Living on next to nothing

The prolonged recession has forced many of us to get creative when it comes to stretching a dollar.  I mean really creative.  I recently came across a great profile on money.usnews.com of a couple who did just that.  In the eighties they lived on $13,000 a year, with several children and a stay at home Mom.   They went on to write a book about the experience, America’s Cheapest Family Gets You Right on the Money: Your Guide to Living Better, Spending Less, and Cashing in on Your Dreams.

I feel sure there are tips here to help all of us.  I know there are some to help me.

1.    Eat in.  Go the grocery store less.  Cook with leftovers.  All make perfect sense.  Save for restaurant meals.  Don’t just charge because you think you deserve them.  You’re going to have to pay for that meal someday…and with interest.  The second item I personally have some trouble with.  I love the grocery store, but I go too often, thus spending more money than I should.  According to The Food Institute, the average family of three spends 13% of their budget on food.  Are you above or below that?  For the ultimate in savings try to spend less than 10%.

Don’t buy foods you’re hungry for, buy foods that are in season, and thus cheaper.  It will save you a ton of money.

Never overlook coupons for good savings. In the paper and online

Invest in effective food storage/freezing systems.  The column recommends Vacuum-sealed meats.  Keeps them fresher, longer.  This allows you to stock up when things go on sale.

Yes, you should buy things when they’re on sale, but I also want to caution you to not fall for every sale.  The big grocery store chains where I live, puts certain foods on sale every two to three weeks.  Let’s use boneless chicken breasts for example.  Almost like clockwork, they go on sale for $1.99 a pound every couple of weeks.  Don’t buy every time they go on sale.  Don’t treat a sale like it will never come again.  By avoiding some sales, you will avoid extra trips to the store.

2.    Not everything online is cheaper.  Second hand shops, yard sales (YES), even church rummage sales provide great opportunities to save money on clothing and housewares.

Garage Sales Rock!

3.    Reuse products that can be reused.  Not just recycled, but reused.  The authors of the book even reused the aluminum foil that they used to wrap their baked potatoes.  Very smart idea indeed.

4.    Turn in your recyclables for cash.  In many states you pay a container recycling fee for plastic or glass containers.  Rather than just sticking these in a recycling container, take them to a facility and keep the cash for yourself.

Don’t buy water.  A water filtration system that hooks to your faucet will save you hundreds of dollars a year.   Rather than buying a bottle of water every day, buy a thermos, fill it each day from home and re-use that.

5.    Cleaning.  Clean with reusable cloths.  Don’t pull off a new paper towel for every chore.  Use vinegar and water as a cleaner, baking soda and lemons are also good cleaners and deodorizers.

6.    Climate Control.  In the summer use your air conditioning sparingly.  Buy a fan and you’ll be surprised how much it helps and how much money you’ll save.  In the winter, wear a sweater and turn the thermostat down to 68.  Stay away from electric heaters as well.  Not only are they more expensive to operate, but they’re a safety hazard.

7.    Do you or the kids like jelly?  Make your own in strawberry jam when in season.  It’s much cheaper than buying from the store and it stays fresh for months in the refrigerator.

8.     What else?  Make your own clothing.  But don’t stop there, try tackling repairs you can do for yourself around the house rather than calling in a specialist.

One of the most effective things you can do to control your spending is to change your attitude.  You have got to tell yourself “no.”  And, you have to do it often.  Don’t just buy something or go to a quick dinner because it’s only $20 on the credit card.  You’re going to have to pay it back at some point.

And finally, don’t carry your credit card (s) with you.  The best way to keep from building your balances up, is to stop using them.

Savings are all around you; you just have to keep your eyes open.

The financial worries of Americans and what if YOU hit the lottery

We’re going to start with some not so great news, but end with a little “wouldn’t that be great” kind of news. 

Other than the very rich, or the 1% as they are sometimes referred, the rest of us have real financial concerns that the financial meltdown of six years ago has only made worse.  It’s not like Americans are known for saving in the first place, but this recession has really hurt the retirement goals of millions of Americans, primarily due to the decreased home values that many people now face.

Aaaah! Finances cause a lot of headaches.

So as Americans worry over their stagnant or decreased wages, falling home value and rising petroleum costs, there is one other major worry.  Let’s call it the white elephant in the room.  It’s the cost of health care.  No one seems exactly sure how the Affordable Care Act will affect them, except for apprehension that rates are going to go up.

That’s a lot of financial concern, that’s for sure.  This apprehension was a catalyst for Harris to conduct some research into the current financial picture of Americans.

In the summer of 2012 Harris conducted a poll of more than 2,300 adults to find out how they were progressing financially.

Overall there are some big fears out there.  74% of those polled worry about having enough money to retire; 73% worry about affording healthcare in retirement; 71% worry about unexpected health care costs.  Additionally, only 40% of non-retired persons believe that social security will be there when they retire.

63% of those surveyed say that they are saving some money; of those 62% say that they are saving in the event of an emergency, but only 53% say they are saving for retirement.
Other reasons given for saving include college education and the purchase of a new car.
In addition to these basic questions there was one that clearly illustrates how financial concerns change as we age.  The question was,

“If you won the lottery or received an inheritance of $100,000 today, what would you be most likely to do with that money?”

18-35 year olds

36-47 year olds

48-66 year olds

Pay off debts   

55%

73%

60%
Save for a rainy day

36%

37%

45%
Save for retirement

20%

32%

46%

Go on vacation

19%

17%

19%

Buy a house

19%

17%

10%

Go back to school

15%

5%

2%

The largest difference in sheer numbers is the “save for retirement” response.  230% of 18-35 year olds would save for retirement, while 46% of 48-66 year olds would use the money for retirement.  This of course makes perfect sense.  As I get closer to retiring my conerns about whether or not I have enough for retirement becomes a much bigger concern.

What would you do with $100,000?

But by the largest percentage difference between what younger people would spend their money on vs. older is education.  This again makes perfect sense as education is an investment of sorts for younger people.  It is a luxury and far more like a hobby to those older than 50.

So what would you do with an extra $100,000?  Write back and tell us.

Today’s Cable Television

What is the state of cable television today?  To get a clear picture of that we need to look at the overall state of television today.

Television programming options have never greater

First, a definition.  Cable is a delivery system.  Channels are brought into your home via cable.  In addition to cable, another delivery system is broadcast (the old style of TV station delivery).  Broadcast describes the way in which a television signal is “broadcast” via the airwaves.  An antenna is required to receive the signals and only a few stations are available to be received.  Other delivery systems include satellite, Netflix, Hulu, YouTube and other computer sources.

Here’s the dilemma cable now faces.  Remember when you had to have cable to have access to ESPN or USA programming or even HBO?  That’s all changed.  You can access this programming online or through Netflix or hulu or almost anywhere other than cable.  You don’t need cable anymore and millions of people are discovering that fact.

There’s more.  Consumers want to be able to access their program choices a la carte.  In other words, buy one episode at a time to view when it’s convenient for them.  The problem for cable companies?  They make WAY too much money force feeding consumers big bundles of channels, including a ton that you probably don’t ever tune into.

It’s possible that this will turn out positive for consumers.  I’ll be honest, I dropped my cable a year ago and couldn’t be happier to have that extra $100 a month in my pocket.  I miss it occasionally, but not enough to get it back.  I find that I get all I from Netflix and online on the network’s sites.

But this is only part of the cable industry.  These same cables are used to deliver high speed internet.  Here’s the second part of the cable story.

The industry seems to think that they’re data delivery speeds are just fine.  According to industry leaders they think there is no demand for increased speed.  The CTO of Time Warner has said her company has no plans to “build out a fiber network because there’s no evidence that American consumers actually want super-fast networks.”

Say what?  Imagine if the same thing was said about cellular coverage and speeds.

The audacity of cable companies is astounding.  She is readily admitting that upgrading and improving the consumer experience is not something they are interested in doing.  She’s not the only one.  According to BGR.com, the CEO of National Cable & Telecommunications Association, Michael Powell, said that “gigabyte speeds are an “irrelevant exercise in bragging rights.”

The history of the cable industry is the primary reason for the lack of competition.  Firms were granted geographic monopolies in exchange for hard-wiring these communities.   What has resulted is what we see above.  A blind eye to the wants and needs of the consumer.  Why should they upgrade when competition is so weak?

That’s why online competition and Netflix’s various delivery systems are so important for the consumer.  Competition for the cable companies has to start somewhere.

There’s little question that the competition between Apple and Google (or iOS vs. Android in particular) has generated better products.  One can only hope that further competition for cable will change the way they do business; or at the very least, change their outlook to one that more driven to meet and surpass consumer expectations.

Far be it for us to tell you whether or not to remove your cable, but if you’re looking for ways to cut household expenses, take a look at your cable bill and decide if they are giving you what you want, and ask yourself, “is it worth it?”

Ways to save money year round

1.    Get in the habit of looking for deals.  Keep an eye out for super sale prices on products that you use on a regular basis.

2.    Create and maintain a savings account.  It will take a while, but even if you begin with $10 a week, over time, you’ll be impressed with how much you will save.  It also does your psyche some good, to see you setting goals and reaching them.

Ways to save money

3.    Pay off your highest interest credit card first.  There is some debate as to whether you pay the high interest rate card or the card with the lowest balance first.  For this article I’m saying high interest card first.  Start with $10 extra per month if that’s all you can afford, but put something extra against the balance.  Two things will happen.  Yes, the balance will go down quicker, but you will also see your minimum due go down as well.  This will enable you pay the same amount while paying the balance off faster. Continue reading

Is your identity safe online?

As we spend more and more time online buying, selling, dating and sharing, more and more of our personal information can be found floating around in cyberspace.  It’s on a hard drive sitting in a warehouse; it’s floating on a puffy cloud, or it’s being extracted by a cyber-criminal who wants nothing more than to use the information illegally.

The more you use the internet the more vulnerable you are to having your identity stolen.  So, how can you increase your safety?  We have a few tips.

Increasing your online security
1.    Visit reputable websites.  If you want to order/buy something from a website, make sure they’re reputable.

2.    Look for updated privacy policies and third party verified sites.
Don’t buy from sites sites that are not third party verified (TRUST-e and GeoTrust, for example).  Also, do not buy from sites that do not have a posted privacy policy and or have an out of date privacy policy.  If that date on the policy is from five years ago, proceed with caution. Continue reading

Choosing the Right Credit Card

Some people manage to go through life without a credit card.  I don’t know how they do it, (as I am not one of them) but they are to be commended.  But for the rest of us a credit card is quite often a necessary thing.  So, for those of us that require one, it makes good sense to know what to look for when applying for a new card.

Less than Perfect Credit
If you have less than perfect credit, you are going to be limited in your choices, and you are going to pay a higher rate of interest.  There’s no way around that.  But you do have some choices.  Do not choose the first credit card offer that heads to your e-mail or your mailbox.  Compare the rates of interest, the penalties for late payments and other such fine print. Continue reading

Credit scores affect your car insurance rates. What else does?

Many of you already know this, but in case you did not, your credit score is used by many insurance companies as a criterion in setting your car insurance rates.  The lower your credit score (the worse your credit is), the higher your car insurance premium.
This almost doesn’t seem fair does it?  No, but, it’s not inconsistent with other ways that insurance companies use to determine the rate you pay for car insurance.  Insurance companies conduct research into many aspects of human behavior and how these potentially impact a person’s driving record.

Continue reading

For Ladies’ Eyes Only

It used to be that men handled the finances (primarily) and women handled well, pretty much everything else. Circumstances change and it’s important for people to change along with them. In this case, we want to share the highlights of an article by Kimberly Palmer for USNews.com, in which she divulges five things women should know about money.

From a simple mathematical standpoint, women are four times more likely to become widows, than men are to become widowers. It’s true at age 40 and still true at age 80. That’s why it’s important for women to learn about financing independently of their significant others. The odds are that they will have to deal with them at some point in their lives.

Continue reading

Low Credit Scores hurt more than you think

If you are struggling with a low credit score, you already know that it results in high credit card rates and real challenges in obtaining other kinds of credit.  But the problem goes beyond this.  People with low credit scores pay higher interest rates on almost every type of loan.  The reason given by lending institutions is that the cost of lending to people with low credit scores is higher than the cost of lending to people with high credit scores.

A recent article from SmartMoney.com reported on some of the problems faced by people with less than perfect credit.  A perfect credit score is 850.  Almost half of all consumers have a score below 700, with 1/3 in the 550 to 699 range.  Many of these people will have problem getting credit; and if they do, it will more than likely result in a percentage rate that is higher than if your score is 725 for instance. Continue reading

So what has the Consumer Financial Protection Bureau (CFPB) done for you lately?

The federal agency, CFPB, released its annual report in July 2012 to address that issue.

The CFPB was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act in the wake of the near financial meltdown of 2007.  On its website it defines its role in the following manner: “the central mission of the Consumer Financial Protection Bureau (CFPB) is to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.”  Consumer protection, not business advocacy, is the number one goal.

The agency’s start has not been a smooth one.  The head of the bureau was appointed by President Obama during a congressional recess, thereby avoiding an approval vote, which Republicans said they would block.  In short, Democrats created the agency and are in favor of it, and Republicans are attempting to dismantle the agency.  For now, it exists. Continue reading