Bucksome Boomer

3 Reasons To Pay for that Airline Lounge Visit

Kay Lynn — Fri, 25 May 2012 13:34:57 +0000

This post is being written in he comfort of the Delta Club at Los Angeles International Airport (LAX). No, I’m not a regular or even a member. With the purchase of a $50 pass, entrance was granted for the same experience as the very frequent fliers.

Why Pay for an Airline Lounge Visit?

I’ve been traveling for years but this is the first time I’ve ever been in an airline lounge and let me tell you, I could get used to it! You may think it’s extravagant (and I’m not disagreeing) but here are three reasons purchasing a pass could be worth the price.

Long Layovers

After a brief flight at the crack of dawn (okay, 6:30 am), I had 3 hours scheduled between flights. I could choose to spend them in a crowded terminal where a quiet space is not to be found, paying outrageous prices for food and drink and without internet access (at least for free).

Instead I decided to spend some money and use the Delta Sky Club. IF nothing else, it would be much more relaxing and comfortable.

Recover from International Travel

A lot of the people already in the lounge when I arrived at 7:30 a.m. were international passengers. The lounge gave them a place to shower, eat and decompress after a long and overnight flight.

Using an airline club would have drastically improved my day when I returned from my first trip to Europe. A three hour layover in Dallas was not enjoyable.

Lounge Perks

In addition to the relaxing environment during my layover the real reason I shelled out $50 was because of the amenities in the lounge. I could get breakfast, free wi-fi, magazines and newspapers, beverages (alcoholic and virgin) and access to printers/televisions.

Last month I had the same layover length and paid over $17 for a breakfast burrito, coffee and bottle of water. I didn’t use wi-fi because I hate paying so much for a couple of hours of access.

I didn’t even like the breakfast burrito but there were very limited options. Today, I had oatmeal, half a bagel with cream cheese, an apple, coffee, juice and bottled water. I also had unlimited wi-fi and found a couple of interesting magazines to read.

All this (and many more menu items) were included in the price of the pass.

Value for the Money?

Only you can determine if the cost of an airline lounge is worth paying. For me, it was definitely $50 well spent. Ironically, that was the same price to upgrade to first class on my short 25 minute flight. That was not a good value for the money.

I also think it depends on where you are in life. If I was still paying down my student loans I wouldn’t have splurged. However, having money in the budget for fun makes it a guilt-free pleasure that I will do again.

Do you think airline lounges are worth the price?

Will You Be Debt Free or Wealthy?

Derek — Wed, 23 May 2012 13:00:46 +0000

Foreclosures, bankruptcies, and negative bank accounts seem to be the norm these days. After all, that’s all we see on the news. There are quite a few people out there that just wish they were back to zero. Is this your goal – to be debt free?

If you are currently working your butt off to get rid of your student loans, your car loans, or maybe your credit cards, I would hope that you have a budget. If you want to have money left over at the end of the month to put toward these debts, you’ve learned that you need to allocate your funds appropriately. If you do not keep a record, then it’s quite common to be left with absolutely nothing at the end of the month.

So, over the course of the past few months, you have learned to budget and you may even be paying down your debt faster than you initially planned (if so, good for you!), but what is your ultimate goal? Do you plan on just getting debt free and that’s it? Or, do you have plans beyond debt freedom?

My wife and I began to pay down our debt in January, 2010 and by March, 2011, we were completely debt free! It was a wonderful feeling, but you might ask us what our goals have been since that debt-freedom date. Well, I’m not sure I could tell you, and that’s exactly the response that I hope you don’t have after reading this post.

Our Debt Freedom Day

My wife and I paid off the last of our debts with a $4,800 check and we were ecstatic! It was such a great feeling to know that we didn’t owe anyone in the world a single penny. No longer did we have to worry about our next payment – we could finally just live with ease and tranquility.

This warm and fuzzy feeling lasted a while, but now that we’re in the summer of 2012, it’s really quite faded. Since our debt-freedom date, we purchased a house (and technically brought debt on ourselves again, but a home mortgage is more acceptable than consumer debt I suppose…) and have built up approximately $30,000 in equity already, but I still don’t feel like we have accomplished much since that wonderful date just over a year ago.

So What Happened?

It’s been over a year, and yes, our net worth is much higher, but our bank account has not grown all that much and our assets are still not making money for us (like they do for the wealthy). So, what has been our problem for the last 14 months?

When I look back, the answer is simple. We stopped budgeting. Our food budget used to be $400 a month, but now we spend close to $700. We used to only allow ourselves to spend $25/month on gifts for ourselves, but now we freely purchase items as long as we can “justify” them through some twisted, one-sided reasoning. Our overall spending has probably increased by $600 each month, all because we no longer tell our money where to go.

Pay Attention and Budget

If I were you (meaning, if I could go back in time again…), I would be sure to have my sights set on that next thing after cleaning your slate of debts. Have an investment goal, or decide to save up a huge emergency fund, or perhaps you’d like to start a business. Whatever the case, never stop budgeting! If you’re not telling your money where to go each month, then you may as well just throw it in the trash, because it’s not going to invest itself. Make a plan and stick to it for life.

Do you have a plan for life? Will you be wealthy, or will you simply be debt free?

The Living Food Budget

Guest — Mon, 21 May 2012 12:57:21 +0000

In many respects a budget isn’t just a piece of paper, it’s more like a living, breathing organism. It changes, grows, flexes, and contracts, in many cases based simply on the stage of life.

Single Living

When you’re living on your own, cooking can be a pain. Most recipes start at two people, single portions of meat are ridiculously expensive, pre-packaged meals for individuals may not be too healthy (think Top Ramen), and it can really just seem like a lot of work to cook for yourself, sit down to dinner, and clean up pots and pans just for you.

Budget: Factor in times that you want to cook for more than just yourself. Having friends and family over makes your home feel warmer. Also, don’t eliminate buying in bulk as a cost-saving measure. You can use a Foodsaver or freezer bags to reduce your cost on high-ticket items like meat and fish.

Top Tip: Make your own pre-packaged meals. The best thing I did when I moved into my first apartment by myself is I broke out the Foodsaver. I could either cook several meals and freeze them in single-size portions, or when I would go grocery shopping, I would divide the ingredients in single-serving portions. When you make your own “microwave meals,” you know what you’re eating nutritionally, and it’s far cheaper than buying actual pre-packaged meals.

DINKs (Dual Income No Kids)

Being part of a couple is a food process. You walk into it with different tastes, different food priorities. For example, my husband and I love food. We’re both foodies, love going out to restaurants, and would rather have a higher food budget than an entertainment budget. We also both work and sometimes do not have any energy to cook, or in my case, remember to pull the chicken out of the freezer two hours prior.

Budget: Take a look at the food budgets you had, and how you ate, prior to the relationship and merge that together. If one of you only ate in, and one of you only ate fast food on the go, talking about your food budget is a good way to talk about how your life will be together.

Top Tip: Factor in your restaurant spending. If you know you go out to restaurants at least once a week, but your food budget only covers grocery shopping, there’s going to be a giant, expensive hole in your budget.

Families

Having a family can put a financial strain on any budget. It’s not meant to be harsh, I think that families are a great and wonderful thing and I come from a large family. I watched my family go grocery shopping only after cutting out all coupons and coordinating them with store sales.

Budget: The good news is you can now take advantage of all those bulk deals you always saw. $0.99/Lb? Only if you buy 10 pounds? No problem! The bad news is the cost savings on buying in bulk doesn’t necessarily offset the cost of feeding more people. You can mitigate the damage by keeping track of store sales, stocking up on non-perishable items, and cooking only one meal at a time. Picky eaters will eat when they’re hungry enough. Lastly, don’t buy food just because it’s on sale. A pantry full of great deals that no one will eat is still a waste of money.

Top Tip: Don’t be afraid of specialty diets or allergy issues. The more people that enter a food budget, the more likely you are to encounter allergies, intolerances, health issues, and special diet programs. This doesn’t have to capsize your budget. Just remember to check the labels of what you purchase so you don’t buy something you can’t use. Also, look for specialty markets that will offer better prices on the items you need.

Retirement

At this point in society, retirement means many different things to different people. My grandfather was scuba diving well into his 70s, whereas my grandmother will never completely retire. Oftentimes what defines retirement is the shift from an employment/business-based income, to a fixed investment based income. However, there’s a lot of increased available time for different experiences, and different tastes.

Budget: A fixed budget can make things both easier and harder. If you know exactly what you have to spend, it doesn’t leave a lot of room for confusion, and you can develop a routine that keeps your budget in check. However, it also doesn’t necessarily leave room for a lot of escapades, and may not increase with inflation. It’s important to be aware of your budget, but not wary of it, and make good decisions.

Top Tip: Pool your resources. Between friends, family, and community groups, there are considerable opportunities to have great experiences without adjusting your budget. Whereas hiring a private chef to teach you Thai cooking may seem frivolous, getting together with many of your friends can make it an affordable event.

Take advantage of any discounts available to your age bracket. My mother was a little depressed when she turned 55, until I reminded her she qualified for senior discounts. She can save so much money that I’m ready to bypass my 40s and head straight there myself!

Thinking of a budget as a living, breathing thing that changes it’s form when you change your life can be an excellent visual tool. When you have more, your budget has more, whether that be time, money, or people. When you have less, your budget contracts. Openly examining your life and circumstances will help your budget to be a friendly tool instead of an adversary.

Andi Blackwell has spent over a decade writing about personal finance, local features, and health & wellness. A happy locavore residing in Portland, Oregon, she spends most of her time writing about eating seasonally with healthy meal plans at Meal Plan Rescue, and exploring the city with her husband when he can peel her away from her laptop.

Policies are Guidelines : How One Company Exceeded Expectations

Kay Lynn — Fri, 18 May 2012 13:56:16 +0000

My mother passed away last month on the day my husband and I were to sail on a long-scheduled 15 night cruise to Hawaii.

We cancelled the cruise with a day’s notice which was well past all the cancellations periods for a partial refund let alone the full amount. The situation is exactly why thousands of people buy travel insurance. But we hadn’t.

The Bad News

When my travel agent spoke with the cruise line representative to cancel the booking she wasn’t able to arrange any type of credit. We were about to lose both my mom and $3500 on the same day. I wasn’t mad at Carnival Cruise Lines, but at myself. Why would I risk losing so much money?

When delivering the news to me, the agent did encourage me to write a letter and so I did.

Asking for What You Want

I wrote an email explaining the situation (including a link to the obituary) and requested a credit. My appeal included the fact that we were loyal cruisers and stockholders.

I also included the fact that I knew we should have arranged for travel insurance and had learned our lesson and thanked them for their kind consideration.

I was hoping for at least a 50% credit so we could take a vacation somewhere later this year. This letter was not sent via snail mail to the customer service address my agent gave me but emailed to the president of the cruise line.

Now, I had no expectation that he would read my email but trusted that it would be routed to the right resource and it worked.

The Result

Two days later I received an email from an email address labeled icare (guest administration). Not only did we get a credit, but it was for the full amount!

The credit did come with a few restrictions and one of them was that it couldn’t be used for Hawaii. I requested that be waived since the cancelled cruise was to that destination and again Carnival came through.

We are now booked for a cruise to Hawaii in 2013 and Carnival now has two very happy and loyal customers. Oh and yes, we did get travel insurance this time.

The Argument for the Power of the Debt Snowball

Melissa — Wed, 16 May 2012 12:44:06 +0000

From a strictly financial viewpoint, the Debt Snowball doesn’t make sense. You target the smallest balances first and gradually move on to the larger ones, regardless of the interest rates on each debt.

However, as I am learning from personal experience, paying down debt is often more of an emotional process. If you can harness your emotions to drive you to pay down the debt faster, a debt snowball may make perfect sense.

Our Debt Load

My husband and I accrued quite a bit of debt the last several years, mainly because we lived on a very small income (averaging $30,000 a year while living in the suburbs of a major city with a high cost of living while raising 3 children). Our income was small because I was just beginning to work as a freelancer and my husband was finishing his Ph.D. Now, we are in a much better financial position, and we are tackling our debt with the goal of having it all paid off in the next year or two.

We started with three credit card balances and four student loans between the two of us. Our plan was to pay down the credit cards first, and then move on to the student loan debt.

However, that plan has recently changed.

The Argument Against Changing Our Plan

We have one credit card paid off, and the second credit card now has a balance of only a few hundred dollars. The third credit card has a whopping $11k balance. We have one behemoth of a student loan with a $17k balance and then three smaller ones at $4k, $5k, and $5.5k. Our plan is now to pay off the smaller student loans first.

Why?

Many people would urge us not to deviate from our plan and to instead work on the $11k credit card balance because it has the highest interest rate (nearly 5% higher than our student loan interest rate).

They would also say that the interest on the student loans is tax deductible, which is another reason why we should save it for last.

Finally, they would argue that we would end up paying more in interest overall because we waited to pay off the higher interest credit card.

These are all good arguments with a solid financial basis. They were in fact what I was thinking when I planned our modified debt snowball to knock out all of the credit card debt.

Why We Changed to a Traditional Debt Snowball

However, I found that when I could see the end in sight, I worked that much harder to pay it off. At the beginning of this month, the smaller credit card had a balance of $1,100. Because I could see that the balance was almost gone, I set about to pay it off this month. I put any extra money I earned or received on that card. I started selling more things around the house. I did what I could to free myself of that balance.

If the balance would have been $11k, I wouldn’t have had the same drive because even though I would be paying it down, the end would be no where in sight. If I instead move to the smallest student loan once this small credit card is paid off, I am still motivated because I know it may only take a few months to pay off the $4k student loan.

My plan is not based on sound financial principles. It is based on my emotions and my drive. For me, that is what will help me pay off the debt more quickly. You may be different. If you get motivated by how much you will be saving in interest, you may want to pay down debt based on highest interest rate first.

If you had debt to pay off (or are doing so know), which method did you use to pay it down?

Why Are You Taking Out Student Loans?

Derek — Wed, 09 May 2012 13:36:10 +0000

All the parents in the world seem to have the same advice, “Go to school, get good grades, and get a safe, secure job.” That is their definition of success, and do you know why? Because it’s what their parents instilled in them! Our parents and grandparents saw how limited their options became later in life, all because they did not have that piece of paper from a college institution.

Any More Advice?

For whatever reason, the parental advice seems to stop there. In my mind, I had plenty of other questions as a teenager leaving the walls of high school and venturing into this unknown called college. For instance, “How do I handle my finances now that I’m out on my own?” Or, “Are my study tactics from high school going to be good enough for college?” Most importantly though, our young high school grads are often asking the question, “Is it ok for me to take out all of these student loans? Will I be able to pay these back easily once I find a job?”

When it comes to student loans, many parents do not have the money to fund their children fully through college, and since their kids don’t hardly make any money and have nothing saved up, the only option available is student loans. Throughout their college career, students are borrowing $10,000, $20,000, and sometimes $50,000 or more to fund their schooling! The average graduate owes $25,000 in student loans and most likely doesn’t have a way to pay for it. After all, there is absolutely no guarantee of a job, even if you do have that magical piece of paper.

The Reality

Did you know that 20% of the bankruptcies today are filed by kids that are under 25 years of age?! More often than not, it’s the same story: they went to college without having any money to pay for it, survived with a few credit cards for a while, but then simply ran out of borrowed money. Before they realized it, they had $40,000 in student loan debt and $30,000 in credit card debt and were forced to start paying it back. Well, a $900 payment each month is pretty tough considering they still only make $12 at their part-time job. Bankruptcy seems like the only way out.

I beg you not to become one these bankruptcy cases. It just doesn’t have to be like this! Believe it or not, college CAN be paid with cash. It takes careful planning, and perhaps you’ll even have to take a few months off from school to save up some more money, but it is possible. Just think about what you could do if you graduated with your degree and found a job that paid $45,000 per year, and you have absolutely no debt! Immediately, you’d begin to fund your retirement accounts, you could make a massive down-payment on a house, and you’d build up your savings to the point where you’d never feel stressed about money ever again! Wouldn’t that be nice? Let me tell you, it is possible!

It’s Never Good to Hear from the Fraud Department

Kay Lynn — Mon, 07 May 2012 13:24:01 +0000

Last night my husband and I were enjoying a wonderful dinner out celebrating our anniversary when I got a call from Chase Bank. It was an automated message from the Fraud Department stating they suspected fraudulent activity on my credit card and to return their call as soon as possible.

My husband wanted me to call them back right away, but I wanted to wait until we were home where I could put my full attention on the matter. An hour wasn’t going to make a big difference if they’d already detected suspicious activity. We had already planned on using another card to pay the bill.

Fraud Department Call

When I called the Fraud Department, an automated process identified me by last four of my card number and social security number. It detailed two declined charges and said to press 1 for valid transactions, 2 for customer service and 3 for fraudulent charges.

No, I was not attempting to transfer over $1,000 via Western Union and didn’t want to buy gas in Illinois!

I was then transferred to a live representative who then went over all the activity on the card that day. Yes, I did make charges to Amazon and RoadRunner Sports but no to the other three transactions. One had gone through, but they removed that charge.

Resolution/Next Steps

My card was immediately cancelled. I was given a choice of rush or standard delivery for the new card. There was no need to rush a card as we will just use our American Express is needed before the new one arrives in 4-5 days.

I was also told my account wouldn’t be accessible online for 3-4 business days during the card number transition. I was asked to carefully check my statement when available for any additional fraudulent charges.

Having your personal financial information stolen is never fun and I have no idea how it happened. I’m thrilled Chase Bank noticed the suspicious activity and took action. They turned a potentially horrible experience into a positive customer service interaction.

Have you ever experienced fraudulent use of your credit card or other financial accounts? How was it resolved?

Lessons I Hope to Teach My Son

Melissa — Wed, 02 May 2012 13:00:01 +0000

What did your parents teach you about money? My mom taught me how to add in my head so I could comparison shop at the store and get the best bargain, how to stretch food to feed a family, and how to set up a budget as well as how to balance a checkbook. These are basic financial lessons, and I am glad that I learned them; many of my peers did not.

However, there was a lot my mom couldn’t teach me, such as how to save for retirement, because she felt that she would never make enough money to save adequately. She did not begin saving for her retirement until her early forties.

What I Hope to Teach My Son

My son is only seven, but I hope to teach him quite a bit about finances, specifically, those things I never learned.

My plan?

Teach him to save for retirement early. When my son is a teenager and gets a job, I plan to teach him about retirement and the power of compounding interest. I plan to open a Roth IRA for him and put some of his earnings there. If we have the money, I may match his retirement savings, up to his $5,000 yearly contribution, assuming he made that much in a year.

Teach him to save for what he wants. This lesson has already begun, and in just a year he has become much better at it. Right now his favorite hobby is reading books. He just went to a book fair that he has been saving for the last few months. He knew I would give him five dollars, but he needed to come up with the rest; he saved $15 on his own.

Teach him to work for what he wants. We bought a Dave Ramsey Financial Peace Junior set for my son, and we have been working through the material. Before the set, my son was notorious for whining and begging for money. Since he has been listening to the CD set, he has now started to ask for extra chores he can do around the house to raise money. Just this change makes buying the Financial Peace kit worthwhile!

Teach him to look for a less expensive alternative. As I mentioned, my son loves to spend his money on books. I am hoping to eventually teach him about less expensive alternatives such as Paperback Swap and using the library. He does use the library extensively, but right now he wants to own the books he loves the best. Still, there are plenty of ways to own books without paying the full price. I want to show him how much further he can stretch his money with smart purchases.

As parents, we often do the best we can. My mom educated me about finances in the way that she knew best. I am grateful for that because I still use some of the frugal strategies she taught me. I hope to teach my son about the benefits of saving and retirement at a young age so he can make smart financial decisions throughout his life, which is the best path to financial security.

4 Reasons Family Vacations Should Be in Your Budget

Guest — Fri, 27 Apr 2012 13:00:09 +0000

This is a guest post written by Jana from Daily Money Shot, a personal finance blog about money at the intersection of life, pop culture and everything in between.

I’m a huge advocate for family vacations. I don’t believe that a family vacation needs to be somewhere elegant or fancy. A simple camping trip is just fine (and often provides more fun and adventure than sitting on a beach. Just ask anyone in my family about the night of the rabid squirrel). Because no matter where the location or the accommodations, family vacations do these:

They provide a chance to unwind as a family. Let’s face it. Day to day life is stressful. Between work, school, activities, doctor appointments, pets, bills and all of the other responsibilities we have, we’re all overextended. That overextension can sometimes provide unwanted or unnecessary friction in a family. Taking a vacation, even if just a few days, can give everyone a chance to relax and escape from those responsibilities. In my experience, those few days of relaxation have a pretty long lasting impact.
They create lasting memories. Some of my most vivid memories are the crazy things that happened to me and my family while we were on vacations. In fact, my parents still like to use my affinity for It’s A Small World as a reminder of…well, I’m not exactly sure but they love to tell me how I tortured them at Disney World by making them go on the ride approximately 800 times. In a row. And it’s fun to relive the experiences via pictures and stories. Because even 25 years down the road, some of the stories will still be funny (even the ones that weren’t funny at the time).
They provide an opportunity to experience new things together. Often, as adults, we gear our vacations towards our interests. We think about the places we want to go, the sights we want to see, the food we want to eat. What’s nice about this is that we get to share those activities with our kids (who probably have some other agenda). On the other side of that, by planning a kid friendly vacation, we get to experience the trip from the kids’ point of view and participate in activities we never thought we would. Either way, we’re experiencing new things together.
They provide an opportunity to teach kids about saving. Most people cannot afford to decide to go on vacation and just pay for it on the spot. Most of us need to decide where we want to go, figure out the approximate expense and start saving in advance. What better opportunity to teach our kids the importance of saving for our wants? Saving for a vacation can even turn into a family event. Explain to your kids why you need to save the money and encourage them to participate. For instance, you can have them do extra chores and offer them the choice of keeping the money or putting it into the family vacation savings account (you can also offer to split the money for each). Whatever you choose, use it as a teachable moment.

Family vacations provide so much more than what’s listed above. They provide topics for family dinner conversations. They instill a sense of adventure. They provide a way to teach our kids about patience and how to read a calendar. But most importantly, the offer a way for a family to enjoy time together.

How do you feel about family vacations? Are they important to your budget?

I’m Getting Rich, How About You?

Derek — Wed, 25 Apr 2012 13:00:04 +0000

I started focusing on my financial position a little over 2 years ago, and I realized that I was in trouble. My wife and I were newlyweds and there was more money going out than what was coming in, plus we had $18,000 worth of school loans to pay back. Rather than wallow in my sorrows, I decided that we were going to increase our income, pay off our debts, and live the way we had always dreamed.

Paying Off The Debt

To increase our income, my wife was able to find work (rather than go into more debt at school), and I started learning how to make some online money in addition to my full-time job at the office. With an extra $1,500 coming in each month, we were able to pay off all of our debts in just over a year.

Buying a House

After paying off all of our debts, it was pretty easy to save up a down-payment for a house. We found a lovely foreclosure that needed some work, but at the cost of only $78,000 we figured that we could make some improvements and still come in at a cost that was less than the actual value of the property. While we are still in the “improvement stage”, we are nearing completion and our house is already worth more than $100k for sure.

Paying Down the Mortgage

It is pretty normal to pay for a house over the course of 30 years these days. Well, my wife and I are far from normal. In order to save $75,000+ on interest payments, we’ve decided to pay off our house in less than 4 years. After all, not much has changed financially in the last couple of years, so instead of making those $1,500 payments toward our debts (which are gone now), we’re putting an extra $1,200 toward our mortgage (and having $300 worth of extra fun)!

After the Mortgage is Gone

Once we get rid of that pesky mortgage, think about how quickly we could increase our savings/investments? If we consistently put $2,000 (our mortgage payment of $711 plus our extra $1,200 + a little extra) a month into some retirement funds for the next 40 years, guess how much our fund would be worth when we’re 70 years old? Drumroll…….. $11,521,743.46!!! If that’s not considered rich, I don’t know what is.

You Can Do It Too!

The crazy thing is that my wife and I are not really that special. We just started by living frugally, increasing our income, and devoting every extra penny toward our debts (and then later our house). Anybody can do this! What’s stopping you? If you need a little kick-start, email me at derek [at] lifeandmyfinances [dot] com. I would absolutely love to help you get started down your “get rich trail”!

Are you heading down the road toward a better financial future? How are you doing it?