Smart Spending

'Let It Be': Learning money management from hit songs

2008-05-11T00:38:53Z

Did you know that you can learn a lot about personal finance from the Rolling Stones? They said, "You Can't Always Get What You Want." "They didn't say, 'Put it on a credit card,'" writes Debbie Dragon at Destroy Debt.

Debbie identifies 28 songs that contain lessons about money management. Here are some of our favorites:

From the Beatles: "When you put money into a savings account, retirement or other interest-earning savings, 'Let It Be,'" Debbie writes.
"Walk on By" by Dionne Warwick: That's good advice if you see something in a shop window you want and don't want to give in to a shopping addiction.
"A Change is Gonna Come" by Sam Cooke: Debbie writes, "With careful financial planning and budgeting, you can break out of the living paycheck-to-paycheck lifestyle and create a change for the better."
"What's the 411?" by Mary J Blige: Hopefully, Debbie says, that's not your credit score.
"Shop Around" by Smokey Robinson and the Miracles: That's particularly valuable when you're going to buy a big-ticket item.

Poll: Majority of Americans cutting back to afford gas

2008-05-09T22:29:57Z

A USA Today/Gallup poll released today says 60% of Americans are cutting spending "significantly" elsewhere in their budgets to compensate for higher gas prices. The Gallup Web site says that "only 38% said this when gas prices were shooting up three years ago."

Gallup surveyed 1,017 people in early May about 10 possible ways to deal with record-high gas prices, and got some remarkable results. "It seems a tipping point has been reached," says an article at Gallup by Lydia Saad.

Among them:

84% are cutting back on daily driving.
81% choose to drive their most fuel-efficient car if possible.
76% are trying to maximize the gas mileage they get from their vehicles.
71% are giving serious consideration to selecting a vehicle with better gas mileage next time they buy.

"Only two approaches -- switching to a lower grade of gasoline and using mass transportation or other alternate modes of travel -- have been embraced by fewer than half of Americans," the article says.

Of course, Gallup notes, those on the lower income rungs are sacrificing more to fill up their tanks. Three-quarters of low-income people and almost two-thirds of middle-income people are significantly cutting household spending, compared with fewer than half of high-income Americans.

"However," the article says, "even most high-income Americans (those with $75,000 or more in annual income) say they are trying to be more efficient with their errands, have taken steps to increase the gas mileage of their car, are opting to drive their most fuel-efficient car when they can, and are shopping for the cheapest gas."

Do Americans think gas prices will improve? No. "Over three-quarters of Americans are now convinced that the rise in the price of gas is permanent, the highest such reading since Gallup began asking about gas prices in this way in 2000," another article at the Gallup Web site says. And the majority of people think gas will reach $6 a gallon within the next five years.

What busts your budget?

2008-05-09T21:13:58Z

We all have those items that tempt us to overspend. For some, like Amy at My Daily Dollars, it's shoes. For others, it's video games. For us, it's anything with a Steelers logo on it and travel.

Many personal-finance bloggers have shared theirs -- after being tagged by the "five budget busters" meme. While some wrote about treats like eating out, others said the necessities of life are busting their budgets.

The blogger at Thriftiness Becomes Us has a high-deductible health insurance plan and no dental coverage. She wrote, "DH and I have a 'put out the fire' mentality with our own dental care. That can get expensive once in a while. We save all year for our kids' dental visits, which are much more important than our own."

Lynnae at Being Frugal mentioned gasoline. Now that it's kids soccer season, they're driving to a neighboring town six times a week.

Sometimes our attempts at frugality can get us in a rut. Carlie Faulk at Why Ask Why cited resale shops and clearance racks. And then there are her kids: "'Can I have a dollar for a snack after practice?' 'Mom, my jeans are really short. Are you supposed to be able to see my socks?' ... 'Mom, I'm thirsty and hungry. How much longer till dinner?' Etc., etc., etc., etc. You get the idea," she wrote.

Aryn at Sound Money Matters said her husband busts her budget, particularly with weekday lunches with co-workers. She wrote: "Then there are the times when they change plans on the way to the restaurant and he finds himself in a steakhouse paying $40 for lunch, and then hitting happy hour later for another $20. That's two-thirds of my grocery budget for the week."

Vh at Funny about Money included house maintenance, her aging German shepherd, $75 hair cuts, and Costco on her list. "There's only one way to survive a Costco run with your budget intact: Wear blinders," she wrote.

The fast-food drive-through is the Achilles' heel of Ana at DebtFREE-Revolution, followed by $5 DVDs at Wal-Mart ("a DVD for less than a movie theater ticket!" she said) and day-old stuff on sale in the bakery department.

Cindy S at Oh My Aching Debts, who started this meme, listed her kids, eating out while shopping, sodas on road trips, and late and overdraft fees.

Some bloggers found the meme helpful. "We all have stuff floating around in our heads, but when you write it down, take an honest look at it staring you in the face, it becomes reality and you have to make a choice about it. You can ignore it or do something about it," wrote ChouChou at Debt Non Sequitur.

ChouChou listed organic foods, home-schooling and kids' books, travel and Starbucks caramel frappuccino, and added, "Hello, my name is ChouChou, and I am addicted to buying shoes."

National food drive: Spare a can for your fellow man

2008-05-09T17:07:00Z

Tomorrow is the National Association of Letter Carriers Annual Food Drive, billed as "the world's largest single-day" food-gathering effort. In the past 15 years, the drive has collected more than 750 million pounds of food, according to the U.S. Postal Service.

With the rising price of food, lower-income folks are finding it harder to put food on the table. According to the U.S. Department of Agriculture, some 26 million Americans are fed with help from food stamps. If you're lucky, you're not among them -- and if you're that lucky, could you spare even a little something to help others? Say, a 33-cent can of tuna?

If you live in New York City or Chicago, you're supposed to take nonperishable foods to the post office. The rest of us can leave rice, pasta, cereal, or canned soup or vegetables in bags next to our mailboxes. Letter carriers will make sure the items get delivered to local food pantries.

A bag full of hacks
There's tuna in my donation bag, of course; since I bought several dozen cans of the stuff recently, I can certainly spare it. As I filled the bag I realized that the other items were all loss leaders or frugal hacks.

The ramen was on sale for a dime each. A box of Cheerios was 50 cents thanks to a coupon and instant store rebate. A 2-pound bag of rice came from the dollar store. (It bears repeating that there is no shortage of American-grown rice. It's the imported stuff that is being rationed in some places.)

When a local grocery outlet offered a dozen eggs free with any purchase, I went in and bought a 39-cent can of pinto beans. Twice. Those cans are in the bag, too.

Tomato soup had been five for $1. Peanut butter was on sale for 99 cents and I had a 30-cents-off coupon. A box of macaroni and cheese was left behind by a tenant. The 42-ounce box of Quaker Oats cost 50 cents after a coupon and instant store rebate. (Even the bulk-buy oatmeal is 89 cents for 16 ounces.)

Finally, I put in a cake mix and a tub of ready-made frosting. After loss leaders and a rebate, the cake mix was 9 cents and the frosting was free. And yes, I know that cake is not a healthy food. But if it's some kid's birthday, to heck with nutrition for just one day.

In fact, a lot of the nonperishable food the letter carriers request is high in sodium and/or sugar. Guess what: If you're hungry, you can't afford to care. Organic milk and produce aren't in the cards if you can barely pay rent.

Go ahead, give a little
Even if you've put yourself on a strict budget, you can probably shake loose a little something for people who are hungry.

If you're utterly, completely strapped, then by all means take care of business at home. The old cliché about putting on your own oxygen mask is pretty accurate. There's no point in giving away your last jar of peanut butter if it means you can't have a brown-bag lunch tomorrow. (And if you're living that close to the bone, consider checking out your local food bank.)

But if you can find a way to leave even a dime package of ramen out for the letter carrier, by all means do so. Giving even when you're broke will remind you how lucky you are to have a way to heat up the water for that ramen and a place to sleep after supper.

In short, giving can make you feel blessed. It also helps you rethink the impulse to moan about how "broke" you are. Being unable to go out for dinner or buy new clothes as often as you used to is not broke. Having to skip a big family vacation is not broke. Deciding to keep the car another year instead of buying a new one is not broke.

Being without a scrap of food in the house and having no way of getting any is broke. If you're not in that position, think about those who are and put some tuna out by the mailbox.

Training wheels: Why I spend less time managing money

2008-05-09T13:52:54Z

This post comes from Trent Hamm at partner blog The Simple Dollar.

When I first went through my financial meltdown, I was almost obsessive about my various accounts.

I checked my credit card and bank balances daily, kept careful notes on every penny I spent, and planned and plotted every single expense. The giant budgets and debt snowballs and investing plans I created were amazing in their detail. I spent hours with Excel, calculating my financial life and seeing the implications of every little move I might make.

Over time, though, something fascinating happened.

I stopped checking my balances every day. I slowed down my use of Excel, opening it only to answer a specific question I'd come up with or to model something for The Simple Dollar. I didn't sweat every penny on every receipt anymore.

In short, I began to trust myself. I had seen the results time and time again of my good financial behaviors: My account balances went up and my debts went down. Eventually, I began to trust those principles, and that trust led to a reduced need to keep running the numbers and micromanaging everything.

The transition was much like taking the training wheels off a bicycle.

Finding balance

Back in the bad old days of crazy spending, I was like a child who couldn't balance a bicycle. Eventually, I realized what I needed to do, but I needed some help learning the right balance -- I needed training wheels. Then, after some practice, I took the training wheels off. I knew intuitively what behaviors to use to keep my balance, and the constant reinforcement wasn't worth the time anymore.

I'm not saying that the training wheels of budgeting and careful planning are wastes of time. They're not. The experience of carefully tracking my balances and creating various debt-snowball models brought me a deep understanding of what the good and bad life behaviors are.

Budgeting tools were more useful in teaching me good behaviors than revealing any deep financial truths. I already knew I was in a lot of debt and wasn't in very good financial shape. The planning and daily effort showed me that making wise shopping decisions resulted in more money in my checking account at the end of the month, and that many months of this behavior resulted in breathing room if bad things happened.

I encourage everyone who is in debt trouble to gather as much data as possible and pay attention to everything very carefully at first. Riding the bicycle of financial freedom can be hard, and if you find yourself continually crashing, it's worthwhile to strap on the training wheels.

But if you find yourself continually spending far less than you earn, and budgeting begins to feel like a less effective use of your time, don't be afraid to back off a bit and unhook those training wheels. Once you've incorporated the principles that work for you into your life, you'll find that you can go along just fine without that support, riding into your future with the wind at your back.

Other articles of interest at The Simple Dollar:

"Is an all-cash lifestyle useful for kicking the debt habit?"

"Taking the leap into entrepreneurship: Where is that financial safety net?"

"The life map: Connecting your daily activities and spending to your lifelong goals and dreams"

Jackets, travel boxes, GPS systems, Dutch ovens, pens

2008-05-09T13:00:03Z

Here are today's hot deals at partner blog dealnews.com:

Members Only men's jackets for $10 or less. Plus, apply coupon code MODAYSHIP for 30% off, putting them at lowest-we've-seen prices. Shipping adds $6.99.

Colby small leather travel box for $10 with free shipping. That's $24 off and the lowest total price we could find for such an item.

Harman Kardon GPS-300 4-inch GPS navigation system for $89.99 plus $5.99 for shipping. That's $13 under Thursday's mention and the lowest total price we've seen.

Lodge 6-quart color enameled cast-iron Dutch oven for $39.99. With free shipping, that ties a March deal for the lowest total price we've seen by $10.

Wagner of Switzerland pen for $13.99. Add it to your cart and it falls to $8.39. With $5.95 for shipping, it's the lowest total price we could find by about $16.

Snail-mail bargain: Time to buy forever stamps

2008-05-09T03:32:27Z

The cost of a first-class stamp is going up yet again on May 12, by one penny to be exact. The smart shopper will lock in the soon-to-be-departed 41-cent rate for a standard letter by stocking up on the forever stamp.

The U.S. Postal Service introduced the stamp about a year ago so people can avoid having to buy those annoying 1- or 2-cent stamps every time the rates go up. The forever stamps you buy now for 41 cents will cover the postage for a letter weighing no more than an ounce no matter how high the first-class rate climbs. Love may not be forever, but this stamp is.

According to the post office, forever stamps have really caught on, with more than 6 billion sold. We like the convenience, plus the thought of avoiding future rate hikes.

But not all bloggers enthusiastically embrace them.

"Mighty Bargain Hunter" said that by locking in today's price for a stamp, he'll miss buying cool stamps like those with the comic book superheroes. We agree, MBH. The forever stamp is bland in comparison. Those superhero stamps are our favorites, too.

And please, don't consider forever stamps an investment. The math isn't there. As The Penny Saved observed: "The postage rates are increased yearly based on inflation -- and this just in: Pacing inflation is not a good investment."

Also, stocking up makes sense only if you use snail mail.

Writes Andrea Dickson at our partner blog Wise Bread, "I try to do all of my bill paying online, since the last time I paid my mortgage with an actual paper check, the bank had no idea what to do with it, and called me, asking why I hadn't paid my mortgage like I always did."

The best advice is to accept forever stamps as a frugal purchase but not a gargantuan savings. Getting a supply good for a year or five sounds reasonable. Writes "BeThisWay" at Are You Going To Be This Way The Rest Of The Time I Know You?: "So, my frugal friends, go buy as many forever stamps as your budget can handle, but please don't take out a second mortgage. And please walk, because the price of gas will undo your frugal coup before you pull out of the driveway."

"Now," says Xin Lu of Wise Bread, "if the government introduces a forever gas stamp that guarantees a gallon of gas for today's price, then I would definitely stock up $8,000 of that stamp."

Saying no when people want to borrow money

2008-05-09T00:21:50Z

This post comes from Xin Lu at partner blog Wise Bread.

I think most of us have been asked to lend money to someone we know. No matter how close you are with the potential borrower, there are certain situations when you just have to say no.

Here are some of the times I think you should absolutely keep your money for the sake of your relationship with the other person and the well-being of both parties.

The money is enabling an addiction. If you know full well that someone has a drug habit or gambling problem, you should not give that person money. The best thing you can do is to get them real help like rehab; otherwise the money will be spent on the habit. If you become an enabler by giving them money, they may hurt themselves even further.

Your boss is asking you for money. I wrote about this in an article about crazy bosses. A manager should not use his or her authority to secure a loan. It is highly unethical, and you should not be afraid to report such behavior to the higher-ups or even the authorities. If a manager targets you in a threatening manner because you refused to lend money, that should be reported.

Good money is going toward irreconcilably bad debt. I read a story about a very responsible man whose extremely irresponsible in-laws took out multiple cash loans on their mortgage and ended up near foreclosure. They asked their son-in-law for help to cover their mortgage, which was now twice their income. When you know that the borrower cannot manage the money you give them, you should not let them squander what you earned and saved. Teach them to manage money responsibly; otherwise, continually paying off a chronic debtor's debt is no different from enabling a drug habit.

The asker is a repeat borrower or leech. In some families there's a person who has a track record of hitting up everyone for cash. If that person is able to work and generate income and chooses not to, you should refuse to be taken advantage of. Once again, what would really help these people is to teach them to become financially savvy, and that can be done with coaching and perhaps employment opportunities.

In all of these cases, you should think of alternatives to money to help those you care about. Ask them what the situation is, and look for ways to improve their lives without giving away a bundle of cash. In most of the stories I have heard, relationships actually get worse if money exchanges hands, because more often than not the borrower does not pay the lender back.

If someone is worth helping, you should dig deep to find the root of the problem and help eliminate it. If someone is just an opportunistic jerk, perhaps it is best to sever that relationship and improve your life.

Either way, you must be strong and say no when you're asked for money, even if that person promises to pay you back.

Other articles of interest at Wise Bread:

"How big of a house do you really need?"

"Should you stockpile the forever stamp?"

"The ethics of hoarding"

Wrench sets, emergency kits, watches, shoes, keyboards

2008-05-08T23:50:03Z

Here are today's hot deals from partner blog dealnews.com:

Bob Vila eight-piece Quick Glide wrench set in SAE for $3. With $4.95 for shipping, that's a buck under our February mention of the same set in metric and the lowest total price we could find for such a kit.

Halberd 31-piece roadside emergency kit for $10 with free shipping. That's $3 under our mention from a month ago and the lowest total price we've seen for such a kit.

Invicta men's Russian Diver Collection Blue Watch for $125. With free shipping, that ties last month's mention as the lowest total price we've seen by $120.

Sandro Moscoloni men's Canton shoes for $29.70. Coupon code NEW5459 cuts it to $26.73. With $5 for shipping, it's the lowest total price we could find for this style.

Logitech cordless desktop MX3200 keyboard and laser mouse combo for $59.99. A $30 mail-in rebate drops it to $29.99. With free shipping, that's a buck under our mention last month and the lowest total price we've ever seen.

Frugal or just downright cheap: Take the test

2008-05-08T23:40:26Z

Pinyo's wife thinks he's cheap. In his mind, he's frugal. Who's right?

He scored a 20 on the cheap vs. frugal test he devised and posted at Moolanomy. That score indicates that he's neither, but that he "appears to be reasonable" with his spending.

Take the test. It's fun. For example, here's Question No. 6.

You have some old clothes. Do you ...?

What are you talking about? I don't have old clothes.
I donate them when they get a little older.
I turn them into rags.
I am still wearing them.

We scored a 26, which means we squeaked into "You're frugal. Good job!" We also took the test for our partner blogger Donna Freedman. Her TV-free status earned her a few more "cheap" points, but she still finished with a respectable 31, well within the frugal range.

Here are two more sample questions. (To see the entire quiz, click here):

When you receive gifts, do you ...?

I take them back to the store to trade up.
I keep all my gifts.
I may return or regift some.
I sell them on eBay for cash.

What kind of TV do you have?

1080 HDTV, of course!
A flat-screen TV, but not the latest and greatest.
I still have the one I bought 10 years ago.
I don't have a TV.