away at how much the charges totaled, yet when they are out there making their purchases, they think nothing of it.

If you have trouble staying focused on necessities when you’re out shopping, a credit card might mean the difference between purchasing the Gucci bag you don’t need or leaving it on the shelf.

The road trip is an annual rite of summer, but rising fuel costs may replace car rides with gas rations. Fortunately, there are still smart, effective ways of “getting your motor running” and “heading out on the highway” to your favorite destination.

Skyrocketing gas prices and a brooding economy don’t have to spell doom to KOA Across America. Wise travelers know how to avoid the pitfalls of price gouging and drive through the pain of economic duress to have a great trip this summer season. Follow this list of dos and don'ts to have a successful, sunny vacation.

Do carpool.

The best way to cut costs on gas prices is to split the cost among friends (ever wonder why there were three Magi?). There are a few different ways to do this. You could pool money at the start and dip into the reserve at every gas station. You could take turns paying at the pump at each stop. But whatever system you choose, do not fall for the “you buy gas, I’ll buy food” con job. Unless you plan on having steak at the gas station, this one will never work out in your favor.

In addition to saving money, you will also have a great time with people you love. Having a group of friends to travel with makes the experience that much better, especially if someone brings license plate bingo!

Do plan your breaks.

There is nothing worse than stopping at every town to grab a snack, use the bathroom, or take a picture. On top of the general annoyance and hassle of herky-jerky travel is the increased downside of an over-extended gas tank. It takes gasoline to idle and turn the engine off and on, so if you’re serious about saving on fuel, you’ll need to get serious about shortening your stops. Instead of pulling over whenever the mood (or bladder) hits you, try organizing your breaks to achieve optimal efficiency. When you gas up at the convenience store, everyone should hit the bathroom, stock up on snacks, and take pics all in the same place. Convenient, huh?

Do get gas in the city.

There are a couple of drawbacks to small towns: No Best Buys and high gas prices. Fill stations in Podunksville have little to no competition for the wallets of their auto patrons, meaning they can set the prices at whatever they choose and not lose any business. Local customers have to pay or turn Amish—a pricey proposition either way. A better alternative would be to pull over in big cities—or at least cities big enough to foster gas price competition. That way, instead of filling up on the first $4.00 pump you see, you can shop around and find your holy grail of $3.95 manna.

Do use cruise control.

Maintaining a steady speed can be as difficult as finding a Top 40 station in the middle of nowhere, so instead of riding your car ragged, slip on the cruise control and travel in style. The constant speed changes can wear out your gas cache faster than you think. Gunning it around a minivan and slowing down while you throw things at road signs can have a big impact on your gas mileage. Leave it on cruise control and you can save money and ride comfortably. You’ll still be able to pass the minivan and you were never going to hit that No Jake Brakes sign anyway.

Do get your car serviced.

Especially before road trips, it is important to go in for a tune-up and make sure, say, that your carburetor won’t give out in the Mojave Desert. Also, having a car as fit as a fiddle will help gas mileage immensely, since all parts will be in working order and everything will be working efficiently. Change the oil, dump in fluids, and inflate the tires. You’ll be glad you did

Don’t hyper-mile.

Yes, practicing hyper-miling (the art of wringing every last drop from your gas tank) can save you money. Also yes, hyper-miling can put you in the hospital. To be a successful hyper-miler you have to take some risks—like drafting behind semis or cutting the engine on freeway dips. Never mind the fact that most of these practices are illegal. They’re just not safe. If you value life over Chevron, then keep your hands at 10-and-2 and stick to the driver’s manual.

Do not speed.

Excessively. Keep in mind that the faster you go, the more gas you expend. Once you hit 40 miles per hour, your gas efficiency takes a turn for the worse. Depending on what you drive, you might consider slipping into overdrive or a higher gear to lower your engine’s revolutions per minute. Others might just choose to define “speed limit” the way the state police intend.

Do not enjoy the scenery.

At least, don’t enjoy the scenery so much that you feel the need to stop and take pictures. This item relates to the “Do Plan Breaks” mention; there’s no point wasting gas and ruining your momentum just to take family photos at a rock that looks like a loaf of bread. Scenic overlooks are obviously the work of Big Oil. Buy a postcard instead.

Do not turn on the air conditioning.

This last item is where things get testy. “No A/C?” you might ask. “Then what’s the point of being in a car? We might as well hitchhike!” As such, this item can be debated. What can’t be argued is that A/C makes your engine work harder and hard-working engines drink gas like it’s chocolate milk. If you can stand the heat, turn down the A/C, or plan your driving at night. But don’t compromise by rolling down the windows. It might cool you off but it will also build wind resistance. What a drag.

Between the excitement of moving into a new home and the closure of leaving an old one lies the tedium of moving. Hours are spent boxing up belongings and carefully wrapping fragile keepsakes only to spend even longer opening boxes and unwrapping items just a few days later. Whether the move is city-wide or state-wide, the chore remains an unenviable task.

Worse, the job can be expensive. Serious packers could end up spending hundreds of dollars on packing supplies and moving vans, and aloof movers could spend even more hiring someone to do the job for them. Moving costs are steep, and most of the time, people forget to budget for the multitude of money spent on getting from one place to another. Boxes, gas, padding, and manpower do not come very cheap, and while there really is no way to avoid the expenses of moving, there are certainly ways to curb the spending.

By following the five tips below, you should find the moving process to be easier and less expensive than you would have thought.

Plan ahead.

Before any other step, it is important to make a plan of attack for the moving process. Knowing what you need to accomplish and when tasks need to be completed will give you an advantage over a typical mover. Those who wait until the last minute to plan often find themselves frantically rushing to the moving store and plopping down wads of cash to make their moving problems go away.

Preparation will save you from the same fate. Find out how far you have to travel and how long it takes to get there. Start packing early so you aren’t stressed at the last minute. Label boxes and sort according to rooms to save yourself time and energy when you get to your new place.

The time spent sitting down and getting prepared will be invaluable when it comes to the bottom line. Knowing your needs while you still have time to act affords you an opportunity to save where others spend.

Borrow boxes.

Moving companies and storage facilities sell fancy cardboard boudoirs for a premium. They may be able to sort your wardrobe by style and hue, but for twenty bucks per container, they should launder, iron and hem, too.

Rather than shill for basic corrugated boxes, borrow your packing materials instead. Hit up your employer for their shipping and receiving parcels. Ask your next door neighbor for his leftover moving items. Find out if your neighborhood grocer could spare some broken-down cardboard.
Don’t end up spending out the nose for boxes you will only use for a few days. Similar styles and quality can be found for cheap and for free. No, your books may not be able to fit alphabetically, but yes, they will still get to your new home in one piece.

Scrounge for padding.

Like the extorting box industry, packing padding can also be a scary ride down the river Expensive. For everything from plastic popping pads to turquoise peanuts, look no further than the greedy shelves of your local moving business.

Instead of the expensive supplies one can find in stores, a simpler, cost-effective home alternative works just as well. The couture wrapping paper for plates and fragile wares can run a steep price, yet the same job can be done by wadded newspapers or soft paper towels. Bubble wrap might be fun to use (and abuse), but air-filled plastic bags do the same trick. There is a great alternative for nearly every product found in a packing store, and half the fun is finding creative ways to make things work.

Get a truck for a favor.

Once everything is boxed up, you will need a place to put it all. Again, moving companies are more than happy to help. Giant vans that can be bigger than your new digs would easily hold all your worldly possessions and then some. And, for those who are moving cross-country or across the state, a big van might be a necessity.

However, avoid these money pits if you can. In addition to paying for the rights to use the machine, companies will also charge you for insurance, damages, and many other fine-print items you would have never considered. Plus, it is your responsibility to feed these gas-guzzling behemoths.

If you have a shorter move on your hands, it would be best to call in one of your favors and get a friend’s truck to do the job. You can move a lot of your smaller boxes and lighter items by taking trips back and forth with your own vehicles. And when it comes to the bigger items (beds, couches, pop-a-shots), you should be able to fit everything into the bed of a friend’s truck. Of course, now you’ll owe your buddy big-time.

Employ your friends.

The actual moving part is a tough task, too. Packing and organizing is only a part of the battle; getting your belongings from Point A to Point B is an entirely other story.

Occasions like this are what friends and family are for. Extra pairs of hands and feet would make the job much easier and much quicker, and most of the time, friends and family are more than happy to help. Buying everyone pizza will be much less expensive than paying for professionals. Plus, Joe Muscles might be good at dead-lifting the piano, but he won’t be half as fun as working with your best pals. The dread of moving is much better when your friends and family are sharing your misery.