$5 off $5 Purchase at Sears

I just learned, that Sears is offering $5 off of any tool or home and garden purchase of $5 or more through January 22, 2008. Hurry! Sounds like a great deal.

Print out the coupon, and head to the store for your own bargain.

"Savings Bomb"

I recently saw an article on Yahoo.

TOKYO (AFP) - Graying Japan has a new weapon to scare people into saving for their retirement -- an exploding piggy bank.

According to toy manufacturer TOMY, the "Savings Bomb," that went on sale this week (in Japan), "explodes" and scatters coins if the user fails to save for a long time.

The battery-powered toy -- designed as a cartoon-style, ball-shaped black bomb with a skull and crossbones logo -- lights up, makes a noise, shakes violently and scatters coins if it is not topped up for a long time.

"Users must pick up and collect the scattered coins and reflect on their laziness," the Japanese company said.

As someone who likes to collect piggy (or coin) banks, I simply must have this one. I have no idea, if it ever will be available in the United States, but it sounds awesome. I mean talk about "breaking the bank."

I also think it would be an awesome item to use as a giveaway, if I were given more then the one for my collection.

First the bomb bank begins to quiver and quake, then it emits a rising crescendo of destructive sounds. The climax comes when the bank splits asunder, spewing out its hoard of coins and leaving you to pick up the pieces of eight. Don't worry though, what comes apart goes back together again - leaving you none the richer but much the wiser! Fun a-plenty for just 2,922 yen (about $25) at most Japanese department stores. (via NewLaunches.com)

History of the Piggy Bank

Have you ever wondered why we save coins in a piggy bank? Dogs bury bones. Squirrels gather nuts to last through the winter. Camels store food and water so they can travel many days across deserts. But do pigs save anything? No! Pigs save nothing. They bury nothing. They store nothing. So why do we save our coins in a piggy bank?

Some say it come from the Middle Ages, metal was expensive and seldom used for household wares. Instead, dishes and pots were made of an economical clay called pygg. Whenever housewives could save an extra coin, they dropped it into one of their clay jars.They called this their pygg bank or their piggy bank.

However, there is another story that seems to be more reliable. According to Legends of America.

In the early 1900’s, a ten year-old boy, impressed by a traveling missionary’s sermon about lepers, decided to raise money to help a boy suffering from the disease. Raising a pig named Pete, Wilbur Chapman, sold the pig, donating the $25.00 from the sale to the boy with leprosy. His compassion caught the imagination of the public and started the “Pig Bank Movement” to help lepers and the name “piggy bank” was coined. A plaque commemorating the boy and the idea of the “piggy bank” is mounted on the Community Christian Church on Main Street.

It seems he bought the pig for $3 (as a piglet) and then sold it (after raising it) for the $25 mentioned in the paragraph above. On a side note, this is also the answer to why the pig in Charlotte's Web is named Wilbur.

So there you have it. That is why we have the piggy bank, instead of the squirrel bank.

In addition the Oct. 30, 1933 issue of Time magazine told this story:

Contributors to the American Mission to Lepers, which now supports 184 leproseries, own toy pig banks in which they deposit their odd coins. The idea developed 20 years ago when Wilbur Chapman, Kansas farm boy, bought a piglet, named him Pete, raised him to pighood, gave his profit to Leper missions. Last week Mr. Chapman, now a St. Paul electrical engineer, visited Manhattan to permit a firm-willed patrician from Richmond, Va., Mrs. Robert Randolph Harrison, to pin a silver medal on him for his boyhood initiative. Mrs. Harrison during the ceremony wore a little gold pig on a brooch over her heart; she is the "Honorable First Pig Lady in America," for ingeniously transforming Mr. Chapman's pig-fund idea. Like 80,000 others who learned from her, she sends toy pig banks to her friends. Proudly she recalled last week: "I started with six little pigs, and in the first year raised $45. Now in Richmond I am able to raise in good years $2,000 through 400 pigs I have out. . . ."

If you like this post, buy me a piggy bank

This Got Me Thinking: How Do You Save?

Everyday, I get the Kansas City Star's Midday Business Report in my email box. Today, there was a story that caught my eye (Readers offer ideas for saving).
With great interest I read the article. Some ideas were new, most however have been discussed in various posts on this blog.

For example:

Thomas A. Haunty, a certified financial planner in Madison, Wis., advises avoiding big house and car payments.

“I have found that two major causes of lower savings rates are too large of a house and too-big auto payments,” he said.

In particularly, buying a smaller house than the bank or mortgage company says you can afford “ripples through your finances so that you have much more cash flow,” Haunty said.

“Smaller houses have smaller repair costs, smaller remodeling costs, smaller property taxes, less space to furnish, etc., etc.,” he said (among the etceteras, utility and insurance bills immediately come to mind).

I have advocated the last 2-years to buy smaller homes and cars and then move up as you need to. Of course, this guy still advocates getting a loan, whereas I recommend saving for these expenses. In fact, Haunty, even makes that recomendation, for cars latter on in the article.

As for cars, they are depreciating items that lose rather than gain value over time, Haunty said. “If we can buy used, we can save a lot of money up front and even begin to save enough to buy our cars for cash each time. Imagine a lifetime of interest saved by paying cash versus borrowing for cars?”

Almost sounds like Dave Ramsey doesn't it?

My favorite suggestion in the story, which actually was the only other suggestion was one that came from a banker in Schaumburg, IL

“My client had saved a tidy sum, and when I asked how, she told me the story,” Harcourt said.

By regularly depositing in her savings account the money saved with coupons and discounts, and having the interest compound for more than 10 years, her balance had grown to $30,000-plus.

“I decided to give it a try and found to my surprise that it does work,” Harcourt said of this savings strategy. “In three months, I have saved more than $300.”

Saving this way “is not an easy habit to get into since, we are so used to spending,” Harcourt said. “But once the habit is mastered, it is very easy to save and is fun. I am very thankful my client was so kind to share this savings tip.”

Now that's an idea. I love that idea, I just need to get myself to clip and use more coupons. I think I actually have heard of it before, but not sure.

So this got me thinking, what if I asked you, my readers for your suggestions. So how about it? How do you save? I would love to hear those thoughts and ideas. Do you have any ways to save additional money?

Saving Enough?

It's a Sunday evening, the first day of my vacation and I sit here in front of the computer working on some of my posts for the next week. this a great opportunity to catch up on some things that I have wanted to write about, but just didn't have time to do. One such thing is discussing an article that I read in a local magazine called TK Magazine. TK stands for Topeka, Kansas. The article in the current July/August 2007 issue was about saving.

Entitled "Are Topekans Saving Enough," and written by Katelyn Hasler, was an interesting read. Certainly, a topic, that I as a personal finance blogger, and the only one in Topeka, am interested in. Not only that, but a topic, related not just to Topekans but all Americans, that has been in the news since I started writing this blog.

The Bureau of Economic Analysis has reported that savings of disposable income has dropped below zero, while household debt has risen, during the same years.

There are those of course who argue that the alleged savings crisis that these statistics might suggest is simply a mathmetical error or an exaggeration.

However Hasler, writes that

Officials at local banks, however, said that based on what they have seen the trend toward saving less and spending more is startlingly real.

I am not surprised. That is one of the reasons, that I started this blog and started trying to get out of debt. I don't want to have the negative savings rate in my life any more. I want to stop making the banker rich. Instead, I want to be able to retire someday, and not be one of these seniors working at Wal-Mart or McDonald's in my "golden years."

Dave Ramsey has been discussing this issue for years. It goes hand in hand with the "me" attitude. The attitude that says, "I want it and I want it now." A desire by young people, fresh out of school to "have it all." A desire to have everything their parents have, not taking into account that it took their parents 20-years to accumulate all that stuff.

This attitude is the attitude that we all, not just those of us under 40, need to change. We need to take a look at our great-grandparents and have the attitude of not buying anything unless we have cash in hand. This in past generations included saving up for that house.

Even the Bible warned against debt, when it said in Proverbs 22:7:

The borrower is slave to the lender.

Of course, even Benjamin Franklin has been quoted on debt:

The borrower is slave to the lender and the debtor to the creditor.

and Shakespeare in Hamlet (1603):

Neither a borrower nor lender be.

So with all the advice against debt, from the very people we all trust; God, Shakespeare and Ben Franklin, why is it that we enslave ourselves. Do we really think we will beat the odds and not be snared in the bankers trap? Wake up, let's all bankrupt the banks and make ourselves rich instead of the banker.

An 84 square foot Home?

Did you see this story. I seen this video on CNN yesterday. The video comes from:Katu.com


TreeHugger.com wrote:

Dee Williams wanted "a simpler life, time, more money. I don't have a mortgage. I don't have a big utility bill." So she built herself an 84 square foot house- "Not much to it. Simple. Small. A dream house tinier than a parking spot." Her monthly heating bill is $6 bucks and electricity is free from the solar panels.

Dee built the tiny cabin herself out of salvaged material. She picked the door out of a dumpster and retrieved the floors from a house fire. Dee's new tiny home sits in her friend's backyard.

To our eye it looks suspiciously like Jay Shafer's Tumbleweed Home but no credit is given in the article or video; that is the way of the world. Nonetheless Dee is happy in her knockoff home. "Right now there's nowhere else I want to be!" Watch the video at ::Katu.com

Now thats what I call thrifty. That's what I call frugal. Maybe i should consider finishing up my tool shed. Turning it into a small home. Then I can rent out the larger house.

Now i realize that I can't do it at this time. I have to pay off to many debts at the moment, but when I do, it would be a great way to save money in the long haul. I mean $6/month electric bills. Wow! That would be awesome.

Hmm, I will have to think about this more. What do you think?

Low-Income Individuals Penalized for Saving

Did you hear this story? Yesterday, I was watching CNN, before going to work, when I heard this. So shocking, it was, I knew I had to look up the story online and report it here. I never found the CNN story, but I did find several print versions of it, including the LA Times, which I quoted in this post.

The federal government has been urging people to sock away money for their retirement, but many low-income families would be foolish to take that advice, according to a report released Wednesday by a Washington think tank.

Low-income households face "astronomical" penalties for saving, according to the report by the National Center for Policy Analysis. For example, each $1 saved by a single mother earning $15,000 a year could cost her $2.60 in higher taxes and lost government benefits.

That's right, the poor are actually penalized for trying to get themselves off government assistance.

"We're constantly told that we need to save early and often to prepare for retirement," said Laurence Kotlikoff, professor at Boston University and author of the study. "Yet government policies tell low-income families, 'If you save for the future, you won't get our help today.' "

Over the last decade, the government has sharply increased the amounts that Americans can set aside on a tax-favored basis for retirement, created a tax credit for low-income people who fund retirement accounts and launched public campaigns urging people to save.

But those efforts are hindered by incentives created by the government, Kotlikoff said. For example, the tax credit for saving for retirement is wiped away when the taxpayer also qualifies for the earned income tax credit.

Meanwhile, putting a few dollars aside in a retirement plan can disqualify families for food stamps, health care benefits and assistance given to poor families with children. The loss of benefits is felt year after year, compounding into a huge loss over time, the report says.

Someone who doesn't save for the future will become a drain on the public tax rolls after they reach retirement age. It is my humble opinion that these low income individuals who save to build a retirement savings are being fiscally responsible. However, the government concerned about about people cheating them (Lord, knows there has been a lot of people, using these funds, who have cheated), has instituted these guidelines.

In Massachusetts, for example, anyone with assets of $2,500 or more is disqualified from getting federal assistance to families with dependent children. That asset test includes retirement accounts and even the cash value of a life insurance policy, the report says. As a result, a single parent with two children who earns $500 a month would lose $133 a month in benefits if the family saved more than a nominal amount for retirement.

"People start saving, thinking that they are going to be treated fairly, and then they get clobbered. They don't know what happened," Kotlikoff said. "There are ways to achieve our objectives without kicking people in the head if they try to work and save."

Most of the benefit programs looked at in the study are federally funded. But because eligibility rules vary by state, the study focused on Massachusetts.

So what is the answer? To me, I think the answer is simple. Keep the restrictive guidelines about saving, with one little change. They still must use their savings for necessities, before getting government assistance, unless that savings is in a recognized retirement account (IE: 401-k, IRA, Roth IRA, SEP, etc).

Revisiting Practical Way to Become Debt-Free Forever!

In August of 2006 I posted Practical Ways To Become Debt Free Forever. Today, I thought I would re-post the article, with a few minor updates.

1. If you have Credit Cards with Outstanding Balances.

A. Cut up ALL Your Credit Cards, and do NOT open new lines of credit.

B. Call those cards and ask them to reduce the interest rates.

2. Save or Earn an Extra $150 - $200 Per Month.
3. Pay this Extra Money off ONE Credit Card each Month until it is Paid Off.

A. Do NOT open new lines of Credit, as the idea is to get OUT of debt, not deeper into it.

4. Continue to Pay the Minimum of ALL your other Credit Cards each Month.
5. Once One Card is paid Off Apply the TOTAL amount to a Second Card.
6. Continue until All Your Credit Cards are Paid Off.
7. Apply the Same Method to your Car and House Loans.
8. Do Not Borrow Money for Consumer Goods Ever Again.
9. Use this Monthly Amount to Build Your Assets (aka Savings).

Using this Simple Method, as John Cummuta says, most People can become Debt Free in 5 to 7 Years and Wealthy in 10 to 15 Years. Please note Dave Ramsey say, that you will be more successful if you build an emergency savings of $1,000 ($500 if you make less than $20,000/year) first, and then pay off you smallest debt first. According to Ramsey, it may be mathematically correct to pay off the highest interest rate first, but if we were think mathematically, we would never have gotten ourselves into debt in the first place.

Bank of America

Over the past few months, I have seen a number of my fellow personal finance blogger's, discussing opening a Bank of America (B.o.A.) account. While, I thought it would be nice to have an account at a bank that was for the most part coast to coast, I have not made the switch for one glaring reason.
What is that reason? My credit Union, gave me free checking. Something the B.o.A.'s of the world would not do. Well the other day B.o.A. delivered packets of information to my workplace, that outlined how if I transferred my direct deposit to them, I would get my checking free.
Now, I had free checking. Great, now I can't use that as an excuse. What's more, I can earn a $25 bonus after I have kept the account open (and active) for 90-days. So, I am making money, but that's not all. I signed up for their "keep the change program," as well. That meant, I had to open a savings account with them. Which means after the same 90-days, I will get another $10 bonus. I also get these same bonus' if I refer anyone to B.o.A., who also earn the bonuses for their new account(s). Plus, my "visa check card (aka debit card) will have my picture on it, for even tighter protection, then my credit union currently provides.

Keep the change

OK, so I mentioned the "keep the change" program. You may have not heard about this. If so, you may be asking what is keep the change?
Simply put "keep the change," is a plan where every time you use your visa check card at the gas station, grocery store or where ever, they will round the amount of your purchase up to the nearest whole dollar and deposit those pennies into your savings account. For example if you spend $5.01, they will deposit 99 cents into your savings account. Or, if you spend $6.99, they will transfer 1 cent to your savings account.
Plus, it gets better. They will match 100% of your "keep the change" savings for the first three (3) months. After that, they'll continue continue to match 5% a year, every year. The downside though, is that none of this matching will be placed into your account until the end of the year.

100 Ways to Save Energy in Your Home

1. Turn off both incandescent and fluorescent lights when they aren't needed, even for a short time.
2. Fluorescent tubes use 60% to 80% less energy than incandescent bulbs, and last 10 to 20 times longer.
3. Compact fluorescents are designed to fit most standard light fixtures, last 10 times longer, and use 70% less energy.
4. Halogen bulbs (spots or floods) use 50% less energy than incandescent bulbs, last two to four times longer, and are compatible with dimmer switches.
5. Energy efficient incandescent bulbs are the same as "regular" light bulbs, but with slightly less light output. They are available in 34, 52, 90, and 135 watts to replace 40, 60, 100, and 150 watt standard bulbs.
6. Low voltage outdoor lighting used for landscaping is an energy efficient choice.
7. Dimmer switches can replace standard on/off switches. They reduce light level, save energy and extend bulb life. (Do not use with fluorescent lights.)
8. Programmable timers turn selected lights on and off at specified times, and make your house look occupied.
9. Motion sensor lights turn lights on automatically when movement is detected in a certain zone. Useful as security lighting, and to light your way when you come home in the evening.
10. Avoid multiple-light fixtures. Four 25 watt light bulbs give off only two-thirds the light of one 100 watt bulb, yet use the same 100 watts of energy.
11. Avoid long-life incandescent bulbs. They put out up to 30% less light, while using the same amount of energy.
12. Use a reading lamp where you're seated, instead of lighting the whole room.
13. Dust your light bulbs and fixtures. Even a thin layer of dust lowers lighting levels.
14. Walls painted a light colour reflect more light. Less energy is required to brighten the room.
15. Avoid dark-coloured lampshades.
16. Compare "Energuide" labels when purchasing appliances.
17. Set your refrigerator to 3°C (37°F) and your freezer to -18°C (0°F).
18. Vacuum the condenser coils on your refrigerator and freezer every six months.
19. Don't overload your refrigerator.
20. Don't open the refrigerator door more than necessary.
21. Cool leftovers before refrigerating.
22. Defrost frozen food in the refrigerator, rather than the microwave.
23. Locate your refrigerator and freezer away from heat sources.
24. If you're away for more than 10 days, you can empty and clean the refrigerator and freezer compartment, unplug it, and prop doors open.
25. Purchasing an old refrigerator may not be the bargain you hoped for. New refrigerators use up to 40% less then one built in 1972.
26. Replace worn door seals on refrigerators and freezers.
27. Select the best size fridge for your needs; 13 cu. ft. for one or two people; 14 - 17 cu. ft. for three or four people and additional 2 cu. ft. for each extra person.
28. Two refrigerators use a lot more electricity than one larger one. Think about whether you really need that second fridge.
29. Leave cold drinks out in thermos bottles rather than in the refrigerator on hot days.
30. Keep your freezer 2/3 to 3/4 full.
31. Defrost your freezer before ice deposit reaches 1/4 inch.
32. Locate your freezer in a dry, heated area. Fluctuating temperatures will cause it to operate inefficiently, and could damage the compressor.
33. Wait until your dishwasher is full before you wash. Two half loads use twice as much energy as one full load.
34. Use the short cycle on your dishwasher when you have easy to clean dishes.
35. If your dishwasher does not have and energy-saver feature, turn it off at the end of the rinse cycle and open the door to let the dishes air-dry.
36. If used with full loads, dishwashers are actually more efficient than washing by hand.
37. Self-cleaning ranges are more energy efficient than regular models because they have more oven insulation.
38. Use the self-cleaning feature right after cooking, when the oven is already hot.
39. Pre-heat your oven for only 10 minutes, when baking.
40. Pre-heating is not necessary for most roasts and casseroles.
41. Cooking more than one thing at a time in your oven saves energy.
42. Use glass or ceramic cookware in the oven and lower your temperature by 25°F.
43. About 20% of an oven's heat is lost when you open the door. An oven with a window allows you to look in without opening it.
44. Consider using the broiler. It saves energy and requires no pre-heating.
45. Cook two different foods on one stove top element by using a double boiler.
46. Use pots and pans that are the same size as the element to reduce heat loss.
47. Energy efficient pans have flat, clean bottoms and tight fitting lids. Cook with the lid on.
48. Use a thermos, not the stove, for keeping coffee warm.
49. A microwave uses up to 50% less then a conventional electric oven.
50. Since a microwave heats only the food, and not the oven, use it on especially hot summer days.
51. For large quantities of liquids, soups or stews, your stove top element is twice as efficient as a microwave.
52. An electric kettle heats water more efficiently then a stove element or a microwave oven.
53. Electric coffee makers are more energy efficient than a surface element on a stove.
54. Remove mineral deposits from kettles and coffee makers with a commercial cleaner or vinegar.
55. A toaster oven (1500 watts) is less expensive to use then a conventional oven (3200 watts).
56. Electric frying pans use less energy then electric stoves for cooking small amounts of food.
57. Slow cookers are economical for foods that require a long cooking time.
58. 1/4 of your hot water is used for clothes washing. Wash with warm or cold water and always rinse with cold water.
59. Buy a washing machine with water level controls and short wash cycles, and use them.
60. Buy a clothes dryer with and electronic moisture sensor and a cool down (permanent press) cycle.
61. Drying one full load of laundry takes less energy than two small loads.
62. Avoid over-drying.
63. Overloading your washer and dryer make them less energy efficient.
64. Clean the dryer's filter every time between loads.
65. Twice a year, turn off the power at the panel and vacuum lint from the dryer motor, drum and exhaust hose.
66. Use the washer spin cycle twice to save energy when drying clothes.
67. The most energy efficient clothes dryer is a clothesline.
68. Take quick showers, instead of baths. An 8 minute or shorter shower uses less hot water.
69. An energy efficient (low flow) shower head reduces the amount of water needed for a shower by 50% to 75%.
70. Fix leaky taps. One drop per second wastes 800 litres (175 gallons) of hot water per month.
71. Turn your electric water heater's thermostat down to 130°F (or 140°F is you have a dishwasher).
72. Insulate the first 3 to 6 feet of hot water pipe from your water heater with pipe insulation.
73. Wrap your electric water heater with an insulating blanket.
74. Turn off your water heater if you're going to be away for 5 days or more.
75. Install faucet aerators to reduce water flow.
76. All those little drafts in winter can add up to a hole the size of a window. This air leakage accounts for 30% to 40% of your home's heat loss.
77. Weatherstrip around doors and windows and caulk (from the inside). Don't forget your attic hatch.
78. If your basement is unfinished, caulk where the wood frame wall (sill plate) meets the foundation.
79. Install foam switch and plug gaskets.
80. With a stick of incense, check pipe and wire entrances, vents, baseboards, and light fixtures. Caulk where you detect a draft.
81. Put glass doors on your fireplace.
82. The easiest and least expensive area to insulate is your attic. Insulate to R40. (Note: all openings in the attic should be sealed before insulating to protect against moisture damage.)
83. Insulate unfinished basement walls.
84. Insulate upper walls from the inside when renovating or from the outside when siding.
85. Double glaze all windows. If replacing them, consider Low "E" (Argon filled) windows.
86. Set your thermostat at about 20°C (68°F) in winter. For every degree above this, your energy use and heating costs rise about 5%.
87. A programmable setback thermostat automatically lowers house heat at night and turns it up in the morning.
88. Furnace filters should be cleaned or changed once a month during the heating season, and during the air conditioning season if you have central air.
89. The same insulation in your attic that keeps you warm in the winter also keeps you cool in summer. Make sure you add attic vents, so hot air can escape.
90. Shade east, south, and especially west-facing windows in summer by simply closing curtains and blinds. Or install awnings or wooden louvers.
91. Plant deciduous trees to shade your house in summer.
92. In summer, minimize washing and drying clothes, ironing, and cooking during the hottest times of the day.
93. Recommended setting for air conditioning is 24°C (75°F).
94. Purchase an air conditioner with an Energy Efficiency Rating (EER) of at least 9; it will save you 30 to 6 cents an hour.
95. Wash or replace your air conditioner's filter once a month.
96. Fans and ceiling fans keep you comfortable at a fraction of the cost of air conditioning.
97. Turn your pool filter off on cooler summer nights (and save up to $85.00 on a two-month bill).
98. Keep your water bed covered and the temperature in that room relatively warm.
99. Read and understand your owner's manuals. If your appliances have energy saving settings…use them.
100. Keep all your appliances, furnace, and air conditioning well maintained. If you notice something not operating, call a service person.

the Urge to Splurge Is Sapping Savings

U. S. News and World Reports reported that Americans are splurging more then ever before, however, it's not cars or other big ticket items that are sapping their savings. (see snippet below) In addition the Average American savings rate is even lower (see chart), as it drops to a negative 4%.

http://www.usnews.com/usnews/biztech/articles/070125/25savings.htm

While Americans are finding it harder and harder to afford big purchases such as homes and cars, a new survey of household spending and savings shows that it's not the big-ticket items that get many consumers in trouble.

Instead, it's the little things that consumers admit they splurge on that often prevent families from reaching their savings goals. And surprisingly, the biggest culprit isn't frequent trips to the mall, according to the survey, released this week by the Pew Research Center. Many consumers admit that dining out at restaurants is the thing they "splurge on most."

What's more, consumers have drastically expanded the list of things they deem to be necessities of life. For instance, 68 percent of adults now believe that a microwave oven is an absolute necessity, up from just 32 percent a decade ago. Fifty-nine percent say they absolutely must have an air conditioner in their cars, up from 41 percent who thought so in 1996. And roughly half of all respondents say that a home computer and a cellphone are needed to function in day-to-day life.

Yet, when surveyed about their own savings goals, the vast majority of Americans describe themselves as thrifty. The Pew survey, based on telephone interviews conducted nationwide this fall, found that 77 percent of adults describe themselves as "the kind of person who always looks for ways to save money." Meanwhile, 67 percent say they are the kind of people who are "always aware" of how much they're spending. And 88 percent say they closely watch how much they spend.

2007: Resolutions, Plans & A look Ahead

I don't usually make resolutions, in fact the last time I did, I was a teenager in high school, some 20+ years ago. Well this year, as the year comes to a close. I would not be the Prince of thrift if I did not at least take a look at what I plan to do in 2007 about the nasty debt that I have spent the last 9 months actively fighting.
So without further ado, here are my 2007 resolutions (aka goals)

Officially pay-off and eliminate the credit card. While the credit card has been cut up, auto payments continue to hit it and my balance continues to fluctuate between $800 and $1000.

Eliminate the remaining Home Improvement Loan. I still owe approximately $1400. I have been paying this down and in 2007 I will escalate my payments and get this debt paid off.

The Chevy. - In January of 2006 I took out a loan for a car that I should not have bought. Yep it was a stupid tax. I reasoned that I needed a new car because my old truck had been totaled twice by hit and run drivers and was dangerous to drive. While the reasoning may have been true, I did not need a 2004 nor did I need to spend $14,000 for a $11,000 car. I could have bought a $3,000 car to get around as I saved for a nicer car. In 2007 I resolve to find a way to either get out from the upside down loan or to find a way to escalate my payments and get the loan paid off quickly.

Education - I want to look more in depth to seeking CPA or other financial certification.

Love - I want to get to a position financially so that I can again consider meeting a special girl and dating.

Pay Those Taxes

I am not familiar with other states, but in Kansas today is the last day to pay those nasty property taxes. I went to the county court house yesterday, and paid mine. Money, I really didn't have yet. Every time I try to get my savings built up, either something breaks or I stupidly overspend and raid the saved money.
Something I have started doing is automatically putting one source of extra money in the savings and forcing myself to not use it for regular spending. Over the course of the past month since I implemented the plan, it has been working. However, it was not enough to cover the $390 tax bill.
The good thing, if I can keep the plan going as planned I will have the money saved for the 2ND half of my taxes as well as my insurance payments when they come due again.

Money Magazine: Scraping by on $150,000 a year

I was insulted when I saw the Money Magazine headline. Then I saw the sub-title.

The Schuetts have an enviable income. So why are they having a hard time making ends meet,

then I realized they were talking about a family (like so many) who had made a lot of financial mistakes. So much so, they struggle financially like someone or even a family that makes less then $20,000.

f she thought it would really fix her family's finances, Amy Schuett would make it her New Year's resolution to squeeze every bit of extra spending from the family budget.

But she's already slashed so many little luxuries - the gourmet coffee, the restaurant lunches, the weekly dates with husband Brian - that she's fresh out of ideas.

Cable TV? Unplugged. Pool membership? Down the drain.

They've even considered giving up their unlisted phone number. At a cost of $3 a month, this move wouldn't save much - even over, say, 150 years - but it shows how desperate the couple feel about easing their financial strain. "We're struggling week to week to get by," says Brian, 42. "Any money that comes in gets chewed up right away."

Digesting that fact becomes harder when you consider that the Schuetts earn a comfortable living, with Amy, 39, pulling in $150,000 a year as a hospital psychiatrist. True, their income did take a big hit last summer when Brian got laid off from his job as a sales rep for a pharmaceutical firm (he'd been making a base salary of $82,000 a year, plus commissions as high as $24,000).

Whoa, whoa, right there, did I read that right? His annual commissions alone is more then I make in a year? This couple is in serious need of learning, how to spend within their means. Of course it's, not just this family, but a lot of families of all income levels. What can we learn from their mistakes?

There's only one thing that stands between the average person and the discipline needed to save on a regular basis: human nature. When it comes to money, "we tend to spend as much as we have," says Susan Kaplan, a financial planner in Newton, Mass.

So take self-discipline out of the equation by enrolling in automatic investing plans through your employer and financial services providers; you tell them how much to deduct from your paycheck or checking account, and the money will be shifted every month into investments of your choice without further ado from you. In effect, you make the discipline of saving your money someone else's job.

Set targets for how much you should be saving for various goals through these automatic investing plans, then slowly work your way up to the goal.

Financial planner Bonnie Hughes, for instance, suggests that you aim to have at least 10 percent of your income directed to a 401(k) or similar retirement account (15 percent would be ideal); 4 percent in a savings account or money-market fund designated for emergencies (you can stop once the account is equal to six months' worth of your living expenses); and another $100 a month going into 529 plans for each of your kids.

The important thing, though, is just to get started with a different way of thinking about money: From this day forward, you will treat saving like a bill and make it the first one you pay each month. And you will no doubt find yourself automatically adjusting your spending downward as a result.

Kaplan notes, "If you never have the money at hand, you can't spend it."

As we continue to read the article, we learn that this couple also owns several rental properties. Now for me and I am sure Dave Ramsey, there is no question about it, sell these properties.

But there is more. They don't want to give up some expenses, even temporarily while they are getting out of debt.

"The feeling that you can never get ahead can be demoralizing," says Kaplan. So make sure in your zeal to spend less and save more, you still allow yourself a few expenditures that bring your family real pleasure. You just need to figure out in advance how you'll pay for them.

Last year, for instance, Brian's parents gave the Schuetts a horse named Red for their kids to ride. They think it will cost a few hundred dollars a month to feed and care for the animal, and they're willing to give up ballet lessons and gymnastics classes for the girls to pay for it.

The trade-off is worth it, says Brian, because "the kids so love having a horse."

In fact, Amy has already got a name if they get a second horse: Buttercup. "We'll probably have to wait a while for that," says Brian. "We've got another beast to tame first."

Until, they take drastic action this couple will not be debt-free. If they keep the attitude of keeping some luxeries, that many Americans can't afford, like keeping a horse (and especially getting a 2ND horse), ballet lessons and/or gymnastics, they will continue to have a harder time to pay off their debts. Just ask Leigh Ann of saveleighann.blogspot.com, who recently got debt-free by cutting out all unnecessary expenses.

Save VS Borrowing: Why Borrowing Is Stupid

(image from 1st Tennessee) One responder to my post the other day (on 0% credit cards) left this message,

I have to disagree with the premise and the following statement "don't spend (or invest) money you don't have."

The average home costs $170k in the US. Should someone not buy a home because they don't have 170k in cash?

Should a high school graduate forgo college because he doesn't have 30k for tuition & books?

Should you forgo medical treatment (even though you might die) because you don't have 10k for medical treatment?

The whole "don't spend money you don't have" sounds pretty stupid when you start putting things into context.

The short answer to this person is yes, and while his comment saying that the idea of not spending more then you have is stupid, is in fact well stupid. However, the poster is using the mindset of most Americans. Americans who will never be wealthy, because they want everything now, rather then following the advice of those who actually have money, like Warren buffet, Dave Ramsey or John Cummuta.

The key is to save for those big purchases, such as a house. John Cummuta even suggests you may have to borrow to buy your first house. However, what you do is buy a smaller house (a starter house) save up money as you pay off that house, then when the time comes to move into a $170k + house, you pay cash for it. The thing is when you borrow to pay for anything, you end up paying much more for it. For example over the course of 30 years you will end up paying the bank a half million dollars for that 170k house. How stupid is that? Why not save the money up and pay less. That is in fact how rich get rich and the richer get richer.
Take a look at Donald Trump, a great businessman, but a poor example of wealth building. How many times has he filed bankruptcy now?


Now for education, this is a common problem, but if a student graduating high school had truly wise and prudent parents, then they would have money saved up for their kids education. Dave Ramsey tells a story about a couple who had a few thousand saved for their first kids education. Now she was pregnant with a 2ND child and wondering how they were going to pay for the education of that 2ND child, who wasn't even born yet. Dave didn't have an answer, probably only be able to pay half of each child's education. That wasn't good enough for this couple, they returned to Dave a few months later and reported that the young father (a school teacher) had gotten a 2ND job over the previous few months, delivering pizza, to earn enough money to fund the newborn education.

These parents were wise, and they thought ahead enough, to even get a 2ND job, to make sure their kids future was met. So Mr. Rich Slick, if you want to really have enough money to be a "rich slick" then you will save rather then borrow and live within your means.

In fact the graph on this post (from 1st Tennessee) shows how much more a borrower will spend on education then a person who had saved. Rich Slick is that what you want for your kids? Sorry, but I want to provide better for my kids future then that.

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this article has made it's way into other blogs. Mandy commented on D's post

I guess you mean to take the advice with a grain of salt. Aim high. Some people feel that if there's a loan on offer for 95% of the purchasing price, they should take it. Or if they can get student loans for their kids' entire education, they should go for it.

I think the aim should be to have as much of your own cash as possible. Get the smaller house if needs be, and pay it off earlier. Then it's an asset.

Plan for your kids' education instead of letting it sneak up on you (and them). If you have something to contribute, the debt incurred will be significantly less.

To me, it's all about an attitude adjustment from the "I want it all now" to "I want what is possible without huge debt"

It has also made it's way to GetRichSlick.

You Can't Beat The Credit Card Companies

Yesterday, I received a comment from someone who said,

I'm still making $10/day on credit cards.

This is the same detractor who repeatedly tries to convince me that he is smarter then the Credit Card companies.

Repeat after me: A credit card is not money. A credit card is not money. A credit card is not money. A credit card is not money.

If you don't have real money at your disposal, you don't have any business even thinking about anything but the most basic of needs. Again: A credit card is not money. As Dave Ramsey (and John Cummuta) says, don't spend (or invest) money you don't have.

The thing is you don't know what will happen tomorrow. You may think your paycheck will be available to you on your payday, but what happens if the company goes bankrupt between now and then. Or maybe the "mail" truck delivering the checks to your location wrecks (breaks down, gets stuck, etc), delaying the checks. Borrowing from so called free credit cards is risky. The credit cards aren't stupid, they can tell what you are doing and trying to pull the wool over their eyes will only make you a higher credit risk to them rather then a better.

Michael Clarke writes in This is Money,

The practice, where a customer draws the maximum amount on a 0% card to either put in a high interest account or to offset a mortgage, has been popular with sophisticated card users since 0% deals first became popular in early 2000.

At the end of the 0% introductory period, stoozers (British term: those who borrow at 0% then invest the borrowed funds) either withdraw the money from where it has been invested and use it to pay off the full credit card balance, or switch to a new 0% deal.

...One way card providers are stopping customers doing this is by preventing them from transferring money into current or savings accounts. While it is still possible to transfer balances between credit cards, most card providers can now recognise bank account numbers and stop transfers to current accounts.

They also recognize other credit card numbers, and while viewing your credit report, they will see a lot of balance transfers between credit card companies. Eventually, they will say, "hey this guy is jerking us around," or something to that affect and start denying his credit. The person that thinks they are smarter then the card companies will begin to see their credit score (FICO) to drop.

Be leery of anyone like this guy, that tells you that you can beat the credit card companies.