While reviewing Sallie Mae Bank’s online savings account, I realized how little the actual company behind the web interface mattered to me. I know, I know, the importance of choosing the place to store the majority of my liquid savings is critical. But when every company’s offering is just done through “software”, which for the most part, is the same, what other features could tip the scale?

What Matters

So I did some thinking, and came up with a list. This is by no means an exhaustive list, but these criteria is what could make a difference, and may help you decide next time you are thinking about adding or changing a high yield savings account.

• Yield – This is obvious, but it deserves another mention. Having the highest yield, after all, is perhaps the most important criteria for many of us. Some might say that the trend is more important, but now that I think about it, I disagree. With the speed and convenience of transferring money around, it’s too easy to just move your money to the account with the higher rate. If you are a rate chaser, all you have to do is find the few banks who always offers some of the highest yield and just interlink them so you can transfer money back and forth. When the rates change, just switch. Easy and simple enough.
• Customer Service – How I’m treated is beginning to become an important factor for me, and it’s not just because I want to be respected as a customer either. Every company will have problems, and when it happens to affect me, I want someone who is not only able, but willing to help me figure out a solution. To get a sense of this, contact customer service and look for signs that the person on the other side:
  • is courteous and calm
  • is thinking about my specific situation, instead of always trying to read off of a predetermined script.
  • is available when I need them (hours of service, response time etc)
• Handling of Privacy Notices – Like it or not, financial institutions either share, or more likely, sell your information to other companies. Some, like Ally Bank, are more upfront about this practice and send you letters so you can opt out. Others never seem to tell you, but you know they do it when you start receiving junk mail even though you haven’t said yes to any mailing. You can read through the privacy notices in your welcome package, but that’s usually too late, as you already became their customer. If this is important to you, give the customer reps a call before you sign up. This way, you can kill two birds with one stone because you will get a gauge of their service level too.
• Past History – Bigger banks, while not always the best at offering personal care for every customer, has the advantage of having lots of customers. This translates to lots of reviews and opinions you can look up online to get a sense of how the services are before you sign up. The added bonus is that not only can you figure out how the current features are, you can also find out how it’s been in the past. Sometimes, you can even get a sense of how they’ve handled customer complaints, and how they’ve changed their offerings to reflect customer suggestions. Keep in mind that negative reviews usually causes people to voice their concerns, so don’t be alarmed if every bank seems to have more negatives than positives.

Honorable Mention

I’ve heard of people not wanting to do business with a company because of the CEO’s political views, the company’s advertising campaign, or even whether the company is foreign owned or not. While I personally don’t put much emphasis on these types of details into my decision-making process, I don’t think it’s wrong to base your decision on such matters either.

It’s your own money, and you should do whatever you personally believe is right. This is another personal choice, after all.

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There’s a traditional approach to getting rid of student loans: you pay them off. Depending on the type of degree you got, that can mean a sizable chunk of your income going to student loans for years to come. Repayment isn’t the only way to eliminate student loans, however. There are other options that offer alternatives. Each program offers different options in terms of how much of your loans it will pay back, and repayment from certain programs is only available for specific types of loans. Here are a few others ways you can eliminate that debt.

1. Teaching: Both Perkins and Stafford loans can be canceled if you teach full time in a designated low-income elementary or secondary school. You can also arrange for student loan repayment by taking on a teaching job where there is a shortage of teachers with certain specialties, such as special needs teachers. Because opportunities can vary by school district, a good first step is to contact the local districts to check what’s available. There are also several programs that will help you with loans if you’re willing to move in order to teach, which you can find through the American Federation of Teachers.
2. Peace Corps: Depending on how many years of service you’re willing to put in with the Peace Corps, the organization will repay up to 70 percent of your student loans. The Peace Corps sends volunteers to more than 70 different countries, offering an opportunity for you to see the world. Your room and board will be covered through the organization, but, unlike other repayment offers, you will not actually earn an additional income.
3. Hospitals: Depending on what sort of staff a particular hospital is looking for, it is not uncommon to find that one is offering a repayment plan — in some cases, of the full sum of your loans — in exchange for accepting a job with the hospital. Most commonly, such offers are made for nurses, physical therapists and occupational therapists, but it does depend on the hospital. Some have been known to extend such benefits to administrative staff as well. It’s best to contact the hospitals in your area directly.
4. Army National Guard: While most recruitment incentives for the military focus on offering scholarships for attending school, the Army National Guard, at times, will offer a student loan repayment plan of up to $10,000 in loan repayment, depending on the terms of recruitment. In fact, Joshua, a reader who’ve been at the Air National Guard in 3 different states added that all branches of the military (Air Force, Army, Navy, Marines) have these programs in place for times when they need to fill a position immediately. As these programs come and go, those looking to take advantage should check not only the state they reside in but the neighboring states as well.
5. State Government Employment: Many states offer at least some level of loan repayment for their employees, especially those who are considered to have a lower income. In the state of Maryland, for instance, government employees who earn less than $40,000 per year may be eligible for a repayment program. Your chances for eligibility increase if you studied social work, education, therapy or nursing.
6. AmeriCorps: In exchange for a year’s service, you’ll receive $4,725 to be used towards your student loans. You’ll also receive up to $7,400 in stipends. The type of work you’ll be expected to handle in exchange varies, but the AmeriCorps program essentially places you in a volunteering opportunity.
7. VISTA: Not unlike AmeriCorps, VISTA (Volunteers in Service to America) offers $4,725 towards student loan repayment. The money is in exchange for 1,700 hours of community service(essentially volunteering full-time for a year) with private, non-profit groups specifically working on the issues of hunger, homelessness, poverty and illiteracy. However, there is not a stipend available for those VISTA volunteers who chose loan repayment. The VISTA program was actually put under the direction of the AmeriCorps program in 1993.
8. Employment: Some employers have begun offering loan repayment as a benefit. It’s not a particularly common perk, but for certain degrees that aren’t useful in service settings, it can be one of the few opportunities to eliminate your student loans without writing a check yourself. It is possible to negotiate for such a perk, as well, but many employers would be more likely to give you a slightly higher salary and leave you to manage the details of repaying your loans yourself.
9. Non-Profit Opportunities for Lawyers and Doctors: Having grad school loans on top of undergraduate loans can make for a difficult financial position. However, a variety of different government agencies (on both the federal and state level) will repay your student loans in exchange for work. Doctors and nurses can get the entirety of their school loans repaid in exchange for practicing in areas that lack adequate medical care, while agencies like the U.S. National Institute of Health will repay up to $35,000 per year for employees.
10. Loan Cancellation: While eligibility for student loan cancellation is very rare — bankruptcy and disability are the most common reasons — it may be an option for those individuals with significant financial problems.

Of course, the alternatives to paying back your student loans listed here generally aren’t entirely free. In most cases, rather than wanting your money, these options want your time — often a couple of years. It’s a matter of what your personal situation is like: does spending a few years working for an organization that may not be able to offer you a competitive salary make sense in terms of the total amount of loans you have to pay off? If you only have a few thousand dollars in student loans, options like teaching are probably not the best bet. But if you have a higher amount to repay, some of these options start looking a lot better. Timing can also be a factor. While you may be able to find an eligible teaching position where you currently live, it may be harder to take part in AmeriCorps if you are already well past graduating college.

There are plenty of ways to eliminate your loans beyond those listed here. If these opportunities aren’t a good fit, check with the loan program that is servicing your debt. Most of the individual loan programs, such as the Stafford and Perkins loan programs, maintain information about loan repayment opportunities you may be eligible for and can often connect you to the right resources.

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Sometimes, as personal finance writers, we get carried away with the idea that everything needs to be saved, saved, saved. All the time. But personal finance isn’t just about building up emergency funds and maxing out retirement plan contributions. It should also be about learning to enjoy life a little bit right now. It’s nice to think that you will be able to amass huge amounts of wealth and then just retire and do whatever you want. But what happens if you are 50 or 60 or whatever, and no longer in prime condition to enjoy the fruits of your years of labor?

Another issue is that of breaking the habits of decades. Many people find that, when they retire, they don’t really enjoy their money because they are still in saving mode, pinching all of their pennies. They are no longer obsessed with saving up for retirement. Now they spend their retirement hoarding money, scared that the money will run out before they die. While this is a legitimate concern, and while financial discipline and saving are very important — vital even — it is also good to learn how to spend on occasion so that you can get some enjoyment out of life.

Money as a Means to an End

I like to think of money as a means to an end. I don’t care about amassing great piles of it. I do know that I need it to pay for life’s necessities, and some of life’s pleasures. While you don’t need money to have a good time, sometimes it’s nice to treat yourself, whether you are buying something you like (my husband’s style) or buying an experience (my style).

Neither of us care about leaving a fat inheritance for our son. We’ve got a 529 for him, but he’s going to help pay for his college, and he’s certainly going to be mostly responsible for his future prosperity. Instead, we want to be able to enjoy a few things now, and live in reasonable comfort in retirement (which will probably be semi-retirement, since we’d go crazy in a full retirement situation). Our retirement accounts and investments are aimed at creating income streams later, and we have a decent emergency fund. Could we be putting more in retirement accounts? Probably. But what good is having all that money later if we never actually use it?

Having a Plan for Spending

This doesn’t mean that we just willy-nilly spend money we don’t have. We still have to be responsible, otherwise we’ll end up in vast amounts of debt, making interest payments directly into others’ pockets, instead of using the money for us. Before we spend money on things we think are enjoyable, we do a few things:

1. Pay tithes to our church and make charitable contributions.
2. Set money aside for emergency savings and investing (including retirement accounts and the 529). This is automated.
3. Pay our bills.
4. Fund our long-term goals (finishing the yard, buying new furniture, vacation, etc.).

We know approximately how much we need to set aside for the future, and we have a pretty good idea of what it costs to do the things we enjoy, like seeing movies on occasion, proving music lessons for our son, going out to eat once a week (for lunch), seeing a concert or show, buying a fish aquarium, and traveling a little bit. It’s all about taking stock of your financial situation, and figuring out what money you have for spending on things that you may not need, but that you might enjoy. We live fairly modestly now, and we plan to live fairly modestly in the future, so we don’t really need to reach some large number of accrued assets in order to maintain our current quality of life. So there’s no reason to hoard just to hoard, once we make the appropriate provisions for the future.

It’s true that money can’t buy happiness. But if you plan so that you can spend some of that money now, it can provide a little pleasure.

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I knew baby Sara was smart, but when she started teaching me personal finance concepts…

Many of the kids and money articles discuss how we can teach our children money matters, but let’s turn the table this time. Since baby Sara’s birth a week ago, she already reminded me of many principles that you and I can both benefit from. Here they are.

When Sara first started breastfeeding, she still needed to learn how to properly open her mouth to take her milk. She was frustrated because she was hungry, but she needed to learn how to get her nutrients first. You can’t be impatient, everything starts off slow. When was the last time you were frustrated because your retirement account was small and you know you needed much more money? Thinking about giving up? Don’t. Imagine the consequences if baby Sara gave up just because she couldn’t eat.

Once she struggled through and began sucking, it was smooth sailing. We wanted her to take more at each feeding, because we didn’t want her to be hungry while she learned next time around. However, the doctor said that her stomach is tiny, and our plan just wouldn’t work. Everything takes time. You can’t expect your investment portfolio to come back in a year after it drops 40 – 50%. It will, but not right away. Have trust.

For a few feedings, we wanted Sara to have more milk and fed her with a syringe the nurses gave us. It worked wonders, but we noticed that the more we used the syringe, the worst she got. In effect, we were helping her practice waiting for food to come to her instead of going after it. Practice doesn’t make perfect. Practice only forms a habit. Do you have your finances on auto pilot? Perhaps it’s time to look at whether it’s still the most appropriate strategy for you.

You are never going to know what your reaction would be until the moment arrives. When we went to a baby class, about half the moms wanted to give an all natural birth. In order words, no medication or epidural. When we asked the instructor how many people took an epidural once they got to the hospital, she said 97% did. You can claim to have high tolerance for volatility all you want, but until you experience a crash, you are just guessing. That’s why you should start small and get used to the fluctuations before you fully commit to a new investment. Take the time to learn. Again, be patient.

When the situation isn’t ideal, you must realize that you were a big part of why it is the way it is. If we taught Sara to wait for food, we can’t complain when she doesn’t cooperate. With our finances, we are often the one to blame. No one cares about our money more than we do. If you only have one dollar, you can either spend it now or later. There’s no way around this. Take responsibility.

Learning beforehand is important. Those baby classes were extremely useful. It helped guide us in the right direction, but more importantly, it helped us stay claim in the moment when most others would panic. How many of you established an emergency fund because you read sites like this one? You may not appreciate it now, but you will when the time comes.

You can adapt. Studies have shown that while most people worry about their retirement, less actually run out of money. If you are late in saving for retirement, start now, but don’t worry. You will adapt. Baby Sara wakes up during the middle of the night, so we will just sleep whenever she sleeps. It’s really no big deal.

Things get easier as you learn and gain experience. Sara is 8 days old, and we are better already. We do everything more efficiently, and actually, so does Sara. Everything, including money matters, always seem overwhelming at first. Stay the course, and you will learn and figure it out. I know you can do it, and so does Sara.

Just keep doing the right things, and you will be able to sleep at night!

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Sorry for such a quick note the other day, but it’s been pretty busy times lately. Many wondered, and many more asked about them, so here are baby Sara’s pictures! Say Cheese!

Baby Sara can’t wait to write to you. (Hmm, maybe a little early, but it never hurts to plan ahead you know…)

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They turn up in the mailbox every month, demanding your attention and your money.  If you want to save money on bills you need to approach the problem in two ways.  The first thing is to cut services you don’t need and the second is to find ways to get the things you need, cheaply.

How to Trim Essentials Bills

Food, power and shelter are all essentials.  Each can be trimmed, but that ability is heavily dependent upon some factors.  For example, to trim shelter costs you can move from a large home to a smaller home, or even to an apartment.  This may or may not be realistic.  Taking in a college student as a tenant can help defray housing costs as well, but carries some risks.

• Power costs relate to what you pay on gas and electricity and in some areas water as well.
• Weatherproofing helps reduce waste and energy lost from the windows and doors.
• Redoing your landscaping with a focus on drought resistant plants and smaller plots of grass will save you money.
• Changing to compact florescent bulbs and setting the thermostat lower in winter will save on gas and electricity.
• A sweatshirt is cheaper than heating a whole house to 67°.

Food is one of those areas where relatively large cuts can be made with little effort.  You don’t have to survive on Ramen noodles either.

• Ground turkey and beef provide plenty of good protein, as do eggs, and they cost a lot less than large cuts of meat.
• Plan your menu around the circulars for the week and cash in on the discounts.
• Clip coupons from your paper and find them online to save the most possible.

Luxuries

I know that we don’t really think of cable and Internet as luxuries any more, but they really are.  Do you really need the level of service you currently have?  I shut off my cable service nearly two years ago and we haven’t really missed it.

I don’t use the highest level of DSL, rather I settle for a slower speed that is still plenty fast since I don’t game online.  Between the two items I save nearly $100 a month.

Editor’s Note: I am paying for the slowest service, and my whole business runs online. Before you think you need to download the latest security patches in a millisecond or else your lifestyle will somehow be affected, think carefully about how much money you are actually wasting by helping broadband providers prosper.

Pedicures, manicures, fancy haircuts and gym memberships are all luxuries too.  If you are in the professional world and feel that you must have the manicure and haircut, check out a local esthetician school; you can get the same services performed by supervised students at a fraction of the cost.

Cell phones are also luxuries, believe it or not.  If you carry it for anything other than emergency calls, you are spending more than needed.  Now, some of us use a cell phone exclusively, having abandoned the land line.  In that case you need more than basic service, but shop around and find a plan that meets your usage profile, don’t try to fit your profile into a specific package.

Saving money on your bills is all a matter of viewing them in a new light.  Be creative, re-prioritize your spending and watch your bank balance grow.

Like these simple tips? Check out the How to Save Money on Everything ebook. It’s yours free when you subscribe to the free frugal newsletter.

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A few weeks ago, I started asking readers to submit their money questions in case they wanted a second opinion on their dilemma. If you have a question you would like answered, you can just contact me.

My name is Ken and I am turning 23, single. This year, I felt that I had to diversify my investments. I plan (and have already started) to diversify my finances to many types of savings/investments such as savings, time deposits, stocks, mutual funds, UITF, forex, etc., as well as a personal savings and emergency fund. Although I’m not planning to retire yet, I plan to invest in long-term, 1-5 years investment products. Do you think this is a good idea, considering that I’m completely debt free? Or do you think I have gone overboard in my investment strategy?

Investing is always a good idea, especially for someone with no debt. From the terms you use to describe your investments (time deposits instead of CDs, and UITF, a mutual fund like investment available in the Philippines), I assume you are foreign. The good news is that investment strategies are more to do with you instead of where you are currently living.

Diversification

First off, I believe your investments are spread out too thin. I say that not because I think you are over diversified, but because I believe most non-professionals don’t have the time to track so many investments. Most people buy different mutual funds, only to find that the funds they own are invested in similar stocks. With your own stocks, mutual funds and UITF in the same portfolio, it’s unnecessarily time consuming to dissect everything to see if you are diversified properly. Diversification comes from buying different asset classes to smooth out volatility, not necessarily where you bought the assets from.

Emergency Fund

You are 23, and your whole life is ahead of you. Since you have no debt, I would be more aggressive with your investments, as well as having a less than usual emergency fund. Most people recommend 6 months worth of living expenses, and that is good advice. But for someone like you, I would put less in liquid savings (3 months ought to do it) as long as you have a stable job because someone young like you can probably cut down your expenses drastically and live like a college student if you are forced to down the road.

With less liquid savings, there’s more to invest for the long run. You can cash out your investments if you have to as well. Some people may frown on this advice, because having to withdrawal in a down market is really bad, but at your young age, I believe it is a risk worth taking.

Investment Mix

There’s no standard answer to this. With your age, you can even be extremely aggressive and invest in a 95% / 5%, equity / liquid savings portfolio to start with because you have time to make your money back if the stock markets were to tank. Also, while the ratio is a good place to start, you need to be adjusting this as you age during the next decade of your life as you will:

• age
• have different priorities (ex. want to purchase a home).
• have increased obligations (ex. perhaps a family to take care of).

Forex

Though I know many people who own foreign currencies, I’m not a big fan because most of those people just own them and have the cash in a savings account earning no interest at all. Over here in the US, we can invest in foreign investments like the Brazilian stock market index through an ETF such as the iShares MSCI Brazil Index (symbol: EWZ). Doing this is better because you are not just getting exposure to the Brazil real, but also to have it invested in the Brazilian economy. In my opinion, it’s a much better long term play. So, instead of buying the currency, why not buy its stock market index instead?

If you own forex because you trade currencies frequently, then it’s a different ball game all together. Be aware of the leverage that these investment accounts give you, because you can loose quite a bit of money VERY quickly.

Investment Horizon

You mentioned investing for the long term, but you followed that statement with a 1-5 year period. When we are young, it’s easy to think of 5 years as a very long time, but know that you might be living for the next 80 years, which is the time frame you need to plan for. Look to win battles, but don’t forget the war too.

Lastly, Don’t Forget that Everything Changes with Time

Though I said a 95% equity investment may be for you, whether it’s the right approach to take will depend on at least your job, your tolerance, your net worth and your spending habits. As your situation changes, your ideal investment mix should move with it. Don’t make the mistake of setting and forgetting. If you don’t have time to constantly look after your investments, a financial advisor is still worth the money.

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Vacations provide an escape from reality. They give us the opportunity to step outside our daily routine and relax in a new environment. One week a year we book the fanciest hotel, go to the big name restaurants, and splurge on the ultimate activities. Then, in 2009, came the staycation. With everyone watching their budgets, these luxury vacations fell by the wayside. Holidays were spent in the back yard or at the neighborhood pool. No more cruises, no more resorts.

Most people think of vacations as “all or nothing”, but there is a middle ground. A vacation does not have to be expensive. Like many other things in life, a vacation can be done on a budget, and the experience can be more valuable because of it. Though this strategy involves changing the way you think about travel, reconsidering your vacation options can open doors to new places, new adventures, and reduce your budget too. Here are some tips to help you along the way.

Improve Your Travel Habits

Reconsider Your Destination

The first step in changing your travel style is reevaluating your destinations. Mediterranean cruises, all inclusive resorts, and Disney World vacations are wonderful experiences, but often they consume an entire year’s travel budget in one or two weeks.

If you are staying in the United States, consider a national park. A year-long annual national park pass is good for the entire family in all parks in the country and costs the same as an adult one day ticket to Disney World. If you’re not the outdoor type, consider a vacation to a city known for it’s free entertainment. Washington D.C. is filled with free museums and cultural activities the whole family will enjoy.

Thinking internationally? Research your options. Money will go significantly farther in less expensive countries. If you are looking for the beach, consider a nearby international destination. Belize or Costa Rica can offer surprisingly affordable tropical experiences. If you have more time, consider a country like India, where you can travel for $30 a day. Research countries you may have otherwise overlooked and step outside your comfort zone. Syria was recently removed from the State Department’s warning list and the Syrian people are regarded as some of the friendliest you’ll meet. Travel costs are dramatically cheaper than nearby Turkey or Israel.

Plan Ahead

Like most other activities, planning your budget ahead of time will help you stay motivated to save. Consider how much you have to spend, breakdown your costs, and then monitor your expenses as you go. Websites like Budget Your Trip provide easy to use tools to estimate, plan, and track your travel costs. Stay focused as you travel and you’ll understand where your money goes.

Go Independent

Independent travel is almost always the cheapest way to go. Resources are available for independent travel at any budget. Websites like Lonely Planet cater to the backpacker crowd, while TripAdvisor provides reviews and advice for independent travelers with a higher budget. With the growing number of online resources, coordinating and planning your own trip is easy and provides the most flexibility, adventure, and cost savings.

Be Flexible

Booking in advance may be the best option in Europe or the United States, but when you travel to non-western countries you can almost always get the best deal after arrival. Bartering is still a strong component of many cultures. Once you’ve made a reservation you’re locked into your rate and there is no room for negotiation. Always consider the country and the culture you’re traveling in. In many places your room will cost a fraction of the price on arrival than it does on websites or brochures. You will also have a chance to check out the room and confirm the quality. While reservations may give you piece of mind ahead of time, flexibility will give you the best quality for the lowest price.

Reevaluate Your Hotel Choices

Ignore expensive chains and consider more independent options that will give you more bang for your buck. A five star hotel isn’t necessary when you spend your days out seeing the town. Super 8 and Motel 6 are surprisingly clean and comfortable, and they now provide wireless internet. Consider your destination and look into all of your options.

If you’re traveling internationally, independently owned hotels are often far cheaper than their American chain counterparts. Okay, so you may be too old for a backpacker’s hostel, but this doesn’t mean that all budget accommodation is off limits. In many parts of the world budget hotels can cost as little as $10 a day. In Vietnam, a mid range locally owned hotel can cost $15 to $20 a night. Pocket the cash you would have spent on a luxury hotel and put it toward entertainment, or better yet, extend your trip. You’ll appreciate your time more than you would have appreciated the 500 thread count sheets.

Change Your Mode of Transportation

The need to fly is unavoidable for many trips. Unfortunately it’s also expensive. Consider limiting your flights by taking overland transportation. If you’re traveling outside the United States, public transportation is often readily available and a cheaper alternative to flights. Check out seat61 for a thorough description of overland travel in regions all over the globe. Buses and trains often provide the best opportunities to interact with locals. They can be an adventure and an opportunity to enhance your travel and cultural experience.

Eat at Local Restaurants

Eat where the locals eat. It doesn’t matter if you’re dining in San Francisco or Beijing, the locals know where to get cheap, good food. Skip the restaurants with the fancy brochures or the large signs in English. When you walk in, glance around you and find an entree that looks interesting. If the waiter does not speak English, simply point to the dish and he’ll understand. By trusting the locals you will have the most authentic meal for the best price. You can be assured, the locals aren’t paying the tourist markup and neither will you.

Find Free Entertainment

If you’re in a large city, you’re likely to find plenty of free activities. Museums, outdoor concerts, and festivals fill many weekends in most cities during the spring and summer. Talk to locals in the area to see what they do for fun. Check out websites like Yelp to know what’s happening when you’re in town. Consider skipping the dinner cruise on the bay for a stroll through a city neighborhood and meal at a local eatery. Skip the amusement park and instead pack a picnic and head to the park. If you travel like a local you’ll experience a whole new side to a city and you’ll save cash in the process.

What You’ll Gain

Traveling on a budget doesn’t have to lower your experience. Think outside the box and you’ll transform your vacation into a true experience. In many cases, the benefits are more than simply saving a few dollars.

Interact with the Locals

If you change the focus of your trip you will open your eyes to new experiences. Traveling like a local gives you the opportunity to interact with the locals. You’ll gain first hand experience and insight into the culture around you. More often than not residents will jump at the opportunity to help you with directions or information. Many cultures are eager to show off their country and you will learn more than a tour guide could ever teach you.

Longer Trips

Prioritizing and cutting costs means that ultimately you can travel longer. Whether it’s lengthening your trip or planning a second, your dollars will buy you more if you monitor your costs and consider watch what you’re spending.

Contribute to the Local Economy

By avoiding high end chain hotels and restaurants, your experience will not only be cheaper and more authentic, it will also put more money into the local economy. Ethical tourism does not have to be your highest priority, but it’s good to know you’re giving back to the country in some way. A $5 meal at a family owned restaurant gives more than just memories; it reinvests into the community and provides local jobs for the residents. By staying at locally owned facilities you truly are becoming part of the community.

Experience Diverse Cultures

Opening your mind to destinations you may not have previously considered will allow you to experience a diversity of cultures. Changing your mindset will do more than save you money, it will allow you to step outside of your comfort zone and immerse yourself in a culture that you previously considered foreign. The experiences you gain from travel can be far more valuable than the cost or the savings.

Staycation is a good way to save money, but traveling somewhere is still, most likely, more fun. If you can keep it to a budget, why not?

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It used to be that saving for college was a relatively simple process: if you wanted to save for your child’s college education, you put money away wherever it was convenient. Now, though, there are several types of specific savings plans that offer you benefits that your old coffee can’t compare with. They may not be as convenient, but when your child is ready to start college, there will be more money available. Of these plans, a 529 plan offers some significant ways to improve on your college savings options.

Investment Plans Versus Savings Accounts

Saving for college in a savings account means that you’ll earn interest on any money you deposit. But, in the grand scheme of things, that interest won’t add up to much. 529 Savings Plans aren’t savings accounts, though, and they offer an opportunity to earn more money. They’re set up like 401(k)s or IRAs: the money you contribute to the plan is invested in mutual funds or similar investments. There is a risk, of course, that the value of those investments could go down between now and the date when your child is ready to start school, but most 529 plans do take conservative approaches to investing.

There is a second type of 529 plan that can pay off even more than an investment can. A 529 Prepaid Plan lets you pay for future college costs at today’s prices. Given the fact that the cost of college has far outpaced inflation and doesn’t look to be slowing down any time soon, taking that option could make for a pretty significant financial boost when your child is ready for school. Because 529 plans are operated by individual states, the prepaid tuition is usually set up to work with in-state schools. However, most plans do offer options for converting that money to be used at private and out-of-state colleges.

Automating Your Savings

Most 529 plans require that, in order to enroll, you have to set up an automatic monthly payment. Such a set up ensures that you’re actually contributing money to the account regularly, which isn’t true for many of other college savings options. You can, of course, contribute more with one-time payments, but having an automatic withdrawal set up makes the entire process easier. There’s an added benefit if you have a relative who wants to help contribute to the plan, as well: anyone can either make one-time payments or set up automatic withdrawals.

The Tax Benefits

Any contributions you make to a 529 plan grow tax-deferred and, as long as the money is used towards college expenses, withdrawals are tax-free. If that doesn’t make a big enough difference, many states offer additional tax benefits as well.

Not only can you create an automatic savings plan to put away money for your child’s education with a 529 plan, but you can increase that money and minimize the taxes you pay on it, all at the same time. It’s worth checking into the specifics of the plans offered in your state to find the best plan for your family.

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In these financial times, many people are looking for ways to get a little more cash — usually in lump sum form. The thinking is that a lump sum could pay off debt, or cover medical bills. For those receiving some sort of settlement payment, or receiving annuity payments, it is tempting to turn to one of the companies, like J.G. Wentworth or Peachtree Financial, that offer to “buy” your annuity or settlement, giving you a lump sum.

This arrangement works when you sign over the right to receive your regular installments (which may be monthly, quarterly or at some other interval) to the company. This company then pays you a lump sum. This lump sum is usually the value of your settlement or annuity, minus a fee. And this is where things can get a little sticky. After all, companies are in business to make money. Therefore, you may pay fees of between 9% and 15% or more. These fees are deducted from the total amount you would receive. So, if you had a $50,000 settlement, and you were charged a 15% fee, you would actually only get a lump payment of $42,500. If you desperately need this money though, you might not mind, since the monthly payout of $50,000 over a period of years might not be enough to sustain you.

Another consideration is related to taxes. You will need to find out the tax implications of taking a lump sum, and what happens when you cash out your annuity. In addition to taxes, many annuities have certain surrender fees that have to be considered. You may have a $100,000 annuity, but by the time you pay fees for turning it over elsewhere, pay the surrender penalty and fulfill your tax obligation, you might be sorely disappointed to discover that you take home less than half the annuity’s value.

But things aren’t all negative, as this arrangement can still be value in some cases. If you have a great deal of debt that could be cleared with the help of a large lump sum, it might be worth it — especially if your credit cards and other loans charge a high rate of interest. Additionally, many people use these lump sum arrangements to pay high medical bills. Having a lump sum can also be helpful in other dire financial situations. If you feel that your desperation outweighs the costs of converting a steady income stream to a lump sum, then it might be the right move.

However, it is important to weigh your options and consider your habits. If the lump sum agreement is the only thing keeping you from financial insolvency, it is a good idea to examine the habits that led you to this point. Unexpected catastrophes including medical problems and even long-term job loss could, in some cases, come from your own negligence. Building an emergency fund going forward, or taking other steps to protect against future events, may be helpful, and a large sum of money can go a long way toward getting you back on your feet.

If your problems stem from poor spending habits and large amounts of consumer debt though, it is a good idea to reform your behaviors. Otherwise, the lump sum will only provide a temporary band-aid for the problem. Your debt may be paid off, but if you have poor spending habits, you will soon find yourself in the same position again — but with no settlement payment or annuity to convert into a handy lump sum.

In the end, what you do with a monthly payment of this nature is a cost-benefit situation. You will likely keep more of your money in the long run if you continue receiving the regular payments, and they will provide at least one reliable income stream. Be sure to consider all of your options, and look at the big financial picture before you convert an annuity or settlement payment into a lump sum.

Editor’s Note: More and more, I’m starting to see the beauty of annuities, or more specifically, a consistent and dependable income. Since you already purchased the annuity, be extra cautious about why you would want to give up something so dependable. There are some rare cases, as Miranda highlighted, that make this decision worthwhile but most of the time, it’s not a good idea. Think twice.

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