I don’t remember talking to my friends about how much allowance they made, but I am guessing the subject probably came up.  As a parent, allowance is definitely something to consider carefully.  You don’t want to give your child too much nor too little.

-“This is an emergency!  I need to know all of your allowances!”

-“Why?”

-“Because you are all still friends, even with different allowances!  I have to know how you do it.”

-“Do we get different allowances?”

-“I don’t know, do we?”

From the kids’ show Arthur, in the episode More! where Arthur’s little sister, D.W., is angry she earns less allowance than her friend.

When Should Children Get an Allowance and How Much Should it Be?

Determining the Work to Be Done

Before you even decide how much to pay your child, you must decide on the work that goes along with the money, or if the child gets the money free and clear without work attached to it.

If you are a follower of Dave Ramsey, you know that he prefers the word “commission” over “allowance.”  He advocates paying children for certain jobs (and if they don’t do the jobs, they don’t get paid) but also giving them other jobs that they don’t get paid for.  They must do the latter jobs because they are members of a family, and everyone in a family helps each other.

This is what we do with our kids.  My son has to clear the plates after dinner because he is a member of the family and can and should help mom and dad with some work around the house.  However, he gets paid for sweeping the kitchen floor after dinner.

Other people don’t like to tie money to jobs around the house.  Instead, kids help out when they can and are able, but they get a certain amount of money each week, regardless.

How Old Should Children Be When They Start Receiving an Allowance

According to Bankrate, “As soon as your child begins to express a sincere interest in material wants (as in, ‘I want that!’), it’s time for an allowance.  Depending on the child, that’s probably around the ages of 3 to 5.”

We started our oldest two children’s allowances when they turned 3.  However, our youngest is only 2 but doesn’t want to be left out, so she has a few small chores she has to do, such as pick up her toys every night, to earn her money.

How Much to Pay for an Allowance

What kind of allowance do you give your child?

According to CNNMoney, across all age groups, the average allowance is $785 a year, or $15 a week.  Of course, that varies with age.

The parenting site Kaboose states, “In a national 2005 survey of nearly 1,500 children by the research firm Yankelovich, the range in allowance for 6- to 11-year-olds is $5 to $9 a week.  For 12-to 17-year-olds, the average is $10 to $19 a week, and around 15 percent of 12- to 17-year-olds received $20 to $49 weekly.  (Notably, the study found that fewer than 60 percent of children ages 6 to 17 get any allowance).”

Other experts suggest a dollar per year of age or to pay them half the amount of their age, neither of which formula I feel works well.  For a 13 year old, you could set an allowance of $13 or $6.50 depending on these two strategies.

A better idea seems to be to pay them based on what you expect them to do with the money.

If you expect your 14 year old to use her allowance as fun money, then it doesn’t have to be as large as her friend’s allowance if the friend is expected to buy her own clothes, pay for hot lunches and her entertainment from her allowance.

Our little ones (2 and 3 years old) get 5 cents per chore that they do.  Our 8 year old son gets 25 cents per chore.  He has at least 4 chores a day including small tasks like putting away his clean clothes.  His bigger chores earn him more money.  Once a week he is expected to clean the bathroom thoroughly, and he gets $3 for that task since it is more involved and labor intensive.  All told, he can earn up to $10 per week, but he rarely does because he skips out on chores frequently.

Finally

Determining how much your child is paid for his allowance depends on what you want them to do with the money and your own financial situation as well as your child’s age.

Likewise, your own personal beliefs and philosophy will help you determine whether your child should get an allowance based on work he performs or if he does work because he is part of a family and gets his allowance separate from any chores.

Editor’s note: Though it’s important to be consistent you, as the parent, can change up your allowance system if you feel things aren’t working out well or if situations change.  Another important aspect to discuss is setting up expectations for what your child will do with the allowance (that’s an article for another day).

Do you pay your kids an allowance?  If so, is it tied to specific chores?

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Children and Allowance – When to Start and How Much

It’s a shame it took until I had kids to fully understand everything you did but now I get it.  Thanks for all the time you gave me.  I certainly didn’t appreciate it all when I was a kid but I do now.

For the rest of you, take some time out to appreciate the dads in your life.  Think about the life and money lessons Dad taught you and consider what you are passing down to your kids.  They may not realize it now but they are learning a lot from your actions.

And here are some great personal finance articles to read as well:

Sound Mind Investing | How Buying a Vehicle Can Drive Your Finances Into a Ditch
PT Money | 33 Free Things to Do in the Summer
Wise Bread | There’s a Lot to Like About Frugal Living
Fatwallet | 6 Tips for First-Time Home Buyers (This was a guest contribution we did for FatWallet)
Bible Money Matters | 4 Warnings Signs That a Person Will Never Get Out of Debt
Money Smart Life | Student Loan Options: Comparing Types of Student Loans
Krantcents | 4 Decisions That Will Cost You a Fortune
My Journey to Millions | It Makes Perfect Sense That The Rich Benefit More From Tax Deductions
Lifehacker | How to Put Your Money to Work For You, Beyond the Basics
Wise Bread | For Amazing, Affordable Vacations, Travel Slowly
Wealth Informatics | Make quick money: 60+ easy, fast ways to earn extra $100 in a day/weekend

Free From Broke was featured in the following carnivals:

Carnival of Wealth, Memorial Day Edition | Control Your Cash: Making Money Make Sense
Carnival Of Personal Finance #417 – Summer Road Trip Edition
Lifestyle Carnival Edition 57

Copyright © Free From Broke - A Personal Finance Blog Please visit for more great content!

Happy Father’s Day 2013 and Links

Well there is and you can.

If you fly on one favorite airline for most of your trips (or even if it isn’t your favorite but you fly it because you have to), using an airline miles credit card for the specific carrier can be a great way to maximize your airline spending.

Finding the best credit card for airline miles can help you travel for less!

If you have that one magic carrier you always use then it’s pretty easy to find an airline miles credit card to match.  Most, if not all major airlines have a credit card.

But what if you fly different carriers and have a few choices?

If that’s you then having a great airline miles credit card can make your flights more enjoyable and you can earn miles towards free trips faster.  The right card can steer you towards a specific carrier because of the better benefits.

And if I don’t know what airline I’ll be flying next?

Don’t worry, some of the best credit cards for airline miles let you transfer their miles to a number of different rewards programs so you can earn miles without worrying about one particular carrier.

But which are the best airline miles credit cards?

Below we’ll look at some great airline miles choices and what makes each card tick.

Need more convincing?

Finding the best airline miles credit card to match your favorite airline can net you free tickets to fly, miles that can be used towards car rentals and hotels, upgrades, free bag checking, preferential check-in, and more!

Keep in mind you need to responsibly spend and pay off your credit card bill monthly in order to truly make the most of your airline miles.  Keep in mind too, most airline miles cards have an annual fee (some waive the fee the first year).  You will find that if you take advantage of the benefits of the card, the fee is well made up for.

Done right, you can turn your everyday spending into airline miles and reduce the cost of your flying and possibly take advantage of special perks as well.

Take a look at the following cards and see which is the best airline miles credit card for you.

Gold Delta SkyMiles® Credit Card from American Express

To start you off on miles, the Gold Delta SkyMiles® Credit Card credit card offers you 30,000 bonus miles when you spend $500 in the first 3 months of being a card member.

That’s already enough to redeem for a free flight!

You can earn an additional 5,000 miles signing up for two additional cards (think spouse and child in college).

You can use your SkyMiles to pay for any Delta seat without blackout dates or restrictions. You’ll earn one mile for every dollar you spend. Earn two miles for every eligible dollar spent on qualifying Delta purchases.

The first bag you check will be free on every Delta flight.  Not only does this save you money but it saves you time in having to pay for your bag at check-in.

You also get Priority Boarding on Delta flights (nice for when you want to get on a flight and make sure you have room in the overhead compartment for your stuff).

And you get 20% in-flight savings on food and entertainment.

The first year’s annual fee is an introductory $0 for new cardholders ($95/year afterward).

Click through for Platinum Delta SkyMiles and Delta Reserve details.

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Blue Sky from American Express®

This isn’t an airline miles card, as the points you earn aren’t for any one particular airline. In fact the points are good for any airline.

The benefits are well-worth checking out.

You can say the Blue Sky (SM) card is an airline miles card for any carrier, which is great if you fly but don’t stick with any particular airline.

You get 7,500 bonus points after you spend $1,000 in the first 3 months of membership.  This can be redeemed for a $100 statement credit, applied towards airline tickets or hotel stays, and more.

Points are 1 for every $1 spent on just about every purchase you make.  As I mentioned above, the points are good for any airline, hotel, cruise, or car rental.  Point redemption has no blackout dates, expiration, or cap limits.

Use your card to rent a car and you will be covered with their Car Rental Loss and Damage Insurance.

Oh, and there’s 0% introductory APR on purchases for up to 12 months, after that the APR will be be a variable rate, currently 17.24%-22.24%.

There is no annual membership fee for this card.  Terms and restrictions apply.

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Citi® Platinum Select® / AAdvantage® Visa Signature® Card

Sign up as a new account holder for this card and enjoy 40,000 American Airlines AAdvantage bonus miles when you make $3,000 in purchases in the first 3 months.  You get double AAdvantage miles on eligible American Airlines purchases.

Also, earn up to 10% of your redeemed miles back, up to 10,000 miles every year.

Traveling is easier with this card as your first eligible bag is checked free.

Take advantage of Priority Boarding with Group 1 privileges as well as 25% off eligible in-flight purchases.

Every cardmember year you can earn a $100 American Airlines Flight Discount with qualifying purchases and card-membership renewal.

The annual fee is $95.00, waived for the first 12 months.*

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British Airways Visa Signature® Card

Earn 50,000 bonus Avios points when you spend $1,000 within the first 3 months of opening your account.  If you make $10,000 in purchases in your first calendar year you get 25,000 bonus points.  Make another $10,000 in purchases and you earn 25,000 points again.

That’s enough for a round-trip business class award ticket.

You earn 2.5 points for every $1 spent on British Airways and 1.25 points for all other purchases.

There are no foreign transaction fees when you use your card abroad.

Every year you spend $30,000 on your card you earn a Travel Together Ticket which allows you to bring a companion along when you redeem your points for a flight.

Smart-chip technology allows you to make chip-based purchases and Europe and other countries.

The annual fee for this card is $95.

See our British Airways Visa Signature Card review.

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The US Airways Premier World MasterCard®

You can earn up to 40,000 bonus miles when you make qualifying transactions.  Redeem your bonus miles for flights for 5,000 fewer miles – exclusive offer!  You earn 2 miles per $1 spent on US Airways purchases.  Earn 1 mile per $1 spent everywhere else.

Every year you get an annual companion certificate that is good for round-trip travel for up to 2 companions at $99 each (plus taxes and fees).

Also enjoy Zone 2 priority boarding on every flight as well as first class check-in.

Make sure you check the site for their terms and conditions for complete details.

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United MileagePlus® Explorer Card

You can earn 30,000 bonus miles with the United MileagePlus Explorer card after you sign up.  Earn your 30,000 bonus miles when you make $1,000 in purchases within the first three (3) months of having your card.

You earn 2 miles for every $1 spent on tickets purchased from United and 1 mile per $1 spent everywhere else.  Your miles won’t expire and there is no limit to the number of miles you earn.

Need to check a bag?  You check your first bag free which can save you $100 roundtrip.

You will also enjoy priority boarding privileges where you get to board your flight before general boarding.

Every year you get 2 passes to the United Club(SM) where you can relax before your flight and enjoy complimentary snacks, beverages, and WiFi.

The annual fee is free for the first year on this card ($95 thereafter).

See our review of the United MileagePlus Explorer Card.

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Our Story

We recently flew back on a particular airline.  This airline charged for your first bag that you checked (this is becoming the norm in the industry).  Ughh.  So what happens?  Most people try to pack all of their stuff in carry-on luggage.  Sounds good, right?  Well what happens is the overhead compartments get filled up quickly.  In fact if I wasn’t carrying a bunch of pillows to use on the flight I would have had to check my backpack (we bring our own travel pillows).  I saw a few people that had to have their carry-on luggage checked and they were already on the plane!

But it could be easier.

This airline offers up a credit card that gives you your first checked bag free.  Right there you don’t have to worry about cramming your stuff into a carry-on.  Then they also give you priority boarding with the card.  So even if you do have a carry-on you’ll have space in the overhead since you get on board earlier.  Win-win.  Oh, and you also get discounts for on-board purchases (which also help you earn airlines miles).

That flight taught me that getting an airline miles credit card can definitely make a flight easier!

Remember

The best way to take advantage of these offers is to use your credit card responsibly.  If you are carrying credit card debt with a high APR then you may end up paying more in interest than you would get in mile/point benefits.

If you want more of a general travel rewards card then check out The Best Travel Rewards Credit Cards.

What do you think is the best airline miles credit card?

*As you always should, make sure you read through the card details to make sure this card fits your needs and you understand the terms and conditions. Be aware that the terms may change after this article’s publication.

“Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.”

Copyright © Free From Broke - A Personal Finance Blog Please visit for more great content!

The Best Airline Miles Credit Cards

When I start the season off I try to take it easy and keep my run leisurely.  And yet I’ll still try to do too much and forget that it takes some time to build up my conditioning.  The next couple of days after that inaugural run are always fun [ouch]!

I got to thinking about how simple it is to run.

Here is this wonderful exercise that just about anyone can do.  People pay hundreds in gym memberships and buy expensive machines for home to workout when a simple run may be all they need.

What’s it take to run?  Go out and move faster than a walk!  I think maybe your feet have to leave the ground at some point.

But then I thought about it and I realized running can be expensive as well.

Here’s How You Can Save on Running Shoes, Gear, and Events

Let’s take a look at whether running is expensive as well as some tips on what I’ve done to keep costs down.

Gear you need to run:

Gear that’s not expensive – Sneakers, t-shirt, shorts.  That’s pretty much the basics.  I’m pretty sure most of us have that in the house and could go out and run today!

Gear that is expensive – Specialty running shoes, performance shirts, sport shorts, running socks, hydrating pack, energy gels, Body Glide, training watch…I could go on.  It’s real easy to take a few simple items you need and then upgrade the hell out of them to where you could easily end up spending hundreds of dollars for your running gear.

What I’ve done to keep gear costs down – When I started to seriously run I researched running shoes (sites such as Runner’s World) to see what was rated well.  I wanted a good pair for fear of doing damage to my feet with improper shoes.  Unfortunately we don’t all have uniform feet and running styles.  Ideally you want to match your foot and style to the right kind of show.  There are stores that have equipment to help you determine what’s right for you (it’s basically a treadmill with a few other bells and whistles combined with a knowledgeable staff).

Shoes don’t have to be expensive but you can easily cost over $100 for some types.  I bought my first good shoes at DSW, a discount shoe store, for about $60.  I’ve also picked up a greta pair of faster shoes for $25 (originally about $100).

Keep an eye out for last year’s model of shoe.  You can usually get a great discount on last year’s shoe and often there’s isn’t much different from the current model.

For shorts and shirts I tried to buy piece by piece when I could find items on sale.  I’ve shopped Target (they have pretty good workout clothes by Champion) as well as specialty shops and everything in between.  I always bought on sale!  When I committed to run a marathon I decided to buy running socks and good shorts.  If I was going to be on my feet for 26.2 miles I needed all of the help I could get!

Also, you don’t have to spend a lot on gear like GPS watches.  Smartphones these days have great apps that can track your runs for you.  I’ve been using the Nike+ Running app on my iPhone and it does a really great job of mapping out my runs for me.  If you do think you need more advanced gear then look for discounts at places like Costco.

Training materials/How to:

Not expensive – Just go out and run!  Watch other runners and if you can ask their advice.  Watch TV for sports programs that deal with running.  There are a number of websites out there, like Active.com, that are full of professional advice.  You also can go to the library to take out books on running form.  Also check out local running groups and stores in your area.  Many offer free groups runs where you can train with others that have similar goals as you.

Expensive – Personal trainers, how-to books, DVD’s, gym memberships…  A person can really go all out if they want to learn to run well.  Personal trainers are a quick way of making the exercise expensive.  I’m not saying it’s not useful, just expensive.  It’s also easy to get caught up in all of the instructional books and videos that are out there, many with different training methods.  Though I don’t think you need a gym membership to run, some people supplement their running with alternate workouts or use the gym’s treadmills and other equipment for bad-weather situations.

What I’ve done – I bought a few magazines to get some tips like when they have advice on a first 5K run.  The only book I bought was ChiRunning.  It was recommended to me and I liked the running philosophy.  I scoured online articles for running advice and took in whatever I thought was useful.

There are also great programs out there like the Couch to 5k plan for beginning runners.

Where to run/Races:

Not expensive – Did I already say “Just go out and run?”  Tie on your sneaks and head out.  Check out your local park to see if they have a trail.  Run around the block.

One of the beauties of running is that you can basically do it anywhere (though I imagine a hilly city like San Francisco could be tough).  Check out this great page from USA Track & Field.  You can zoom into your area code and look for trails or just mark off a route that you plan on running to see the distance.  In Central Park, in NYC, you can run routes that are used for actual races (including the finish for the NYC marathon).

Expensive – Joining running clubs (such as Road Runners Club of America or New York Road Runners).  Traveling to races.  Running official races.

Do you plan on running an official race?  You may have to join some sort of running organization or risk paying a premium for the race.  Paying the premium is not too bad if you’re only running one race but if you plan on doing more it can add up quickly (even with membership).

Why run a race at all if it’s going to cost you?  Good question (man, you’re smart!).

One benefit of races is the motivation to finish and the excitement of running with the other runners in a timed event.    Putting the money down and having a set date to run a distance makes your training real.  You know you have to get out there and train.  There will also usually be support there in the form of water/hydration stations and first aid.

Premium races, like a marathon, can easily cost $100 if not more.  And you may have to pay extra for transportation to and from the event.  Some runners will travel to other cities for races (travel, room and board, food, etc…) so those are more costs to add on.

What I’ve done – I was a member of the NYRR association.  I had a goal of running the NYC marathon.  One of the ways to get in was to run nine qualified/scored races the year before.  For that I needed to become a member.  Costs added up between the races and the marathon but for me it was well worth it!  Running the NYC Marathon is truly an awesome experience (well, once you get over the pain after a few days you can recollect how awesome it was).

Most times I’m not running a race though.  I usually take advantage of local park trails or I’ll use the USATF map to track a route to run.  I’ve discovered beautiful areas in NYC that I wouldn’t have gone to otherwise and got to explore the city up close (Queens Botanical Garden, Flushing Meadow Park, Kissena Park, Arthur Ashe stadium, Shea stadium, Citi Field – just to name a few sites).

Something I’ve been seeing more of is running events on discounts on sites like Groupon and Living Social.  Keep an eye out and you might find an interesting run for less.

Does Running Have to Be Expensive?  Can You Save?

It really depends on what your goals are.

You don’t have to go crazy buying all of the latest gear and doodads if you want to run a few miles a week to keep fit.  If you plan to get more serious then you can upgrade equipment as you see fit.  Keep an eye out for sales and only buy what you need.  It’s easy to get caught up in all the latest gadgets but you don’t need most of them.

Oh, and give yourself some time running before you decide to upgrade.  Realize why you need to upgrade your gear before you go out and buy something just because the experts say it’s good.

Remember, you really don’t need that much to get out there and run!

(Make sure you have clearance from your doctor before starting a new workout). – I’m not sure if I have to say that but it’s pretty good advice and I don’t want you getting hurt, you know?

Do you run? How have you saved?

photo by mikebaird

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How to Save on Running Shoes, Gear, and Events

The average college graduate who has student loan debt walks away with roughly $25,500 in debt.  To pay those loans off in 10 years, the graduate will have to pay nearly $300 a month and will pay almost $10,000 in interest over the life of the loan.

New college graduates in this tough job market often must settle for low paying jobs to gain experience before they can move up to a better paying position.  Factor in rent, food, a car, health insurance, and a professional wardrobe, and tacking on a steep student loan payment can be difficult.

While there is no easy way to get out of student loan debt quickly, there are a number of programs that are available to help graduates pay off their debt faster.  These programs won’t erase student loan debt, but they can give graduates a little extra help paying off their loans.

3 Programs to Help You Pay Off Student Loans Faster

SmarterBucks

SmarterBucks offers a shopping market to get rewards that can be applied to one’s student loan payment as well as a debit card.

Log into SmarterBucks before doing your online shopping.  Each purchase you make is eligible to get a 5 to 10% rebate that will be set aside to be applied to your student loan.  When your account reaches $15, the money is automatically shifted over to your student loan balance.

Another way to earn money is to sign up for SmarterBucks debit card.  The SmarterBank checking account is free of many fees and is attached to the debit card.  Use the debit card for non-pin purchases, and you will get a rebate of .05 for the first $100 of each purchase and 1% for the rest of the purchase over $100.  Purchase a $200 item, and you’ll get .50 cents for the first $100 and $1.00 for the other $100, giving you a total rebate of $1.50 for your $200 purchase.

Friends and family can also sign up to give you a one-time donation or a recurring “gift” that will go directly onto your student loan.

Doug Lowenstein, executive vice president of banking and rewards at SimpleTuition says of the program, “It’s a great, low maintenance way to make headway against your student loans through things that you would be doing otherwise,” (U.S. News).

SaveUp

Every little bit helps in paying off student loans faster.

Users can sign up their savings accounts as well as their credit card and loan debts.  For each deposit into the savings account or payment on their credit card or loan, they earn points that can be redeemed for the chance to win rewards.  Rewards include wardrobe makeovers, cash, and even a jackpot prize of $2 million.

In addition, “the site incorporates financial literacy lessons and videos to help loan holders learn more and earn additional credits” (U.S. News).  The site’s cofounder, Priya Haji adds, “It’s just a fun, extra reward for doing the right thing” (U.S. News).

Student Loan Hero

Students can get loans from a variety of sources, and wading through all the details of each loan when repayment begins can be difficult.  Student Loan Hero was designed to help.  Simply enter your loan information, and Student Loan Hero allows you to choose the best way to pay off the loans as well as whether a loan consolidation might be a good idea.

Cofounder Andrew Josuweit graduated from college with 12 student loans and $104,000 in student loan debt.  He says of Student Loan Hero, “Our mission is to help students strategically organize their loans to save money and get out of debt faster – without the frustration of dealing with a bank or college” (Yahoo!)

Co-founder Evan Shoemaker said, “On average, our strategies can help borrowers save close to $5,000 over the lifetime of their loan repayment and get out of debt 2 years faster” (Yahoo!)

If you have trouble tracking the details of your many student loans, Student Loan Hero helps you keep all of the information in one place as well as monitor your loan repayment progress.

Finally

Most people can’t get through college without taking out student loans, but unfortunately, many students underestimate what they are signing up for when they agree to multiple student loans and a heavy student loan burden.  If you’re trying to repay your student loans, one of these programs may just help you get out of student loan debt a bit faster.

Have you tried any of these programs?  If so, what was your experience?

Copyright © Free From Broke - A Personal Finance Blog Please visit for more great content!

How Can I Pay Off My Student Loan Faster? 3 Programs to Help

The advice is to those that would like to open up a new credit card for a balance transfer, or get a new home equity loan or home equity line of credit in order to pay off their current debts.

And generally speaking, borrowing money to pay off borrowed money is a losing game.

Their advice is for those that can’t handle the financial responsibility of paying off the debt and spending less than they earn at the same time.

If you continually spend more than you earn, no amount of balance transfers or new lines of credit will save you.

Since many people calling into the financial shows can’t handle that responsibility (they are up to their eyeballs in debt currently, right?) the advice points against this strategy.

However, that doesn’t mean transferring a balance from one credit card to a new one is always a bad idea.

If you are smart about how you handle the balance transfer it can actually save you thousands of dollars in interest and result in you being debt-free a lot earlier than you would have been otherwise.

How Does a Balance Transfer Credit Card Work?

Credit card companies love to spam the public with paper marketing offers.  We’ve all received an envelope marked “0% for 18 months including balance transfers!” at some point in the past.

With these types of offers the idea is to move one lump sum of debt from a high interest rate creditor (like a credit card with a late payment) to another creditor at a lower rate (usually another credit card company).

For example, let’s say you have a credit card with a $10,000 balance at 17% with Credit Card Company A.  You get an offer in the mail from Credit Card Company B for “0% APR on balance transfers for 12 months” and quickly decide that 0% is a lot less than 17%.

You call in, complete the application, and are granted a $10,000 line of credit.  Your new credit card company (Company B) sends your old credit card company (Company A) a check for the $10,000 balance and you now owe the new credit card company (Company B) the money instead.

When Does a Balance Transfer Make Financial Sense?

A balance transfer credit card can be a powerful tool but you have to use it for the right reasons.

Moving money from one creditor to the next does you no good if you can never pay off the balance.

A balance transfer only makes sense if:

• you can be approved for the new line of credit needed to complete the transfer
• you can afford to pay off the debt during the balance transfer offer (or at least make significant progress against it)
• you won’t rack up new debt on the credit card you just transferred the balance off of

If you can’t handle these three things, a balance transfer isn’t for you.

A balance transfer that you can just barely afford does help, but you won’t make any significant progress on your debt and will have to hope you can get yet another balance transfer in the future.  If you don’t stop overspending on your other lines of credit you will just end up with two big balances to pay off rather than one.

4 Factors to Consider When Looking at a Balance Transfer

Here are four significant factors you need to look at before taking on a balance transfer offer.

1. What is the rate?

The first factor to know is what the new interest rate will be on the balance transferred to the new credit card.

Most offers are for 0% for a certain period of time, but there are some banks and credit unions that offer flat rate at 4% to 9% based on your credit history.

The rate you receive is one of the largest factors in your decision to do a balance transfer.  If you can drop a 17% debt down to 0% or 4% you are going to save a ton of money on interest payments.

2. What will the new payment be?

This is key in determining how much of a dent you will be able to make in the debt.

For example, if your $10,000 debt at 17% is constantly making you spend $300 more than you earn — you’re going deeper into debt — and the balance transfer drops your payment $305 per month you really aren’t improving your situation all that much.  Yes, you aren’t going further into debt.  But when the balance transfer offer runs out you will either need to find a new balance transfer or be stuck paying the high rate of the new company.

That kind of balance transfer helps you stop taking on water, but you’re still stranded at sea.  You’ll need to find other ways to cut back, earn more income, or both in order to work on actually paying off the debt.

The best situation is where you have a little extra money left over each month and a balance transfer (with a significant interest rate reduction) gives you enough breathing room to actually pay the debt off during the balance transfer period.  (Or if not completely paid off, a huge portion of it wiped out by your extra payments.)

3. What is the length of the offer?

Some balance transfers promo rates are for 12 months.  Others 15 months.  And yet others 18 months.

The length of the offer significantly changes how much of an impact you can make on the balance.  If you knew you could choose between 12 months at 0% and 18 months at 0%, you would choose 18 months every single time.

Yet sometimes the offer that is mailed to you is just for 12 months.  Keep searching or call in and ask for a longer term.  Those 3 or 6 extra months might result in you completely paying the debt instead of just paying off a portion of it.

4. What are the balance transfer fees?

This is the unfortunate part where you learn that performing a balance transfer will cost you money 99.9% of the time.  Most major companies now charge a balance transfer fee of $10 (or some other nominal amount) or 3% of the balance that you transfer over, whichever is higher.

That means transferring that $10,000 balance at 17% to a new offer for 0% for 12 months is really costing you 3% instead of 0%. You’ll pay the $300 in balance transfer fees just to get started.

However, even with that kind of fee in place if you can drop 10%, 14%, or 20% off of your rate you are still coming out ahead as long as you actually pay the balance off.

Finally

You can make great strides in tackling your debt using a balance transfer credit card.  But you are only helping yourself if you don’t dig yourself deeper into debt and you actually take that low- or zero-percent interest period and pay more towards your credit card balance.

If you are looking for a balance transfer credit card here are some offers that have 0% introductory APR.

Have ever used a balance transfer credit card to help eliminate your debt?

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Balance Transfer Credit Cards – When Does It Make Sense to Use Them?

If so, you’re not alone.

More and more Americans are choosing to live together before getting married.  According to a CDC study, 48% of women interviewed between 2006 and 2010, ages 15 to 44, had cohabitated with their significant other.  This trend has been on the rise, so it’s not surprising.

When you consider the level of student loan and credit card debt some adults have when leaving college, living together may also be prompted out of financial necessity to pool resources and be able to afford living expenses while paying down debt.

A New Trend — Buying a Home Before Marriage

Did you buy a house with your spouse before you were married?

The opportunistic housing market with low housing prices and unbeatable interest rates combined with the trend for many couples to cohabitate has sparked a new trend — buying a house together before getting married.

Dr. Robi Ludwig, a psychotherapist, states, “Buying a home together has become the new engagement ring for some couples” (TIME).

Mind you, this trend isn’t for couples buying a house a few weeks or months before their wedding date, but for couples who haven’t even gotten engaged or set a wedding date to buy a house together first.

But is buying a house together before making other relationship commitments a good idea?

Drawbacks of Buying a House Together

Would you buy a home with your partner before marriage?

The CDC study that looked at how many couples lived together also looked at the viability of these relationships.

In their study, they found that “40% of first premarital cohabitations among women transitioned to marriage within 3 years, 32% remained intact, and 27% dissolved.”

Divorce can be very messy, but splitting assets and a house without the legal protection of marriage can be even more difficult.  Still, that is the chance that many of these couples take.

From a financial well-being standpoint, not merging finances before marriage, including buying a house together, is the safest bet.

Benefits of Buying a House Together Before Marriage

While I wouldn’t buy a house with someone without being married or within sight of the wedding date and would advise my children not to, there are some benefits for couples who would like to buy a house before marriage.

1.  They can buy more house with two people’s income than one.

Not surprisingly, the trend of buying a home together is hottest in the Northeast were properties are expensive.  In fact, 40% of couples bought houses together before marriage in the Northeast versus only 28% in the South (where houses are cheaper and a sense of tradition is perhaps stronger) (TIME).  Two single professionals with good incomes could buy a much nicer home together than they could if buying separately.

However, if the couple does eventually marry and have children, will they be able to have one person stay home to raise children, if that is what they so desire?

If they buy a house together before marriage and children are on the horizon, there is a good chance that they will overextend themselves based on family decisions they have not yet made or perhaps even discussed.  This will be even easier to do when the couple convinces themselves that they will have adequate salary increases over the years.  Besides, some people may be sure that they don’t even want kids only to change their minds a few years into marriage.

2.  They can’t keep their finances a secret.

While many couples have honest discussions about the state of their individual finances before marriage, I’m guessing just as many avoid the discussion and try to keep their finances a secret.

However, that is not possible if both individuals are trying to qualify for the mortgage.  “It’s possible to get married without actually knowing how much money your wife earns, or how much credit card debt your husband accrued in college.  Salaries, debt, and more are all on the table when the time comes to get a mortgage, however” (TIME).

3.  They could achieve financial freedom sooner.

If the couple is one of the 40% who marry within 3 years according to the CDC study, buying a house together earlier in their relationship could lead to earlier financial freedom.  Instead of paying rent for each of them to live in separate locations while dating or even paying rent while living together, their money is now going to paying down a mortgage.  If they buy a house together at 26 and don’t marry until 30, they’re 4 years ahead on paying off a mortgage than they would be if they waited to buy a house until they married.

Finally

Throughout the United States, the rate of marriage is declining.

Buying a house together before being engaged or married is just another result of that.  From a financially conservative standpoint, waiting to buy a house until being formally committed is the safest bet, but for those who want to leap into the housing market together, there are some advantages.

What do you think of this new trend to buy a house together before being engaged?

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First Comes a House, Then Marriage?

Here in the United States, we place a premium on hard work.

However, that might actually be detrimental to us.

If you are looking for a good work/life balance, the fact that you leave an average of 11 vacation days on the table (according to CNN Money) could be a bad thing.

It might even reduce your productivity level.

How Does U.S. Vacation Time Stack Up against Other Countries

We take much less vacation than other countries.

In fact, many countries require companies to give a certain number of paid vacation days for employees with 10 years of services.  The United States isn’t one of those countries, but China is (10 paid vacation days).  Other countries include the United Kingdom, with 28, and Japan with 20.

Even though the United States doesn’t require companies to provide paid vacation, there are plenty of companies that offer paid vacation days, or at least the option to take personal time off.  However, when you compare the United States with many other countries, the gap still remains.  Even though they aren’t required to, many companies in other countries provide plenty of vacation time, whether it’s paid or not.

Every year, Expedia commissions Harris Interactive to put together a survey of vacation time taken by countries around the world.  Many might be surprised to learn that Germans earn about 30 vacation days a year, and the vast majority of those days are taken.  Since Germany is perceived as one of the more productive and stable countries, it appears that vacation doesn’t mean inherent laziness.

Norway, Sweden, Denmark, and India all blow the United States away as well (although in India more vacation days are left on the table).  It seems as though countries that repeatedly make the list of happiest countries in the world (think Nordic countries) also have a large number of vacation days — and they use them.  The United States doesn’t make the top 10 — although it is number 12.

Perhaps, if Americans took a little more time off, they would be happier.  We could enjoy greater work/life balance, and perhaps even be more productive.

Can More Time Off Lead to Better Productivity?

According to some studies, 35-hour workweeks mean more productivity.  Think Germany (again).

Germany is among the most productive countries in the world, and its workweek is shorter than the “official” 40-hour workweek in the United States, and there are more vacation days involved.  While the United States beats out Germany, the United States doesn’t beat out Norway, which repeatedly ranks high in terms of vacation, happiness, and productivity.

The lesson is that you don’t have to sacrifice productivity when you take more time off.

A few years ago, a Harvard business school professor, Leslie A. Perlow, led a study that discovered that predictable (and forced) time off led to increased productivity.  Numerous studies have been conducted on the importance of vacations in reducing stress and anxiety, and on improving your level of productivity.

Americans are stressed out, and work a lot.

As a result, between the commute and doing work at home after business hours are over, and even taking our work with us on vacation, quality of life is affected.  Even if your productivity doesn’t dramatically improve when you take time off, you can improve your quality of life.

Is Quality of Life More Important than Money?

In my own life, I see that quality of life can be more important than money.

Every year or so, I find that my client workload has increased to the point where I am frazzled, stressed, and unhappy.  I may be making more money, but I’m also frustrated with my life.  When I re-evaluate my work time, and cut clients, I usually feel better.  I might be making a little less money, but I have time to spend with my family, and time to spend doing the things I like best.

Plus, I have the time to actually enjoy the money I’m making.  I’d rather be able to do more with the money I have, than pile up a cash hoard but never be able to use it because I’m too busy working.

What do you think? Do Americans need more vacation time? Would you rather have a better quality of life, even if it meant a little less money?

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Vacation Time for Employees in the U.S. Vs. Other Countries – Do You Need More Time Off?

But the point isn’t to take a day off just to go to the lake for a cookout.

Memorial Day, originally titled Decoration Day, is to honor and remember the men and women of the United States Armed Forces who died during their service.  Take some time to think about that this weekend as you enjoy your time off.

Having an extra day off is a great time to get your finances straightened out. Here are some good reads for that:

Wealthy Turtle | 6 Ways to Deal with Stress as a Work at Home Parent
Wise Bread | The 10 Worst Ways to Make Extra Money
My Multiple Incomes | Understanding the Future of Your Credit Score After You Say ‘I Do’
Money Beagle | Pay Debt Away But Keep New Debt at Bay
Invest It Wisely | Tips to Find a Job You Really Love
Club Thrifty | 3 Big Mistakes Couples Make With Money
Bloomberg | The Most & Least Taxing States of 2013
Work Save Live | 5 Things to Consider Before Quitting Your Day Job
Financially Consumed | What’s In Your Homeowners Insurance Policy?

Free From Broke was featured in the following carnivals this week:

Carnival of Personal Finance #410 — Summer Plans Edition
Carnival Of Wealth, Turning the Corner Edition | Control Your Cash: Making Money Make Sense
WILD Finance Carnival for Young Adults
Carnival of Retirement at Money Life and More — Money Life and More

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Celebrating Memorial Day 2013 and Links

Yeah….me, too.  Here’s a card that helps ease the pain of that spending with some great cash back rewards on gas, department stores, and the best we’ve seen on groceries.

It’s the Blue Cash Preferred® Card from American Express credit card, another card in the “Blue” family of American Express cards.

They’re offering a decent Welcome Bonus right now, too – if you charge $1,000 to the card in the first three months, you get 150 in Reward Dollars.

Here’s an overview of the American Express Blue Cash Preferred:

• Earn 150 Reward Dollars after you make $1,000 in purchases in the first three months of Cardmembership.
• Earn Cash Back: 6% US supermarkets up to $6,000 per year in purchases, 3% US gas stations & select US dept stores, 1% other purchases. Terms and limitations apply.
• Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit.
• Simple and Straightforward: With the Blue Cash Preferred Card, you can start earning cash back. No rotating reward categories. No enrollment required.
• Terms and Restrictions Apply.

Now Let’s Dig Deeper Into the Blue Cash Preferred® Card from American Express

Get Cash Back Every Day

So, here’s what you earn back when you use this card:

6% back on Groceries
3% back on Gas
3% back on Department Store purchases
1% back on all other purchases

Those are some great numbers for Reward Dollars, which equal cash 1:1 cash back.  So, if you have 250 in Rewards Dollars, you get $250 back in cash.

It’s that simple.

I really like this card, both because of the simplicity AND the ease with which you can earn cash back.  You’re earning money back on such basic necessities of life – food and gas!

The thing you need to consider about this card — it has a yearly fee of $75.  (Here’s the no-fee version — Blue Cash Everyday® Card from American Express, but it also has less cash back)

BUT WAIT!

Before you go on about how bad it is to pay an annual fee let’s run the numbers.  First, you’ll get $150 back for the Welcome Bonus.  So that covers the first two years of the annual fee right there.  But I say keep the $150 and enjoy it, because using this card for your basic expenses alone can earn you back the fee fairly quickly.

Let’s say you spend just $100/week in groceries.  That’s $400 a month, so you get back $24 a month right there, totaling $288 per year.

Most of us spend a lot more — the U.S. Department of Labor estimates that the average family of four spends $9,525 per year on groceries, or about $793 per month (as of June, 2012).  You can earn the 6% rewards on up to $6,000 in groceries per year (after that, 1%), so you may get as much as $395 back per year in groceries alone!

Then let’s add the 3% you get back on gas.

The Energy Information Administration reported that the average household spent $2,912 on gasoline in 2012.  That’s another $87.36 back per year.  If you spend more than average, you get more back – there’s no cap on rewards for gas.

So, your cash back totals for food and gas alone could easily be at least $482 or more a year.

That’s not even counting the 3% back on department stores (no cap) or the 1% back on ALL OTHER PURCHASES!

So, that $75 is negligible IF you are careful.

You should use this card EVERY time you go shopping for groceries and EVERY time you get gas.  Extra cards for your family on your account are free, so if they are responsible and they drive or buy groceries you may want them to carry it, too.

Want to earn cash back even faster?  Many grocery stores sell gift cards – earn back the 6% on those non-grocery purchases that way!

Take a Closer Look – Is this Card for You?

Of course, if you have another card that works better for your needs, you may want to save all those grocery and gas purchases for rewards on that card, and pass on this one.

There are also restrictions which may also make this card a no-go for you.

The one I ran into is that the rewards don’t work if a store is categorized as a “superstore.”  “Specialty Stores” and “Warehouse Stores” don’t work with the program, either.  So, not only are your Costco’s and your BJs ineligible but others you may not suspect, too (if you do a lot of Costco’s shopping then you should check the TrueEarnings® Card from Costco and American Express).  Check the list below, but it’s not complete.  If you don’t see your preferred stores there, call Amex to check if they are eligible.

Your other option would be to switch to doing your shopping at stores that ARE eligible.  This, of course, is only worth it if they don’t cost more than your usual store, because of basic prices or coupon deals, etc.  That could be difficult to figure out beforehand.

Where Can You Use It?

Check out a basic rundown of the eligible and ineligible supermarkets, gas stations, and departments below.

Remember — you do get the 1% back at all of the ineligible stores, just not the additional percentages back for the specific categories.

SUPERMARKETS/GROCERY STORES

Shop at these stores and get an extra 5% back (for a total of 6% back) on purchases there (for up to $6,000 per calendar year):

• Foodtown
• Gristede’s
• Pathmark
• Shoprite
• Stop and Shop
• Vons
• Whole Foods
• Winn-Dixie
• Online supermarkets such as FreshDirect

You WON’T get the extra rewards at:

• Specialty stores (e.g., fish markets, cheese shops, wine shops, and other specialty food stores )
• Superstores (e.g. Amazon, Target and Wal-Mart)
• Warehouse clubs (e.g. BJ’s Club and Costco Wholesale)

Again, you may need to call and double check about a specific store. For instance, in my area our Kroger-owned supermarket was NOT eligible. Basically, if they sell much more than basic groceries, they probably aren’t eligible.

GAS STATIONS

Here are some of the gas stations that reward you the extra 2% (for a total of 3%) back:

• Gulf
• Murphy USA
• Murphy Express
• Mobil
• Exxon
• Hess
• Shell

You WONT get points when buying gas at:

• Costco**
• Target

**Costco TrueEarnings Cardmembers will earn additional rewards on gas purchases at Costco.

DEPARTMENT STORES

Here are some of the Department Stores where you can shop to get the extra 2% rewards (totaling 3%):

• Bealls
• Belk
• Bloomingdale’s
• Bon Ton Stores
• Boscov’s
• Century 21 Department Stores
• Dillard’s
• J.C. Penney (JCP)
• Kohl’s
• Lord & Taylor
• Macy’s
• Neiman Marcus
• Nordstrom
• Saks Fifth Avenue
• Sears
• Stein Mart

Flexible Rewards

Your cash back can be redeemed on the American Express rewards site when you have 25 or more points, and can be redeemed in increments of 25, 50, or 100.  You can also use your points for gift cards or products through the site like electronics, fashion and sports equipment.

Travel Safe with an Amex Card

An American Express card can be a great card to have while traveling – check out these free services:

Renting a car??  Simply use your card to reserve and pay for the rental, and decline the collision damage waiver at the rental car counter.  You can be covered if the car is damaged or stolen.

Use the Global Assist^® Hotline for medical, legal, financial, or other emergency assistance while traveling more than 100 miles from home.  They will direct you to medical and legal professionals, provide emergency cash wires, help with lost luggage and passports, and more.

Travel Accident Insurance can provide coverage when the entire farehas been charged to the card.

Get Unique Purchase Protections

American Express is known for protections it provides you as the consumer.

We’ve all bought items only to have it broken or stolen.  Usually you just deal with it, right?  Eligible items purchased with the card can be protected from accidental damage or theft for up to 90 days from the moment you buy them. Restrictions apply.

What if you just change your mind?  If you try to return an eligible item within 90 days from the date of purchase and the merchant won’t take it back, American Express may refund the full purchase price, up to $300 per item, excluding shipping and handling, up to a maximum of $1,000 annually per Card account, if you purchased it entirely with thecard.

Warranty just ran out and now the thing’s not working?  When you use your card for eligible purchases, membership can extend your warranty up to one year.

Conclusion

This card really packs a punch when it comes to cash back rewards.

Everyone eats, and most of us need to buy gas at some point.  This card offers a really generous percentage back on both, even with the cap of $6,000 per year on groceries.  The first two years of the annual fee are covered by the Welcome Bonus, so I would definitely recommend trying it out, especially if the merchants you already use are eligible for the extra Reward Dollars.

Apply now for the Blue Cash Preferred® Card from American Express.

Terms & restrictions apply.

*As you always should, make sure you read through the card details to make sure this card fits your needs and you understand the terms and conditions. Be aware that the terms may change after this article’s publication.

“Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.”

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Blue Cash Preferred ® Card from American Express Review – More Cash Back