For the past 2 years, most people (including me!) have been having second thoughts before buying any goods. We didn’t want to make an unnecessary purchases and potentially run into money problems down the road. Each time I stand in front of a store and am about to buy something, I ask myself: “Do I really need it or can it just wait?”

In fact, I should also ask another question: “If I really need it, is it the right time to buy?”. Whether you are frugal or not, we all need to buy appliances if they break or look for a new computer when our children start college. In those situations, you might be surprised how great a deal can be found depending on your timing and the month of the year.

In fact, if you take the time to think about it, most stores offer rebates from time to time. But, they come out at pretty much the same time year after year. They have what we call “rebate seasons” and they are fixed in their business models. I did a few researches over the net and here’s what I found as the best months to buy specific goods:

When I look at the table, I am not really surprised about the timing of some rebates. For example, January and February are good months to buy clothes. This is quite logical as one of their biggest seasons just past (Christmas) and they are stuck with clothes that will have to disappear from the store in March to make more room for the spring and summer stuff.

Another note is travel to Europe in February. I’ve done it once and it’s not only pretty cheap but it’s easier to visit those countries as it’s not tourist season. People are less stressed and you have more time/space to visit.

Overall, I think this small list is not perfect but will help you figure when is the best time to buy a specific type of good. When you plan your purchase in advance, you will not only make a better choice, you will also save a lot of money by looking for deals!

I don’t know if you have noticed any other market trends like that?

Author: Mike.

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Last summer, after our house finally sold, I posted a list of our financial priorities  now that we no longer had to deal with the financial obligation of owning a home. I kind of forgot about that post and when I ran across it recently, I was pleasantly surprised to see that we had made progress in most of the priorities that I listed back in July. Eight months have passed since the closing of our home and while we are not rolling in the dough, we have turned a corner of sorts.

Priority #1: 0% APR Balance Transfer

Balance transfer money is in reality, a credit card cash advance, but there are various ways to access the money as a balance transfer. The key point is that cash advances have very unfavorable terms (fees, interest) while balance transfers often come with favorable terms. Our balance transfers usually came from new credit card applications – 0% introductory rates and low fees. As long as you stay current with payments and completely pay off the balance before interest starts to accrue, the net effect is a really low cost loan. In 2006 and 2007, the Stew family had almost $100,000 in balance transfer money. You should have seen those spreadsheets . . . Anyway, balance transfers came in handy when we were trying to stay current on our mortgage while renting in another state. When we finally sold the house, we still had about $15,000 in balance transfer money remaining. Our first priority was to pay off this money as soon as possible. As of March, we only have $2,500 worth of balance transfer money remaining and that is interest free until the end of the year. I hope to have all of it gone by then.

Priority #2: Emergency Fund

We are working on this one. My goal is to have three months income saved before starting to contribute to retirement. We have about one month’s budget saved right now – not great, but better than where we were.

Priority #3: Retirement

My goal was for Mrs. Stew and I to max out our employee matching opportunities at work. Mrs. Stew ended up not taking the job and we are tighter financially than we expected to be this school year. I am still not contributing to retirement on a regular basis.

Priority #4: Debt Reduction

I actually kind of pushed this one up a notch and looking back, maybe debt reduction should have been Priority #3 instead of #4. We are paying extra toward the principle on our car loan every month. Some would say that retirement is the higher priority, but I am really motivated to get our car paid off before it is no longer useful. Debt still occupies a great deal of our budget every month. The sooner that we no longer have to make those payments, the sooner we can start saving in earnest for retirement, or – since I plan to work the rest of my life – for a rainy day.

Article by Stew

Photo by Maenie

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I have received several comments with regards to my previous posts about giving an allowance to my children. I presume this is a very touchy topic since it links to 2 major things in our lives: money and our children. While we want the best for our children, we also want to use our money wisely and teach them to do the same. What is the best way of teaching money management to your kids? I have no clue! However, I still have more thoughts on allowance for children:

#1 Never use the allowance to punish your kids

I don’t think that using the “you won’t get your allowance if you don’t behave” would be a proper way to do it. If you want to give money to your kids, establish simple rules leaning towards recognition instead of using money to punish them. It has been proven that encouraging good behaviours is a better way of teaching than by threatening. However, I don’t think you should be giving money away for everything either!

#2 Do not cover for them

If you set a specific amount as an allowance, this should always be it. If the purpose was to give your children the sense of responsibility towards money, you must not cover for them if they are missing a few bucks to buy the video game of their dreams. Who would give me additional money to buy a BMW? Nobody… this is why I don’t drive one!

#3 Make allowance realize your kids’ dreams

All right, your son won’t be able to gather enough money from his allowance to go to Disney World. However, I think it is a great thing to show him how quickly he could gather a few bucks and have a great time buying toys at the dollar store. I am not in favour of seeing my kid spending all his money on frivolous toys, but he also needs to reward himself once in a while. If not, saving money will feel like the biggest chore of all

#4 Promote values such as generosity, responsibility and independence with his allowance

If you want to show your kids that giving is a good thing in life, start with his allowance. I have noticed that many of you are telling their children to either put money aside or give it to charity. And you know what? I think it is a marvellous idea! I really see money as an amplifier. Just as you can do really bad things with money, you can also use it to achieve great things. Giving to charity is one of them.

Chores or not to chores?

After all the comments regarding the incremental value of being part of the family and to not get paid for doing chores (as it is part of what family members do), I am still divided. While I want to make sure my children understand that they won’t be paid for every single little thing, I also want to show them that money doesn’t grow on trees.

I remember when I was 8, I actually tried to charge my parents because I shovelled a bit of snow around our door. My father looked at me:

“You seriously want to get paid for this?” he asked me with a stern look.

“Of course! It was not part of my chores and I did it anyways. This means I should get more money” I replied filled with confidence and pride (I considered myself quite industrious at that time to charge for extra chores!).

“All right, here’s a quarter” he flipped it towards my direction and I was left with a stupid quarter for a good hour of work (or so it seemed to me back then!).

This quick money lesson was enough to show me that I might get paid to do some chores, but it was to encourage me and provide me with an allowance. It was not meant for me to become a cleaning machine to earn more money.

I guess this is the kind of lesson I want to teach my kids!

Author: Mike.

Image source: the ritters

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Last week, Mrs. Stew started a sentence with the words, “next time we buy a house . . . ” and then finished the sentence with her idea for our home at some point in the future. I responded that I did not think we were going to buy a house anytime soon, if ever. Of course, Mrs. Stew has heard the statement from me on many occasions over the past two years. I think she had been mostly dreaming out loud while making her buy-a-house plans.

Our troubles with selling our home are well documented on this site. Fortunately, home ownership did not destroy us financially, however, I do not plan to take that chance ever again even if my financial situation improves a great deal. Here are my thoughts:

• There is no indication that we will be moving in the near future, but nowadays, you never know. My profession is one that typically involves relocation about every three to five years, even though I have had the blessing of only having to move once in fifteen years. Until I am in a job with really steady prospects for the future, I am going to keep on renting.
• I generally like mowing the lawn and sometimes even shoveling snow, but if I do not have to do it, why change a good thing?
• If it was a question of mortgage payments, owning a home would make a lot of sense for us. But as those of you who own a home know, home ownership comes with all kinds of hidden costs.
• The down payment is the big issue when it comes to home ownership for us right now and even if I had the kind of cash that a down payment requires, I would be much more likely to save it. We have a ton of other financial issues that need attention.
• I am not even sure that I would enter into a mortgage for fifty or even sixty percent of the home’s value right now. If I could build my own home and truly own it without a mortgage, I might  move toward true home ownership.

For most of my lifetime, home ownership has been sold to Americans as the ideal purchase, a financial priority, the thing that every responsible person does at the earliest possible time. I certainly believed that idea. My wife and I purchased a home withing a year of getting married and thought that we were in great shape since we had bought a home about 10 years earlier than either of our parents had been able to afford one. What we failed to understand was that while we could afford a ten percent down payment and the monthly mortgage, we could not afford to own a home.

I have come to understand the real cost of home ownership quite clearly and I plan to be a contented renter for a long, long time.

Article by Stew

Photo by ugraland

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Don’t forget to set your clocks ahead one hour this weekend. I would like to call for the abolition of Daylight Savings Time. Why in the world do we do this every year? Anyway, here are some articles that I enjoyed this week:

Be sure to stop by Green Panda Treehouse today and sign up for the free iPod Touch giveaway!

Ron at The Wisdom Journal figured out where our government learned math. Funny video, check it out.

Jason Topp, one of the writers at ChristianPF, posted a really challenging article about the best ways in which to help the poor. Outstanding post.

Jim Wang tells us how to survive an IRS tax audit. Fun stuff.

That’s the list! Have a great week and remember, do not just spend money, spend time with family.

Article by Stew

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Insurance. Every time this word is heard, we frown; we get sceptical. We all know someone who has a “story about an insurance salesman. Since it is a commission based environment (if they don’t sell, they don’t get paid), many clowns become desperate and turn into i-want-to-make-a-quick-sale insurance agents. They hijack your emotions (look your wife and kids in the eyes and tell them how much you love them… don’t you think they deserve financial security when you pass away?).

That having been said, it is a fact that most people need life insurance. Of course, reps are going to tell me that everybody needs it, I would tend to say it’s a case by case scenario. Many people are wondering if they need insurance and they don’t really know how to ask to get a clear an unbiased answer. Fundamentally, I think there are 4 reasons to get life insurance:

#1 Get life insurance to pay off your debts

If you have outstanding debts, you surely need life insurance. Why? Because you will surely leave people behind when you pass away. Since you can’t bring your debt to the other side, you will leave those you love with grief… and debt!

A mortgage, a car loan, a line of credit. They are all linked to one’s estate. Therefore, if you accept the estate of someone, you get the right to their assets AND liabilities. A decent life insurance policy will cover the debt and relieve your family from an additional burden.

In order to get coverage, you can ask for credit life insurance (provided by the creditor) or through an independent broker (which can be a regular life insurance contract, not linked to the debt). While the creditor may push pretty hard to sell you their life insurance product, the latter will usually be way cheaper (unless you have a pre-existing condition or take more than one type of insurance with the creditor such as critical illness or disability). If you are looking for a life insurance only, go with a broker.

#2 Get life insurance for your financial dependants

You are debt free and your mortgage is already covered? Congratulations! But you may still need additional coverage. The second reason why you should get life insurance is to make sure that your financial dependants don’t suffer from your economic loss (it will be enough grief to be left alone, it would be worse to have to start work the next morning on top of it!). Financial dependants could be your spouse, children and any other individual benefiting from your income.

When you pass away, some expenses are reduced. You don’t need to eat or buy clothes . However, there are a great part of your income that was used by your family to pay common expenses (heating, utility bills, mortgage, etc.) and if you are the main bread winner in your household, the lack of revenue will deeply impact your family’s lifestyle after your death.

There is an easy way to calculate how much you would require to cover for this lack of revenue but this will be discussed in another post alone. For now, just remember that if you are making good money right now, a part of it needs to be replaced by a life insurance policy so your spouse and children can maintain their lifestyle even if you are gone.

#3 Get life insurance for estate planning purposes

This third reason why you want life insurance concerns the wealthiest of us. If you have rental properties or an important investment portfolio, your death may trigger important capital gains. If you want your estate to keep its assets, life insurance can be put in place to pay off the taxes generated upon your death. This amount is usually pretty small for the rest of us so I wouldn’t be too concerned about my last cheque sent to Uncle Sam.

#4 Play Santa

I have met some people who want to make sure so and so gets enough to live the good life if they ever pass away sooner. Then, you can purchase life insurance to “give” to someone who doesn’t really need this money but would make their life much easier. For example, you can decide to increase your coverage in order for your children to receive 1M$ each. They surely need money if you pass away tomorrow, but they surely don’t need that much. This is why I call it “playing Santa”.

Final Thought on Why Do I Need Insurance:

I’d say that everybody needs life insurance. Some require more than others and some need it for a limited time while others will always need substantial coverage. This is why there are so many types of life insurance and costs to go with them. However, regardless of your situation, what is important is to know that you need insurance. In the upcoming weeks, I’ll share more thoughts about life insurance products and insurance needs calculations. In the meantime, I would be curious to know your experience about getting life insurance. What did you choose? How did it go? Did you shop around?

Author: Mike.

Image source: Sava the Aggie

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I remarked to my wife the other day that if we have no major, unexpected financial calamities this year, our financial situation might be back to where it was in 2002-2003. That is, back before we had our second and third child, before we went down to a single income, before I learned to budget, before we moved and before we took sixteen months to sell our home in another state. In financial terms, back to a below average debt-to-income ratio, back to being in possession of an emergency fund and back to being able to again contribute to our retirement savings. I do not want to count our chickens before they hatch and I probably just jinxed our prospects, but being almost back to even is a nice feeling.

Then today I was sitting at a stoplight and a really slick, wide rim, dual exhaust SUV pulled up beside me and for an instant, I thought, “Boy, it would be nice to roll around town in one of those.” My next thought was, “why in the world would I ever want something like that?” Even if I could afford to purchase it without using a loan, a nice car is just another source of worry. I have enough trouble parking our minivan next to other vehicles at Walmart, much less a huge luxury ride without a scratch on it. Then it hit me:

I have become far more interested in debt freedom than in a nice car, house or clothes. I like knowing that while we do not have a whole lot in this world, but that we are not living beyond our means, either.

And I would not trade that place of contentment for the best house on the block. There are people all around us who own really nice stuff, but that stuff only ends up being a source of worry. Isn’t it interesting to look back on one’s life and realize that you were just as happy before you came across certain luxuries than before you got used to having them around? I recently purchased a new computer to use for blogging, homeschooling, etc. The one I purchased is not extravagant, but it is probably the most expensive thing that we own outside of our car. The other night I thought about what I would do with that desktop computer if, for some reason, we suddenly had to pack up and leave and all we could take with us was what would fit in our car – and my thoughts went immediately to that computer. How could I fit it in? Would it fit under a seat? Boy, it would be a shame to leave it behind! I am always puttering with it and warning the kids to stay away from it if they are eating or have dirt on their fingers . . .

Good grief! That pile of circuits and wires is a useful tool, but I am not sure that I can take the stress of ownership!

I want to heed the warning of Ecclesiastes 5:10-20:

Whoever loves money, never has money enough; whoever loves wealth is never satisfied with his income. This too is meaningless. As goods increase, so do those who consume them. And what benefit are they to the owner except to feast his eyes on them?

The sleep of a laborer is sweet, whether he eats little or much, but the abundance of a rich man permits him no sleep. I have seen a grievous evil under the sun, wealth hoarded to the harm of its owner, or wealth lost through some misfortune, so that when he has a son there is nothing left for him. Naked a man comes from his mother’s womb, and as he comes, so he departs. He takes nothing from his labor that he can carry in his hand.

This too is a grievous evil: As a man comes, so he departs, and what does he gain, since he toils for the wind? All his days he eats in darkness, with great frustration, affliction and anger.

Then I realized that it is good and proper for a man to eat and drink, and to find satisfaction in his toilsome labor under the sun during the few days of life God has given him—for this is his lot. Moreover, when God gives any man wealth and possessions, and enables him to enjoy them, to accept his lot and be happy in his work—this is a gift of God. He seldom reflects on the days of his life, because God keeps him occupied with gladness of heart.

And be more like Matthew 6:25:

Therefore I tell you, do not worry about your life, what you will eat or drink; or about your body, what you will wear. Is not life more important than food, and the body more important than clothes?

Article by Stew

Photo by yachtfan

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As Frank Hubbard puts it, “The safe way to double your money is to fold it over once and put it in your pocket”. Do you think this is the only way out to save more money? No, it can never be this. Man is subjected to temptation and no one can ignore the sensation that money gives. However, the smarter way for you is to think and spend, than spend to think. If you are a geek or love gadgets, here is something very exciting for you. iPhone applications can now boost up your finances.

You wish to live life king size but at the same time want to control your outgoings. iPhones are craved by almost all gizmo lovers and so there are a number of personal finance applications that come as a package with it. Whether it is tracking your stocks, expenses or calculating your debts or converting currencies, you can have a real time pleasure with your iPhones. You can also manage all those multiple account woes or transfer money between your accounts with your iPhones. The very trendy GPS or WiFi helps users to find the nearest route to the ATM. You will get all these applications for a low cost.

Every time when you swipe your credit cards, you either end up paying huge bills or accumulate huge debts. What happens next is you consolidate debts in order to improve your bad credit history. Isn’t this complicated? Yes, indeed. The best way is to gorge on things that help you to lead a frugal life in style. So take a look at these 10 most stylish yet cost-effective finance iPhone applications:

1. In the numero uno position, it is worth mentioning about an iPhone application from Bank of America that comes free. If you have an account here, you can surely find a quick view of this Mobile Banking in its web portal. This helps you to manage and check your balances, make bill payments or transfer funds round the clock. The USP of this application is its ability to detect the nearest ATM or banking center locations with the aid of GPS in the iPhone. You can be rest assured about Bank of America’s online banking guarantee. So there would be no unauthorized transactions. This is enabled by a special advanced encryption technology that would safeguard your online identity.
2. Next in line is an iPhone application from PayPal and its absolutely free. You would no longer require opening up your wallets to make your payments. Do you know in Japan, people have almost given up using wallets as they are using this application? Right from train tickets till buying a beer from a vending machine, they are using iPhones. The PayPal iPhone application gives you complete access to your PayPal account for carrying out transactions and 16 currencies are supported by this application.
3. Bloomberg Mobile is another aesthetically sound iPhone application. You get this for free. Wall Street Traders forge on Bloomberg Terminal for analyzing financial market data and also get the latest money news and price quotes. A very trendy yet useful mobile application from Bloomberg will give you real-time scoops, stock market updates and give you a brief insight into the market trends. As you rotate your phone horizontally, you will get larger charts and this is made possible with the help of the iPhone’s sensor device. Let the power of Bloomberg in your iPhone and stay financially alert.
4. Have you heard about ATM Hunter from MasterCard? This also comes free. This is one of the best ATM locator or finder no matter where you are. This is just perfect for use in US and Canada. You just need to enter an address or an airport location in your iPhone GPS from anywhere. So now move around in style!
5. The next most coveted finance iPhone application Tipulator. Wondering what is this? This is another out of the world iPhone application. It stands way above in the world of calculators. Wired.com said Tipulator is, “…an elegant, intuitive interface…” Whether converting currency or other calculations, everything can be done at ease. There is an innovative disclosure picker for selection of unit names. A revolutionary magic lens displays only the information that you ask for.
6. E*Trade- another smart iPhone application is the best way to carry on stock trading as if you were on Wall Street. Get up-to-the-minute news and quotes, trade news or add to your watch list. There is another attraction as you get completely integrated historical and intraday charts as well as free streaming finance updates on your iPhone.
7. Are you having trouble in borrowing or taking out a loan? Well, Loan Shark on your iPhone can help you do away with financial blues. As Foggynoggin says, “Navigating the waters of financial lending can be very dangerous indeed. Loan Shark helps you fight off predators and assists you in making sound financial decisions for you and your family.” After you get the detailed information about the loan you want to take out, just click on the Amortization button that will elucidate the monthly payment. Not only this, your interest rate for the loan can also be checked with this.
8. Another venerable finance iPhone application is a mobile checkbook-PocketMoney that can track all your accounts and fulfill all transaction requirements based on payee. This will also generate essential reports and pie charts. PocketMoney gets its database files from the Palm version and Quicken Interchange Format (QIF).
9. Are you an investor? There is one special iPhone application for you-Daily Finance. This comes free from AOL to receive current stock quotes, money news, track portfolios. So you will have the entire market updates at your fingertips.

10.  Last but not the least, it is important to detect your spending and keep a track of your money when you are shopping. This is one of the most favorite pastime for commoners but something that lands us in a soup if we do not regulate our finances. So Save Benjis has catered to this issue and with this you can transform your spending habits as you will instantly compare prices while going on a shopping spree! You need not carry your American Express Card. Instead do not forget to get yourself a Save Benjis application on your iPhone.

So if you want to save money in style, make use of these finance iPhone applications. Get away from age old methods and make use of your gadgets to bag more money into your pockets. Live smart and spent smartly!

author: Dorothy Anderson

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Dave Ramsey has done well for himself as a financial advice guru. He was one of the first people to recognize that our culture is steeped in debt, dependent on debt and that debt was enslaving the American culture. Ramsey has not been successful in changing our cultural dependence on debt, however, there are many individuals and families who owe him a great deal when it came to turning their financial house around. One of Dave Ramsey’s more controversial pieces of advice deals with FICO scores, also known as a credit score. Ramsey has said things such as: your credit score is an “I love debt score” and, Americans today are “worshiping at the altar of the FICO score.” He downplays the importance of a credit score on a regular basis and emphasizes his strategy of paying cash for everything.

I think that if you have had the misfortune of going into debt, a certain amount of credit score maintenance is necessary. My credit score has been checked by potential landlords, insurance companies and potential employers. Since credit was a big part of the last ten years of my life, I don’t want them to check my credit report and see bad news. I like my high credit score, but I do not plan to use it for financial credit ever again . . . I hope.

I did not realize how much I had been affected by Ramsey’s advice until the other day when I told a friend of mine to not worry about his credit score and actually delay repayment of a loan. I think I gave the correct advice. Here is the scenario:

“Vince” is in his early thirties, no children, single and has a limited criminal record. About five years ago, he trusted in Christ and began to attend our church. Although there are some consequences from his past that pop up now and then, he has pretty much forsaken the influences and habits that hurt him during his twenties. For the past five years, Vince has been sober, faithful to church, hard working and stayed out of trouble. Lately though, he has run into a string of bad luck – lost his job due to the economy, has been unable to get into college, had to move back with his parents. Then, two weeks ago, he was in a car accident – not his fault – that left his only vehicle totaled. To make things even worse, Vince had not purchased “gap insurance” – not a mistake that he will make again – but the fact still remains. Vince has no job, very little money and now he owes $2,000 on a car that he cannot even drive.

Vince is struggling to pay his rent and even purchase food, yet in the aftermath of the accident, he was worried about his credit score that he had been carefully cultivating for the last five years. He told me that he thought he could partially settle the balance of the car loan using IRS tax refund of about $1,500 that he was due to receive this month. I made the following suggestion to him:

1. Forget the car loan for now.
2. Use the tax refund to purchase a $400 or $500 beater.
3. Save the balance of your refund to live on.
4. Get the best job that you can find – fast food, janitorial, whatever – hopefully within walking distance of your house.
5. Start paying on the loan again when you have regular income.
6. Never use a loan to pay for a car again.

Vince’s response to me was, “but won’t that kill my credit score?” I told him that it would, but right now, he has much bigger fish to fry than FICO. Vince was almost ready to go without food in order to “please” his credit monitoring service. I believe that God expects us to settle our debts. Not paying or refusing to make payments on money that has been lent to us is sin. Vince definitely needs to eventually finish paying off the car loan because it is the right thing to do, however, right now, the credit score can wait.

Article by Stew

Photo by Library of Virginia

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Spring is springing in my neck of the woods. I hope you see the light at the end of the winter tunnel where you live. Here are some articles that I recommend this week:

The second installment of my time saving articles was featured at the 246th Edition of the Carnival of Personal Finance.

An article about making money online, written by my boss was featured at the Carnival of Money Stories.

Dough Roller asked if renter’s insurance is worth the cost. My policy is eleven bucks a month. I think it is worth it.

Lynnae talks about the tension between quality and price.

Do you ever find yourself fascinated by things that you do not really understand? I did as I read an article about short selling stocks at Moolanomy. Whew! I will never do it, that is a pretty tension-filled way to live.

Another article about home insurance, Mrs. Micah encourages us to document our possessions for insurance purposes. Yep, I need to do that.

Do you block all that extra stuff on Facebook? Yeah, me too, but Mighty Bargain Hunter profiled the Buddy Bailout . . . I might be interested in that one.

That’s it, that’s the list! Hope you have a great weekend. Find a good church on Sunday and remember, do not just spend money, spend time with family.

Article by Stew

Photo by spisharam-AWAY

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