This guest post is brought to you by Earl Fischer, who writes for The Digerati Life, a site that covers all things personal finance, from investing to budgeting and money management. Check out the site’s reviews of online brokers and the best credit card programs that are available today.
Know what the world’s oldest profession is? Well what about the world’s oldest business? That would be a bank, I believe. No condescension intended by the analogy. In fact, I like banks. I am a client of at least four of them. Banks have a way of sustaining an economy just as much as it can take one down.
What I dislike about some of these large financial institutions — aside from the fact that quite a number of them have siphoned my tax dollars, no thanks to government bailouts — is how they tend to resort to deception in trying to entice one to become a client. Take my recent experiences with two such banks whose names I’d rather not mention right now.
Extra Bank Offers That I Don’t Care For
1. The Upsell
From one bank, I received a replacement card in the mail recently. The instruction they gave me was for me to call a toll free number in order to activate my card. Pretty standard stuff. Well, I followed the instruction and after going through the entire rigmarole of entering my card’s last four digits to giving the names of my first dog’s offspring, I was informed that my card was now activated and ready for use.
Just as I was about to wish the phone representative to have a pleasant day, she tells me that I am entitled to an additional service which would give me fraud and identity theft protection, credit monitoring services and other security features. The use of the word “entitled” can be very deceptive. Does this mean it’s like a gift that I just need to accept? Or will it cost me something? Remember, this is a bank and nothing ever comes free. So the fact was…. there was going to be a monthly charge of $6.95 (not the true amount). I told her I was going to think about it and will give them a call when I was ready for this. But she was insistent. She told me that it would be better for me to avail of the service right away because should I later change my mind, I can cancel it within a certain period and get a refund of the fees paid.
Wait. Hold it right there! It’s obvious what the bank was trying to do. They are capitalizing on the fact that people like me might not read the account information that they send and that I would become too busy to call them to cancel so in the long run, the bank makes a fortune. Of course, $6.95 a month is hardly a fortune. But think of 5,000 busy credit card holders and that’s a lot of money. So just like with drugs, I just said NO!
2. Does “no maintenance fee” really mean there are no fees?
My other experience involved this online ad which I came across while paying my credit card bill. In some cases, to encourage you to open a high interest savings account online, a bank may offer you a cash bonus for the effort. I caught on to one such offer lately, especially when I noticed the big bold letters on the ad that said the words “No maintenance fee.” I decided to fill out a savings account application online. Just as I was about to hit the final key to submit my application, I decided to confirm the terms and conditions of being an account holder one more time.
Lo and behold! Upon a second review, that’s when I noticed that the account would carry a monthly service fee. In fact, because of this fee, my initial deposit would have been exhausted after just three months. To make a long story short, I didn’t like how this bank would dangle a carrot by promoting their “no maintenance fee” account, but in the end, would turn around and still charge me a monthly service fee. Sneaky! I had two choices at that point –- hit SUBMIT APPLICATION or hit CANCEL. And so did I hit cancel? Well, does a zebra have stripes?
This post is brought to you by CouponCactus.com, a great source of online coupon codes for taxes, groceries, and more.
BargainBabe.com readers are above average – way above! A whopping 75 percent of readers pay off their balance every statement, according to a recent poll in which 161 readers voted. Wow! The national average is 59 percent.
Just a smidge – 22 percent – of BargainBabe.com readers carry a balance. That is half the national average of 41.37 percent of Americans who carry a credit card balance. Another 3 percent of readers chose the ambiguous “other” option, including Danielle, who said “I can’t get a credit card, because I don’t have a credit card.” Hmm, really?
These impressive stats got me thinking…are BargainBabe.com readers above average savers?
Vote first then I’ll tell you how you compare to the national average on the next page!
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I’m a finalist in the Plutus Awards in the Best Deals and Bargains Blog category. Please vote for me!
I’m up against stiff competition. The other finalists are Bargain Briana, Deal Seeking Mom, Keeping the Kingdom First, and Wise Bread. Wow!
The contest is run by a personal finance blogger named Flexo. To vote you’ll need to share your name and email, then scroll down until you find the Best Deals and Bargain category (it’s pretty far down). Then vote for your favorite blog!
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Here’s another great tip from my interview with author Laura Rowley: BrightScope.com. The site ranks 401k plans for some of the country’s biggest employers, from 0 to 100. Is your company listed?
- Home Depot
- Apple
- Hewlett Packard
- Lowe’s
- Dell
- General Electric
- Microsoft
- IBM
- McDonald’s
- Walt Disney
- Exxon Mobile
- Walmart
- Boeing
- Qualcomm
- Nike
- Proctor and Gamble
- Sears
- Nike
- Coca-Cola
The ratings consider 200 factors, including total plan cost, company generosity, and investment menu quality. For each of these factors and others (like participation rate, salary deferrals, and average investment) you can see how each plan ranks compared to others. The Google 401k plan, for instance, is in the top 15 percent of plans with the lowest fees, but is in the 35th to 64th percentile for average account balances. Those young computer whizzes are banking on their stock options, apparently. You can also get a report on the fees associated with your 401k when you register for the site.
BrightScope’s goal is “to increase the retirement security of America’s workforce by bringing transparency and efficiency to the 401k plan market,” the site says. BrightScope claims to be “the only 401k analytics firm that is truly independent and does not accept compensation in the form of revenue sharing from mutual fund companies or plan providers.”
So how does the site make money? BrightScope is “aligned with plan sponsors,” which is all the website says about its bottom line. That leaves me slightly suspicions. It seems the site means well, but if the folks behind BrightScope are not willing to explain how it makes money then they are hiding something. You can read more about the company on their About page.
As for the data sources, the site culls 401k info from the Department of Labor, the Securities and Exchange Commission, the U.S. Census Bureau, the Equal Employment Opportunity Commission, and the Bureau of Labor Statistics. Some mutual fund and investment data come from mutual fund prospectuses, and a few companies provided information.I hope this site is a resource for you!
I talked to Laura Rowley, author of “Money and Happiness”
1. “Female” versions of products are often more expensive. Consumer Reports did a study and found that products with his/her versions, like shaving cream, deodorant, and razors, perform the same but cost $1-2 more for the version targeting women, Laura said. All that pink packaging is cute, but not worth an extra dime.
2. A coupon toolbar saves time. Research shows more people do at least two online searches before they buy. First to find the product and then to find coupons for the product. Laura likes the coupon toolbar at Dealio.com, which automatically finds coupons when you search for products on Yahoo, Bing, or Google. Having a toolbar helps you get more value out of a single search.
3. Certain debit cards earn cash rebates. Laura says she earns 3-4 percent on the account tied to her debit card. To earn this high interest rate, you generally have to do five things. One, swipe your debit card 10-12 times a month. Two, set up direct deposit into the account. Three, use the bank’s online banking program. Four, get statements by email not snail mail. Five, bank locally. You aren’t going to see any of the major banks offering this perk.
But do the benefits of using a high-interest debit card surpass credit card perks? “Totally,” Laura said. “It’s way better to get 3-4 percent interest than credit rewards.” What about not building your credit history by using a debit card? “The people with the best credit scores only use 8-10 percent of their credit capacity every month. By using a debit card 10 times, you are getting the best of both worlds.”
Still interested? Go to CheckingFinder.com, plug in your zip code to find a local bank, and compare offers. The banks can afford to give you this interest rate because they are making money on the interchange fee. Every time you swipe your debit card, retailers pay about 2 percent of the sale, Laura said.
This deal works best for people who are comfortable banking online. Laura recommends using a high-interest debit card for small purchases between $10-$50 and a credit card for bigger charges. She makes the most of this deal by transferring 3-4 months of savings into her high-interest account. But only do this if you can stop yourself from spending your savings!
I just checked for my zip code and one bank is offering 4.09 percent interest on balances up to $25,000. That’s a far cry from the 1.25 percent interest rate ING Direct is offering for a 18-month CD.
Politicians cracked down on credit card companies to help out consumers during the recession, but the new credit card law that goes into effect today has pitfalls.
“During the past nine months, credit card companies jacked up interest rates, created new fees and cut credit lines,” an AP story says. “They also closed down millions of accounts. So a law hailed as the most sweeping piece of consumer legislation in decades has helped make it more difficult for millions of Americans to get credit, and made that credit more expensive.”
Here an outline of the changes in store.
Pros:
1. Credit Card companies have to give you 45 days notice if your interest rate is increasing.
2. Statements will now show how long it will take to pay off the balance if you make only the minimum payment. Statements will also show how much you need to pay each month to pay off the loan in three years.
3. Statements must be sent 21 days before the due date, which cannot shift willy nilly anymore.
4. You have to expressly agree to be able to charge over your limit, which triggers over-the-limit fees. Even if you do agree, there are limits to how much your bank can charge you.
5. Folks under age 21 cannot get a credit card unless they have a co-signor or can show they can pay off the charges (independently of their parents’ income). Banks can’t hang out on college campuses offering perks for applying for a credit card.
6. Americans will save $10 billion or more a year from the changes, according to the Pew Charitable Trust.
Cons:
1. There’s still no ceiling on interest rates.
2. Fees now are capped at 25 percent of the total credit line during the first year – but in my book that is still way too high!!!
3. Annual fees are coming back. In late 2009, forty-five percent of new credit cards had annual fees compared to 25 percent in the same time period the year before.
4. Some retailer credit cards will charge $1 for paper statements, like Victoria’s Secret and Ann Taylor. Look out for inactivity fees, as well.
5. Balance transfer fees will go up on some cards.
6. Reduced credit lines on existing accounts. My credit limit decreased, which is not surprising consider 40 percent of banks reduced credit limits on existing accounts.
7. Higher initial interest rates. The average rate for new cards was 13.6 percent last week compared to 10.7 percent a year ago, according to Bankrate.com.
8. Fewer cards. There are 15 percent fewer Visa, Mastercard, and American Express cards in circulation in 2009 compared to 2008. Maybe this is a good thing, though it means credit cards with perks – like grocery and gasoline rebates – are declining.
I hope these changes have a net positive effect, but the bottom line is that if you use credit cards you have to be very careful about charging more than you can pay off, paying on time, and avoiding fees. When in debt, you are at the lender’s whim.
PS. Remember you can check your credit report for free.
Offbeat Photography/Flickr
A friend of mine lives in a part of the country where expenses are so high that nearly every couple works two high-paying jobs and still struggles financially. So how do they get buy?
The answer shocked me – they accept money from their parents.
“It’s not a matter of whether you do or do not accept money from your parents,” she said. “But how much.”
My friend was talking about more than simple birthday or Christmas gifts. For her and her friends, parental cash flow affects the household’s bottom line.
Some parents send a check every month. Others give generously at holidays, provide extensive child care, or pay for entire family vacations. Still other parents pay for school tutition or establish college funds for grand kids.
It can be difficult for grown adults to accept money from parents. Many people turn it down because of pride. Others are held up by particulars. Does there needs to be a written contract? How do you ask for more, or less? Most importantly, is it possible to have “no strings attached”?
A contract is not usually necessary, but depends on what everyone involved is comfortable with. Asking for more or less comes down to explaining the request and being able to accept the answer – and additional strings. Because after the agreement is made, what lingers is the strings.
Financial gifts nearly always come with strings attached. And the bigger the gift, the more strings there are.
For instance, my Mom used to send me $100-$300 every month in college. I had a family credit card for groceries, but everything else was on me – clothes, movies, subway tokens – and the paycheck from my part-time job didn’t go far. There were few strings attached to this money, partly because it was a relatively low dollar amount. (Though it did encourage me to call home every week.)
Years later when Hubby and I prepared to buy a condo, my Mom advanced me a large portion of my inheritance so that I could contribute to the downpayment. We wrote up a simple agreement about the terms and both kept a signed copy. The rules were very clear, which made it easier on both of us. The money came with one very strong string – it was not to be used for anything else.
Some years after the condo advance, my Mom offered another fiscal carrot. If I moved back to California (I remained in New York City after graduating) she would give me her car, worth about $10,000. The money came with a very clear string – a California address – and it was one I was happy to accept.
There is nothing wrong with taking money from parents as long as two conditions exisit. The support has got to benefit both sides (don’t take money from parents who can’t afford it). And both sides must agree to and accept the strings attached.
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iowa spirit walker/Flickr
Here’s a quick recap to let you know that the website where you can file your federal taxes for free is now accepting 2009 returns.Here’s a quick recap to let you know that the website where you can file your federal taxes for free is now accepting 2009 returns.
The freebie file exists thanks to a partnership between the IRS and the Free File Alliance LLC, a group of private sector tax software companies. Here’s how it worked for 2008 taxes filed last April. I expect the free filing options to be very similar for 2009 taxes.
Option No. 1. You can file your federal returns for free using the traditional Free File, which offers step-by-step help, if your adjusted gross income is $56,000 or less (this number could vary slightly for 2009). The software puts your answers directly into the forms and does the math for you. You can get a refund as quick as 10 days if you opt for direct deposit. This service is available in Spanish.
Option No. 2. You can fill in your own tax forms without the help of software using the Free Fillable Forms. This hands-off approach lets you prepare and e-file your 1040, 1040 A and 1040EZ federal returns. There are no income limits, as with Option No. 1. State forms are not included.
Both of these options make it possible to file your federal tax forms for free. State forms are not included, however. Does anybody know a way to file state taxes for free?
Thanks, Tina!
Readers who have previously chided my ocassionally crass language, hold back. This post is not intended for minors or the faint at heart.
I couldn’t resist grabbing “Bitches on a Budget” from my patient stack of books waiting for a review. But does the book has as much sass as the title? Yes.
Rosalyn Hoffman opens her 322-page book with this essential question. How do you live a stylish life during the greatest economic downturn of your generation? No matter that the recession is technically over. Budget woes continue. And women rule the pocketbook. Here’s how Chapter 1 starts:
Bitches, we’re going to let you in on a secret: Women might only make $.78 for every $1 men make, but we’re the ones who drive the economy. We’re the ones who decide what to buy and when to buy it. You think we’re kidding? Just turn on the television. It’s talking to you, bitch. And even when it’s not – Rogaine and boner pills – it’s still about you!
Rosalyn gives budgeting a good name (it’s just another way to say edit, really), and attempts to do the same for what seems to be her favorite b-word. She writes about shopping, grooming, staying healthy, mental health, travel, cars, entertainment, entertaining and home decorating, food, and pets in her over-the-top girlfriend no you di-ent hand-waving, finger-snapping voice.
In other words, she makes saving money really entertaining. What more can you ask for?
Comment on this post for a chance to win my review copy. Or, you can pick it up at Amazon for $10.20 (orig. $15).
chiningilles/Flickr
The LA Times recently had a story suggesting 10 simple ways to save. I boiled it down to the best tips and added two of my own. Add yours to the mix!
1. Disconnect your land line. Or find a cheaper plan and call your current provider and ask them to match it.
2. Shop around for home and auto insurance policies. Spend an hour once a year checking if you can get a better price on your home and auto insurance. Do them together so you qualify for a bulk discount. Before you go for the absolute lowest price, check the insurer’s complaint ratio, which will indicate how happy their current customers are.
3. Pay cash (only if you really can’t control your credit spending because you are giving up a lot of perks and cash-back rebates).
4. Adjust your withholdings. The LAT says 70 percent of tax payers get a refund – which means we are letting Uncle Sam keep our money for a year, interest free! Instead, you could be earning interest or paying down debt.
5. Pay off high-interest debt. Focus on paying off your credit cards. It’s hard to get ahead when you’re paying 15-30 percent in interest.
6. Pay into your 401 (k). Making a $100 contribution costs you $70 because of the tax benefits, and if your company matches you are making even more for the same $70.
7. Set up an automatic savings deduction. It will force you to stash cash for a rainy day (which, in Los Angeles, is today).
8. Take care of yourself. Preventive health care really does pay off. Some health plans will reduce your premium if you quit smoking and if you reinvest that money on doctor’s bills and cigarette into your 401 (k), you stand to be $250,000 richer at retirement, the LAT story says.
9. Volunteer. Seeing how others live will no doubt making you feel better about what you have in life.
10. Budget! Check out my simple 15-minute budget. It really does work.
11. Exercise. Going for a walk, run, or bike ride is a cheap activity that can energize you and save you trips to the mall$.
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This post is brought to you by Codero, which provides managed hosting services designed to reduce your total administration costs while improving server efficiency.
Get ready for tax season! Preparing will be a little easier knowing you can file for free thanks to a partnership between the IRS and the Free File Alliance LLC, a group of private sector tax software companies. The site does not go live for 2010 until Jan. 15, so this is really just a heads up.
Here’s how it worked for 2008 taxes filed last April. I expect the free filing options to be very similar for 2009 taxes.
Option No. 1. You can file your federal returns for free using the traditional Free File, which offers step-by-step help, if your adjusted gross income is $56,000 or less (this number could vary slightly for 2009). The software puts your answers directly into the forms and does the math for you. You can get a refund as quick as 10 days if you opt for direct deposit. This service is available in Spanish.
Option No. 2. You can fill in your own tax forms without the help of software using the Free Fillable Forms. This hands-off approach lets you prepare and e-file your 1040, 1040 A and 1040EZ federal returns. There are no income limits, as with Option No. 1. State forms are not included.
Both of these options make it possible to file your federal tax forms for free. State forms are not included, however. Does anybody know a way to file state taxes for free?
Thanks, Tina!
I could be super cheerful and persuade you that this year will be different and that you should take life by the horns, yada yada yada. But I’m not going to. Nothing will change – financially speaking – unless you start to budget.
Life is miserable, eh?
There are as many ways to budget as there are overextended consumers. I’ll share my system in a minute, but first let me warn you that it will take 15 minutes of your time. Can you spare a quarter hour for financial solvency?
Here’s the deal. Most budgets look backwards. You pull out your bills and receipts from the past month and add up what you spent. That number is supposed to indicate how much you will spend next month, right? Wrong!
A better budget looks forward. And my budgeting system only takes 15 minutes to set up. Click here to get my three-page budget. Then click on “Bargain_Babes_15_minute_Budget” in small font to download the zip file.
If you like what you see, sign up for my daily or weekly email list for more savvy-spending tips.
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This is a guest post from Margarette Burnette at CouponsAndKids.com.
We could all use a jump-start in our savings for the new decade. If you’re looking for new ways to plump up your nest egg, try these ten ideas for 2010.
1. To get winter savings, call your heating provider and ask for a lower rate. According to the U.S. Energy Information Administration, the average cost of space-heating fuels this winter is expected to decrease by about $84 . If you’re on a fixed rate heating plan—where unit rates won’t decrease at all–call your utility company and ask if it makes sense to go to a variable (or lower fixed) rate plan. Potential 2010 Savings: $84.
2. For summertime savings, call your electric company and enroll in a load management program. You could get a discount if you agree to cut your energy usage during peak periods (when air conditioners are typically going full-speed). In the mid-west, customers who opt for Duke Energy’s Power Manager Program receive a one-time credit of at least $25 just for signing up. Potential 2010 Savings: $25 or more.
3. Adopt a “round up” or “round down” spare change savings plan. Whenever you spend money, round up the total and put the difference between the actual price and the round number in your savings account. If you round up only $5 a week, that’s a 2010 savings of $260.
4. Come in under-budget at the grocery store. Every week, write out your grocery list and try to figure out how much your bill will be. Then, bring the right amount of cash for those purchases. If you come in “under budget”, deposit the difference at the bank (some supermarkets have banks or ATMs on the premises). By making $10 under budget each week, you could deposit 2010 savings of $520.
5. When shopping online, use rebate web sites. Companies such as Upromise.com give a rebate of 1% to 25% of purchases spent through their site, which can go towards a child’s college fund. If you make $4,500 in online purchases over the course of the year, and receive an average a rebate of 5%, that’s a potential 2010 savings of $225.
6. Call your car insurance company and ask for a low-mileage discount. If you commute fewer than 10,000 miles per year (for example, you work from home or recently lost your job), car insurance companies may give you a rate discount of up to ten percent. If your premium is usually $1,750 a year, that’s a potential 2010 savings of $175. (And even if you don’t have a short commute, shop around for new insurance at least once during the year. You may find a lower rate with another insurer).
7. Find a credit card with lower interest rates. Though new credit card rules don’t take effect until February, you may be able to find a lower rate today by comparing credit card companies. One free site, Billshrink.com, will let you anonymously input information about your credit card usage. It will then instantly make recommendations about which cards can save you money. If you have a $7,000 balance and can lower your interest rate by 4.5%, that’s a 2010 savings of $315.
8. Find a better cell-phone plan. Billshrink also lets you compare your cell-phone company against their competitors to find a better deal. The average person spends $63 a month for cell phone use, so if you find a plan that fits your needs for 30% less, your 2010 savings could be $225.
9. Seal your heating ducts. According to the Energy Star web site, doing so can prevent the “open window” cold air effect in the winter and save about $190, or twenty percent of the average heating bill. Potential 2010 Savings: $190
So far, you have a potential savings of more than $2,000. But don’t blow all your money before the end of the year. Instead:
10. Invest in a high yield savings account. Many online and traditional financial institutions offer FDIC-insured savings products that can help you earn more on what you save. This Bargain Babe post has information on how to find a better bank to save money. When you do that, it will be a great way to start the New Year.
TrinityCreditServices/Flickr
If you haven’t already gotten your free annual credit report, now is the time. Each person gets one free report per year thanks to the federal Fair Credit Reporting Act. Snag yours on AnnualCreditReport.com. (Note, this is the only site where you can truly get a free credit report.) You can also call 877-322-8228 to request a free report.
Don’t expect a free credit score, however. The three major credit tracking bureaus, Equifax, TransUnion, and Experian, will try to upsell you on that. Stick to the report for now because it will tell you plenty about whether there are any mistakes.
Before you call or request your report through the above website, make sure you have your social security number handy. They will also ask you for a few past address and may ask a question that only you know the answer to, such as how much a particular bill was.
If you request your report over the phone, expect to receive it in about 15 days.
Once you get your report, watch this video about how to interpret it. I watched the 3:54-minute video and it is helpful and straightforward.
Thanks, Bargain Hubby!
Talk about concise. Danny Kofke’s How to Survive (and Perhaps Thrive) on a Teacher’s Salary
Kofke’s basic philosophy towards money – be sensible – is one I like. He spends a reasonable amount of time crunching the numbers so he can live comfortably within his means and reach his financial goals, thereby providing peace of mind and security. Here’s how he starts Chapter 3.
Upon arriving in Poland, Tracy and I decided how much money we wanted to have when we returned to the States. Now a lot of people do not plan ahead, and thus, wind up living paycheck to paycheck. We knew that we would be moving back home in two years and decided that $20,000 was a good amount to start with. We divided $20,000 by 24 months (the number of months we would earn a salary teaching in Poland) and came up with $834. We then set up a plan with the secretary at our school to deposit this amount into our savings account every time we got paid at the end of each month.
Kofke also writes about how he managed his finances so he and his family could travel, have a second child, buy a home, build a retirement fun, and get out of debt. How to Survive on a Teacher’s Salary is a welcome reminder that it is possible to live well on a relatively meager salary.
Leave a comment on this post for a chance to win my review copy! The winner will be announced Friday.
If you can’t wait, buy it now from Amazon for $10. Buying this book through Amazon supports BargainBabe.com.
