3 Ways to Save Money On Gifts During the Holidays

I know that to some this may sound like an impossible feat. Beyond the challenge of gift giving, there are countless other opportunities to spend money, like in bringing a dish for a holiday party, or giving money to a charity of your choice. It seems like a time of year when money just burns through my pocket.

These last few years, I've tried to become more careful with where I spend money and how.

1. "Beauty is in the eye of the beholder" - Oliver Platt.
If you are a regular reader then you have heard me bang on this drum a few times. The point is that just because you like a gift doesn't mean the gift receiver is going to like it, and studies back up the concept that the gift receiver cares a lot less about the cost of the gift than the gift giver. That even goes for a gift costing hundreds of bucks. If you're short on affordable gift ideas, take a look at our 53 Easy-on-the-Wallet Gifts. The most important thing is to set a price point that is within your reach. In the end, you can come up with a thoughtful gift at any dollar figure.

2. Start a Holiday Club Savings Account.
OK, this one won't actually help you this year. But if you start it now, by next year, gifts and other expenses will be taken care of and there will be no need to whip out a credit card. If you have charitable donations you regularly give over the holidays, make sure you factor that in to your budget somehow... Your Holiday Club could be a good place!

3. Offer Skills
We all bring something to the table in our skillset. If a friend or family member is in need of help moving, with yard work, gardening, or pet-sitting, this is a way to give a gift that is based on spending your time rather than your money. Times are hard, and for many of us, we have more time than money. Looking for something tangible to give? A thoughtfully picked out (or hand crafted) card could be a great pick. If you're not the creative type but still want a personal touch, try websites like Shutterfly. You can even design a gift certificate if you have a computer and a printer.

What have you found to be great ways to save money on gifts? Please share them, I'd love to get more tips!

Baby Steps to Better Financial Health

I began “budgeting” in 2010. I put the word in quotations because, to a hardcore budgeter, what I did wouldn’t look like budgeting at all... Not even close. Today, I am slightly closer to that goal, but I may never be a budgeting savant. I mean, there are some people that don’t spend a single penny they haven’t set aside for budgeting purposes. I don’t quite know how to do that, because it seems like every time I get close, some unexpected expense pops up, or a friend comes up to visit and they want to go to their favorite restaurant, or a new bar. My point is that budgeting is hard.

It doesn’t help that half the literature out there is about how “easy” budgeting is and how all you have to do is the exact thing that seems so impossible to do. I can look back to not very long ago, and think about how I used to handle my finances. That person would look at what I’m doing today and think, “There’s no way I could do that.” Shows what he knows…

The funny thing is that every time I made a slight improvement on my system, I actually had one less thing to worry about. The truth is that worrying about money is exhausting. Ironically, when I spent virtually no time checking my accounts or tracking spending, I felt more stressed out about money than I do now that I am checking my accounts regularly. After all, my money was being spent one way or another, and every time I swiped my card for a sorta-big purchase, every time I got a loan payment notification in the mail, I was reminded.

I will tell you a couple of things that have helped me, but I also want to ask you what you have done, or will do, as far as baby steps go, to improve your financial health.

Small steps I made:

-          Figuring out my regular expenses, and putting money aside into a savings account I don’t touch except in emergencies.

-          Making financial goals to make sure I’m saving up for things I want to be saving up for.

-          Using Debt in Focus to help me make the most of my debt payments and get a financial overview/help me think about good budgets.

-          Making debt repayment a priority

-          Using Credit Karma to track my credit score for free.

-          Refinancing high interest debt with low interest debt.

These steps in and of themselves were pretty small, but they had big impacts, and they helped me get on the path towards keeping a regular budget. Now that I’m budgeting regularly, it feels like just another baby step. Now for more baby steps towards even better financial health!

Help me, and other readers out and share yours now!

Thinking outside the liberal arts degree to find success after college (while graduating in four years)

Almost a half of all students change their minds on a degree before graduating from college. These students no doubt realize that an undergraduate degree means a lot, and it could direct the future of their career. After all, why would you have an Engineering Degree if you realized you hated Engineering halfway through your college studies? However, when a student chooses to change a degree, it can extend the length of college and the total student loan that will need to be repaid. For parents, this can be a terrifying thought. In fact, my mother expressed gratitude that I had stuck with History as my major throughout my entire college career, for her own sanity as much as for anything else, I’m sure.

And yet, my BA in History was far from a slam dunk on a resume in today’s economy. Most of my options for getting a job in my degree consisted of getting at least a Master’s Degree in order to become a teacher, or a PhD to try my luck at getting a job at a University. My conversations with younger Professors in college left me thinking this wasn’t my ticket to success.

My eventual career landed me far, far away from my History degree, and yet I got the position through a combination of good fortune, determination, and my collegiate experience.

Extra-curricular activities and college jobs can have as much of an impact as your Major on your future job prospects. In fact, many employers see a Liberal Arts major as a big benefit in a potential employee:

A liberal arts education is not designed as training for a specific occupation. What it does do better than any other type of college or university preparation is sharpen analytical and communication skills, teach students how to learn, and provide students with a body of knowledge that can be applied to larger contexts. Thus, it is no surprise that the leaders in most career fields are liberal arts graduates whose specialized training occurred in graduate or professional school.

My addition to that quote is that although graduate or professional school makes a big difference, continuing education takes many forms. In college, I had the good fortune to get a job working at a Greeno Sub Shop, a student-run business at the University of Massachusetts, Amherst. I learned many business fundamentals like budgets, profit margins, and marketing. I also learned a great deal about what it meant to collaborate and take personal responsibility. Many of my co-managers at the time would agree with me that it almost felt like a second degree, and although I’ve learned a great deal more, I do feel that that experience helped set me apart in a field of applicants, some of whom no doubt had more relevant formal education than me.

Why am I saying this? Because rather than spend all of your time making sure your academics are going to fall in line with what you want to do when you get out of school (which you may change your mind about or reality may force you to change your mind about), it might be worthwhile to spend some time thinking about how you’re pulling on the other resources in a college setting. Getting an interesting student job, running for student government, or getting involved in a club, could open you up to knowledge and experiential learning that you would not have received within your major, making you a more rounded job applicant in the future, without having to worry about how to pay for those extra semesters of college.

What do you want to know about paying for college?

This month, we will be offering Paying for College on October 16^th in Hadley, and October 25^th in Worcester at the Hilton Garden Inn. To help us gear up to this and shed light on the college financing process, I’m asking you today if you have any questions that you wish you had an answer to around paying for higher education. After all, it can be mystifying stuff.

So, what are you most confused about? Or, do you not know what you don’t know? Do you have a good enough grasp on the subject matter, or is it so overwhelming you barely want to think about it and are second guessing why you even started reading this? (If it’s the last answer, bravo for confronting your fears so readily. Hopefully you can keep it up!)  Are you planning on attending our upcoming workshop on Paying for College, or are you going to miss it?  If you’ve already gone through the process, what did you wish you knew at the time? If you’ve been to our workshop, what did you think?

 

I’ll leave it at that, until next time.

A Bigger Car

In the pursuit of living simply, I have actually succeeded in making my life more complicated.  Well, I might just be acting overly dramatic. 

Here is the ridiculous story.  When I first told my boss that I was getting married and one day would probably have children, after nearly falling off her chair she proceeded to tell (and tease) me how I was going to need a mini-van.  Now I know that some people love their mini-vans… great for you!  It is just not the vehicle for me.  I was pretty adamant with her that I would NEVER own a mini-van, even signed a paper stating that fact which probably still exists in my personnel file. 

So in an effort to prove her completely wrong, my wife and I purchased the smallest car we could find.  Well, not really.  We bought a Nissan Versa.  It is a decent economical car, pretty good on gas, and for its class of hatchbacks, fairly roomy in the back.  In our day to day life, it works pretty well for our family.  I mean, we have to finagle the recycling and trash in the back and give a push on the boxes before quickly slamming the door shut. 

Our problems have arisen when we travel.  This summer we took a few camping trips, and we had to pack around our son.  Literally.  The softer items went on top so that in the event of shifting he wasn’t bonked in the head with a cooking stove.  And truth be told it isn’t his stuff that is taking up so much room, it is ours.  Yes we are camping but that doesn’t mean we can’t sleep in comfort.  And this isn’t to mention how the back of the car sank down dramatically when we loaded our bikes on the back.  Yikes!  Sorry struts or shocks or whatever is back there.

 

So we need a bigger car.  And it is indeed a need, not a want.  We are a one car family, we don’t even like to drive.  When traveling we like to arrive at our destination, unpack and then travel by bicycle.  We also have been car-payment-free for the past year, snowballing that payment into other debt.  Knowing that it takes a village, I would love to get your thoughts.  Does it make sense to get a car just for vacations?  Is there something else we are missing here?  And, if we must get a car (thinking Honda CRV size), any recommendations? 

Why I chose to use my savings account

Around three years ago, when I began working at UMassFive as a teller, I had a checking account. That was just about all I cared about. Granted, I did have my basic savings account, which everyone has, but I didn’t use it, and I didn’t care about it. Why would I? I loved the interest rate Co-op Advantage Checking gave me, and I wanted to squeeze every penny out of it.

Then, not two months into my new job, my car broke down.

The funny thing is, it wasn’t actually my car. I was twenty two, working two jobs, and just barely out of college. My mother let me use her car at all times, because she lived in New York, and it helped her not have to deal with owning a car in New York City. It also helped her convince me to run errands for her on my days off. And for me, it was a free car. My mom paid for the insurance, and I had no car payments. My responsibility started and ended with paying for gas and repairs. At the time, that was a lot, but I didn’t know how good I had it until I didn’t have it anymore.

So there I was, with no car, two jobs and about $300 to my name. It was also the winter, and I lived nowhere near the bus route. I got by for about a couple of days, but quickly realized I’d need to buy a new car. Desperate times called for desperate measures.

At 60 hours a week, with budgeting, I was making enough money to save without car payments. With car payments and insurance, I didn’t want to give up my savings, but in order to do that and make sure I was making my payments in time, I had no choice but to put money into a savings account. That, along with a loan savings account, turned a hectic heap of bills into a manageable stream. I began to appreciate that my savings account was there for me to build my savings, and that I couldn’t touch it very easily. And I began to really appreciate it when my savings account grew. It not only helped me build savings, but it also helped me pay my loans down more quickly… Happy days!

Since that time, I’ve moved to being a full time employee of the Credit Union, and I’ve begun leading workshops on budgeting. The practice what you preach mantra has helped me make a more convincing case for separating savings accounts from spending accounts. In that time, I’ve picked up a Holiday club savings account, and am considering a secondary savings account for more transparency.

Still, it’s not easy to work out an organizational plan, especially when you’re concerned with making a high rate of return on the money in your checking account. For those who are resisting a savings account, I have one suggestion: Look at how much interest you’ve earned over the last year. If you feel like you couldn’t have saved more money by keeping your savings separate from your checking, then you should keep doing what you’re doing. If not, it might be time for a change.

How about others? How has organizing your accounts differently helped you save (if at all)?

Birthday Parties

My son recently turned 2 and lots of mental energy was expended trying to figure out how to celebrate his birthday.  My wife and I like to keep things simple, we are the type that would rather spend money on an experience as opposed to a thing, and that is a value we hope to pass on to our son.  It is a struggle however, to not get all caught up in spending, spending, spending as a way to celebrate.  There are endless ways to watch your budget get surpassed with bounce houses, clowns, and slides - oh my! 

Another issue is gifts. This day is about celebrating him; does that have to be with piles and piles of presents? Is there some magical amount of presents he needs to get to feel valued and celebrated?  Can that even be quantified?  I also don’t want friends to feel pressure to have to arrive with a gift, not to mention setting a limit on the amount of stuff that will ultimately get piled in different corners around the house.  As a person who strives to live simply, I am still amazed at the amount of plastic toys (mostly reused & recycled) that has entered my life in these past two years.  I want him to get special things, things that I think he will really enjoy but as I watch him take great joy in playing with the box and plastic bags the reusable popsicles sticks came in or the mud puddle on the way to the playground, I question the concept of special.  Whose idea of special are we really talking about?  What’s important to him?

In the end, I did manage to reel myself back in. It was pizza, homemade cake and ice cream in the backyard.  The guest list narrowed down to the closest of friends and a request made to not bring presents.  He got some stuff, a wooden sand box and a new bike, gifts that came early and were from family.  A few friends ignored our request and came with gifts, a rake, a toy car and motorcycle, and his new favorite toy, a previously loved wooden doll house from his young friend on our street.

Most importantly, I hope that he got an early lesson in doing more with less.  What else could a Credit Union mama ask for?

Freeze Your Credit Card?

This post was originally published on the blog at www.getintheloop.coop

You didn't misread the tagline. This tip comes from a member who found a slightly unconventional, but brilliant, way to quit credit:

She froze her credit card in a block of ice.

According to the member, she's always had a hard time resisting the allure of credit cards, but knew how important they were in times of need. How, then, could she avoid the impulse spending while having relatively quick access to the card in an emergency? Freezing the credit card seemed to do the trick.

On three separate occasions, the member felt an impulse to make a purchase on credit. She opened her freezer to pull out the block of ice and let it thaw. Under hot water, she said it took around 45 minutes to thaw. Within twenty minutes, as she saw the block of ice shrink, some restraint would return to her, and the credit card would be re-frozen.

She hasn't used it in a year.

This is not for everyone. This member had AAA (at $54 for a basic membership, it pays for itself the first time you use it), so she didn't need her credit card for roadside emergencies. She also wasn't traveling abroad frequently (it is a good idea to have a few backup payment methods when traveling abroad!). Also, it is worth noting that this doesn't work very well if you have your credit card information saved at online merchants. Still, for many of us, this could be a great way to get into the habit of not relying on credit, to help kick-start the repayment process and help get out of credit card debt for good.

Share your methods for lowering debt on your credit cards here! No idea is too wild: All that matters is that it works.

When is the Right Time?

I have had this question in my head now for some time, turning it over and over, waiting to be asked and answered.  When is the right time to start talking to your kids about money?  After all, money is certainly one of those taboo topics.  When is the last time you talked to friends, acquaintances, co-workers, family, or even your therapist about your finances?   Exactly!  So how do we talk to our kids about something that we just don’t know how to talk about?

First off, we need to understand our own relationship with money.  Here is my suggestion, find someone you really trust, this can include a pet.  Set aside some time (even 5 minutes) and just start spilling the beans about your money story.  Be sure to include your earliest memories of money, your parents’ relationship with money (as seen through your eyes), your deepest desires about what you would do if you won the lottery, any fears you have about money and your dark secrets about money (i.e. the time you spent your paycheck on “fill-in the blank”).  These stories are connected to so many feelings that they clog our thinking, keeping us from being truly present in the realities of our current money situation.  When we tell these stories, let these ghosts out of the proverbial closet, their power over us lessens.  We can then face our current financial situation as it is and use our minds to make the best decisions we can based on our realities.  It is from this place that we can talk honestly and openly with our children about money.

Secondly, the money “talk” is not a one-time event; there is no perfect age or even perfect way to get this “talk” done right.  So just do it.  Every time something about money comes up include your kids. Obviously, depending on their age(s) they will have different levels of understanding.  Regardless, let them help pay the bills (even if this is just coloring in your check register) and put spare change in the piggy bank.  Bring children (ages 6-9) to UMassFive to open an account and join our Super Savers Club!  When facing challenging financial times be honest about the difficulties, all the while reassuring the young people in our lives that we are doing the best we can to take care of them. 

We cannot underestimate what even the youngest among us are absorbing.  My 2-year old son will clearly ask, “Mama, do you have mah-nee?” and then the other day he found a quarter and said “I have mah-nee!” just before putting it in his mouth. 

Why brand loyalty may be costing you money...

Very Loyal to the Apple Brand

As of writing this, I am going through a difficult but very necessary transition from one name brand to another, and I'm not talking about batteries or clothes. I like to think of myself as pretty un-attached to materials, and an enlightened marketer who realizes that half of the cost of an item is often because of its brand, not its quality, and while in this society, some companies stake their brand on high quality, high customer service, good value, and a good social message (ahem, UMassFive), when these things are lacking, I see no reason to be loyal.

Contrary to my optimistic view of myself, I am not impervious to marketing, or brand loyalty, and even though the physical goods I buy often (but surely not always) avoid being blindly loyal decisions, that is not the case with my search engine.

Like many, I use Google. Sometimes I forget that to Google is to search, not the other way around. I also really don't like Internet Explorer, which puts me in another majority. However, my company uses Internet Explorer as its default browser. My habit is to automatically switch straight from Bing to Google as default search. This last week, with a broken laptop, sitting on a temporary computer while waiting for my replacement, I didn't really bother. This allowed me to see Bing in a new light.

The result? I discovered that Bing has reward points. How do you gain them? By searching. How can you redeem them? On gift cards to Groupon, Amazon, and Tango, a card which apparently links to virtually any other merchant you could imagine. You can even cash in your points for donations to a cause you care about, like Boys and Girls Clubs of America, or Teach for America. And, of course, XBox Live points to get games, music, and videos.

To me, this was a total game changer. Someone at Bing had the brilliant idea to put a portion of their proceeds back into the hands of those who used their search engine. And, even though I'm more used to Google's layout, Bing's search results are actually pretty good, and a lot of the features I like in Google's search, like being able to easily convert units or see a snapshot of the weather, and find the result at the top without going to another search page, are also available. In this case, what does Google search actually do for me? What additional value do they provide for me? What additional value do they provide for society?

Absolutely nothing.

And yet I still find myself typing Google and Googling something to find my information, because I LOVE Google. I have an Android phone. I still find myself telling people to Google when I mean search. And every time I do a Google search rather than a Bing search, I'm costing myself what amounts to maybe half a penny. Not a lot, but with the amount I search, it sure adds up!

Search engines may not matter to you. You may use Ask, or Yahoo!, or any other search engine I haven't named. My point is not to get everyone to switch to Bing overnight (although it is worthwhile to know where the value is). Even for those who do switch to Bing after reading this, there is another lesson to be gained: Think about the brands you may otherwise subconsciously purchase, and ask yourself what the value is for you. Whether it's pasta sauce, nail polish, or ibuprofen, it could be worth taking a second look, and making that uncomfortable but useful transition to a new and strange brand that either saves you money, stands for something you want to support, has great customer service, or, maybe, a little of all of the above.

How I made money on the side (and how you could make more)

Just out of college, I had a tremendously hard time making ends meet. I had a wage and hours that, as a college student I found appealing but as a college graduate didn't work. I had a boat load of student debt, and some months had a hard time paying rent. I was acutely aware of two things:

• I needed to earn more money
• I was pretty good at computers

It's amazing what perspective can accomplish. Looking back, I wanted to make hundreds of dollars a week working with computers. However, I never put a great deal of effort into building a clientele. Even so, just by knowing that I wanted to make money working on computers, and sharing that with friends, co-workers, and acquaintances, I started getting gigs. Not bad at all! $50 here, $150 there, and my wallet began to feel a little happier. The jobs were infrequent, which concerned me, but that didn't matter so much when I had the opportunity to make relatively easy money in a short period of time, all for a skill as natural to me as riding a bicycle, but as foreign to others as Mars and the treks of the Curiosity rover. Not that I was the best at fixing computers, but when you're starting at less than zero, anyone who has half a clue is probably better. Now, in my current career, I have no need to do computer work for side money. Still, looking back, I would do some things differently when looking for side income. Whether you're looking at fixing computers or freelance writing, these are things you may want to keep in mind:

1.  Time is money: Never is this more true than in the world of the entrepreneur. The time spent working on improving your web presence, or reaching out to companies, should be counted along with the time spent actively earning money. If you devote a total of ten hours a week, and you earn $200 for two hours of work, you've just earned $20/hour, not $100/hour. Still a good hourly wage, while being more accurate. This theory also works for students applying for scholarships: Search and apply for 20 hours to five different scholarships, and win one for $500? You just earned $25/hr!

2.   Budget side income just like regular income: There may be a lot of things begging for your side income's attention: Bills, entertainment, birthday gifts, and more. However, if you're budgeting to make ends meet or take some of the pressure off, make sure you're including it as a source of income in your budget. That way you're keeping honest. It may not be the most fun way to go about things, but you can still budget for nice dinners and do so without regret. If you've tried it the other way, you know you'll thank yourself later. Trying to figure out how to budget income when it's unstable? The best way is to average out your income. It's probably better to be conservative in your estimates as well. If you have excess, save it so that when you have a shortfall you won't be struggling to make ends meet!

3.  It never hurts to work on self-improvement: It may cost a little bit of money, but take a class! There are many free classes or affordable online classes that won't take much time out of your schedule, but if you don't have much knowledge about marketing, that could be a great place to start. And, of course, adding knowledge within your field is a good thing.

There are no ­­­­­­doubts many people with far more knowledge than me about the ins and outs of managing a successful side-gig, but just because you earn good money and have a good clientele doesn't mean you're managing your finances wisely. By not neglecting your finances, you will truly make the most out of your side gig, and avoid the mistakes I made in my side-income foray.

Canning Your Food is Fun and Easy!

These days everyone is talking about frugality. What could be thriftier than canning your own food? Not only that, you can make it the way you like, without added preservatives, corn syrup, or things with unpronounceable names. Best of all, you can savor the bounty of local food long after the first freeze hits this fall.

Besides canning, you can dry, freeze, pickle, cure, smoke, ferment or place foods in cold storage. When choosing a method for food preservation, safety is a primary concern, with taste being a close second. It’s not too intimidating to throw something into the freezer, the root cellar or the refrigerator with some vinegar. We can be pretty sure that calamity will not follow. You’ve probably made tomato sauce and frozen it, or stored onions in a cool, dark place. It’s canning that’s kind of scary, and therefore the method with the most rules.

While canning does have a lot of rules, it’s also fairly simple—that is, it’s simple if you follow the rules. The most important thing to know is that the bacteria responsible for botulism thrives in the absence of air in moist, low-acid environments. Therefore, it is absolutely necessary to increase the acidity of low-acid foods, to kill any bacteria with heat, and to provide an airtight seal so nothing ominous can enter the product after you’ve sealed it. That's it.

Most fruits are acidic enough to can using a hot water bath canner, while most vegetables need to be processed with a pressure canner and some added vinegar or lemon juice to raise their acidity. Tomatoes are a borderline acid item, while green beans are low acid. If you don’t like your tomato sauce with added lemon juice or vinegar, you should probably try freezing instead. However, a bit of lemon never hurt a green bean.

Using the best, freshest produce makes the best preserve. Follow recipes from a reliable source, and you are assured a good product. Don’t omit the lemon juice, change the amount of salt, or try to cut down the heating time. Kosher salt and pickling salt are both good choices. Table salt contains anti-caking additives and iodine that can cause pickles to darken. Salt substitutes can turn bitter and give preserved foods an unpleasant flavor.

Some signs your preserved food has spoiled:

• The food, jar or lid has mold on it, or food has leaked out.
• The food looks slimy, shriveled, spongy or cloudy.
• You can see bubbles or bulging of the lid.
• The jar’s contents “shoot” out when the lid is opened.
• The food has an “off” odor.

Here are some additional resources for you if you decide to give canning a whirl this year.

1. The National Center for Home Food Preservation has a terrific website and offers a free, self-paced online course from the University of Georgia. http://www.uga.edu/nchfp/
2. Blue Ribbon Preserves by Linda Amendt
3. Quick Pickles by Schlesinger, Willoughby and George
4. The Complete Book of Small-Batch Preserving by Ellie Topp and Margaret Howard

A version of this article entitled “Preserving the Bounty of the Season” written by Peg Toscanini was first published in the River Valley Market Newsletter, Summer 2009.

That little savings jar of mine

It’s the last day of the month and you know what that means… it’s time to empty my coin jar! I actually have two jars, one on the kitchen counter and one in my bedroom. The one in the bedroom doesn’t get much action because I am pretty good about emptying my pockets the moment I get home.

You see several years ago I was interested in knowing just how much coin I accumulated in any given month. The best way I found was a jar on my kitchen counter. It says “golf money" on it but to be honest I am really bad at golf and have yet to use any of that saved money for that purpose. I just hate to waste it! Maybe that’s my problem I don’t play enough…

Anyway what began as a whim has turned into almost an obsession. Let’s just say I am very “diligent” in collecting every last penny I have.

I have to tell you those coins add up!  I usually bring the coins to the Northampton branch and use the coin machine in the lobby. It’s a great gizmo, takes about a minute, and I get a receipt to take to the teller line to make my deposit. Best part is there is no fee for using the service. Last month I had $33.07 in coin!  That’s just one month’s worth of just emptying my pockets, which is about average for me.  So far this year my highest month was $46.33 and the lowest month was $20.75. So far for the first six months of the year I collected $201.05!

So now I get to see how I did in July…its looks like we will be a good month from what I can see, but the coin machine will give me the official count. I can’t wait to find out.  If the second half of the year is as good as the first I could break $400 for the whole year and maybe even $500!  See what I mean when I said almost an obsession….but hey it works for me.  There are other ways to save money that you wouldn’t normally think of, check some of them out here.

The vacation game

"I need a vacation."

If you're like me, you've heard and uttered this sentence time and time again. That's why I developed a new workshop called "Budgeting - Planning Your Vacation". I can't tell you how many times I've spoken with people who have referred to budgeting as boring. See, that's the problem: Budgeting is a state of mind, and if you have the wrong state of mind, you will never be able to budget successfully.

When I ask people what their financial goals are, it's always Paying off Debt and Building an Emergency Fund. Great! These are very important goals, and listing them and working towards them is vital. However, very few people get a sparkle in their eye when they're talking about six month's worth of money saved in the bank. Important? Yes. Exciting? No. It's when I start pushing people to talk about fun things they want to do that I get the answers that people get excited about: Buying shoes or electronics, or traveling.

Enter the vacation game. The premise is simple: If you don't plan to go on vacation, or do some other fun thing, you will end up taking a vacation from budgeting. The end result is that you don't accomplish your goals and you may end up racking up a nasty credit card bill in the process. However, if you do plan a vacation, you'll have the time you need to save up enough money to take a nice vacation without having to sacrifice your other goals. This leads to happiness, fun, and financial security. How could you ask for more?

For help planning your vacation, check out our Vacation Planning Checklist. It's never too late to start playing the vacation game, and winning!

Smart Used Car Shopping

When my wife told me it was finally time to get her a new car last year, as most people do, I cringed at the thought of the whole car buying process and having another car payment.  She knew she wanted an SUV but wasn’t sure what make or model. That was some sigh of relief because the process of narrowing your decisions can be endless!

Once you have decided on a type of transportation you should do your homework. Consumer Reports (www.consumerreports.org) offers a great website that gives you information about different vehicles with an unbiased opinion – it’s simply their facts and findings. We read dozens of reviews before she decided on a particular model and also test drove one to be sure it rode to our liking. We started our search on the web because there are some great sites available that allow you to view inventory, prices, and other vehicle information like Auto Trader (and you don’t have to deal with the annoying salesman until it’s truly necessary!) UMassFive also offers an online inventory listing of our preferred dealers on our website here. When you are shopping for a vehicle you should consider:

• The number of previous owners
• Whether the car has been involved in an accident
• Any previous mechanical problems
• The maintenance history of the car

After we viewed several vehicles in our area that we were interested in we decided to take a trip to see it in person and test drive it – after all there is only so much you can see in a picture.  After road-testing the vehicle if you are interested in pursuing it further you should do a walk-around in-side and out of the vehicle to make note of any imperfections, dings, or scratches. Ideally the vehicle should be in good shape, but sometimes minor flaws are inevitable – but that can be used to your advantage when negotiating the price!

You should have the vehicle inspected by your mechanic to ensure the vehicle is in proper operating condition and that there is nothing wrong present. Any reputable dealer will be more than willing to allow this. (if they don’t that’s a red flag and I wouldn’t buy the vehicle just because of that alone.) I had a similar experience after the purchase when the car salesman asked if I wanted to have the car inspected at their facility. While this seemed like a convenience, it’s was my last chance to see if something was wrong. For that reason, I actually opted out of that offer and took it to my normal inspection station. If for nothing else you have the peace of mind that someone without an interest in the car is looking at it. Getting a vehicle history report to see if it was in an accident, stolen, recalled, etc. is a good idea too. You can get them free and easy at Car Fax – www.carfax.com. The dealership I purchased my vehicle from actually did this for me and printed it out. – a good sign they have nothing to hide about the vehicle.

When it comes time to financing the vehicle do your best to negotiate the rate and term – as most dealers use several financial institutions to fund their vehicle sales. If you have decent to good credit, there is even more of a case for you to negotiate and leverage your positive credit.

At the end of the day you need to be prepared and do your homework. The process can take longer than you want, especially actually finding the one you want – but if you follow these steps  you will be on a better path that you should be happier with and your wallet may thank you too! To read more about used card buying, visit our online Resource Center at umassfive.coop.

Tips that help pay bills on time with ease!

When I have facilitated our Budgeting workshops at the Credit Union a frequently asked member question is “when and how often should I pay my bills during the month?”

My answer is simple; don’t do it randomly, but set up some type of schedule. What I mean is you should work out a schedule that best fits into your lifestyle and is easy enough that it becomes part of your routine. Here are a few things to consider:

What does my monthly cash flow look like?
Are there bills that need to be paid at a specific time of the month?
What other circumstances are in my life that could affect when I pay my bills?

Remember 35% of your credit score is based on paying your bills on time so having a solid routine for paying bills is critical to keeping a good credit rating.

For most people cash flow is the driving force when it comes to paying bills. The key is to match your cash flow to your bills so you have the cash when it’s needed. If you are the only one in the household with an income and you are paid the same amount every month on a weekly, bi-weekly or monthly schedule it becomes much easier. But if there is other income coming in from other sources you will need to coordinate that a little. Many folks match certain paychecks to certain bills using payment dates as a guide. That way you can ensure you will cover those big bills like a mortgage or rent, or other important payments like a car loan. Having a calendar showing when certain bills come due is a great way of mapping out your payment schedule.

It’s important to note that you should treat savings just like a bill…meaning “Pay yourself first”. So work in your regular savings into your bill paying equation. I find using payroll deduction into my savings account is the easiest way to ensure this is accomplished on a consistent basis.

One of the ways I have found to keep up with my bills is to find a set time to pay them each week. For some it might be every other week. I’m lucky because I have a paycheck each week so my cash flow is the same week to week. I have also found if I pay bills once a week they don’t pile up and I am never late. In the past when I would wait and randomly pay bills I would always open one up and realize it’s due TODAY! So paying weekly helps me avoid those late fees. Another good idea I found with paying credit cards is to have the minimum payment on auto pay and when the bill comes I make a second payment to lower the balance. I’m always on time and paying down the balance each month.

What I wish I knew about paying for college

I want to start by sharing that, like many, I never felt like college was optional. My mother struggled to get me through middle school, and by High School I had caught the college bug and really did want to get accepted into a decent school. This gave my mother no end of relief, and had it not been for the fact that I also had a fifteen-year old sister, she probably would have become significantly less stressed out. As it was, I like to think I was able to prevent her from getting high blood pressure. You’re welcome, Mom!

The point behind that little anecdote is that within a month of my college graduation, my mother was talking on the phone with me about my student loans, and how she had heard on NPR that someone who never went to college would often end up better off than someone who went to college for your average liberal arts BA – the very degree I got. Don’t get me wrong, I appreciated my college degree and have no end of gratitude for the effort my mother expended to make sure I got it. I know that it was one of the things she had pictured and strived towards for both of us since we were born. Still, there’s something to be said about timing.

To be fair, I graduated in 2009; a year and a half after most job prospects had dried up. Had we had a crystal ball, I might have done things differently. And, for me, it worked out, as I got a great job at UMassFive and was able to begin paying off my mountain of debt. Had I had a crystal ball, I might have done a couple of things differently.First, I might have taken a gap year. After showing my mother the crystal ball I am sure she would have sent me away with her blessing. After getting accepted into college, I might have deferred in order to save up some money for my first year’s tuition. After all, any loans you take out are going to cost quite a bit over the long run, and a tax benefit doesn’t cancel it out, but just softens the blow.

Second, I might have taken more advantage of scholarships. If I had known what I know now that I choose semi-finalists for our League Scholarship, I would have applied for more scholarships, comforted to know that my odds were probably not nearly as bad as I thought they were at getting a scholarship. After all, if I spend 10 hours applying for a $500 scholarship, I just made $50 an hour. Not bad!

Finally, I would have informed my mother that PLUS loans are an option made appealing due to their fixed rate, but that some private loans are more attractive in the long run. I would have shared with her the knowledge that it would have been a joint loan rather than one she was saddled with herself, and that, in a persistently low interest rate environment, it’s practically a steal!Of course, that would have involved understanding the difference between Prime and LIBOR rates (the latter is lower), and what floors and ceilings are (can’t go under or over a certain rate, respectively). But that’s yet another thing I would have done, had I had my crystal ball – I would have asked someone at UMassFive to demystify the process for me, and I would have checked UMassFive's Resource Center as a launchpad to find additional resources.

If you’re on your way into college and have questions about your best choices, and want someone to tell it to you straight, don’t be afraid to ask away. UMassFive and CU Student Choice are here to help.

Financial Goals

Budgeting without goals is like driving without a destination: you feel like you’re going somewhere, but you don’t know where, and you’re not sure why. Sure, it can be nice, but how long are you going to stick with it before you wonder what the point is, go home, and order takeout?

On the flip side, budgeting with goals in mind allows you to keep your eyes on the prize. Are you going to shop ‘til you drop? Not unless you feel like pushing that winter trip to the Bahamas out until next year. Do you want to grab that second latte every day? You’ll think twice when you remember that loan you’re trying to pay off by the end of summer. A good financial goal makes short-term sacrifice easy, because it is for a purpose that brings you long-term satisfaction.

So what makes a good financial goal? The acronym “SMART” summarizes it well.

Specific: There is a big difference between a plan to pay off “A lot of debt” and a plan to pay off your car loan. Getting specific is the first step towards making a good goal.

Measurable: How much is your car loan actually valued at? Keep in mind that there are costs associated with interest, so make sure you use our loan calculator to figure out how much you’ll really need. Thinking of vacationing? Use our vacation budgeter to figure out how much you’ll be spending over the cost of hotels and lodging. You’d be surprised at how much it adds up.

Attainable: The easiest way to quit on a goal, and often to quit budgeting entirely for a time, is to set a goal that is unattainable. Meaning, if you want to be a millionaire, you might want to set a goal to save ten thousand dollars first. And if a goal you thought was attainable turns out not to be, don’t despair! You can always adjust your goals later to make them work.

Relevant: Is this something you really want? After looking through all of your goals, you may find that some don’t quite fit your needs at this time. If you’re saddled in debt and you have to make a judgment call about whether to pay down your debt or go to Hawaii, you may decide that paying down debt is more relevant to your financial wellbeing. A modest trip to Maine may be more up your alley, and you’re setting the stage for prosperity that will make your Hawaii trip more relevant in the future.

Time-bound: We have a saying, that a goal is a dream with a deadline. If you want to do something, you’re only making dreams, until you set a time frame. Setting a time frame not only allows you to make regular payments towards it every paycheck and every month, but it also helps you to figure out how attainable your goal is. Again, if it turns out that it’s unattainable, you can push the deadline further out!

Try our Financial Goals Planner today to help you get started. With automatic, detailed calculations that even allow you to determine how loan interest and savings interest rates help or hinder your goals, you’ll be up and running in no time!

Is it a Good Time to Buy a Car?

People seem to be hanging on to their cars longer and longer during these challenging times. But at some point it makes sense to upgrade to a newer vehicle. A late model car will have less costly repairs and possibly better gas mileage, saving you money in the long run. With the annual spring sales upon us and car lots full of vehicles, dealers are moving into high gear to make deals and move their inventory. Now may be the ideal time to buy.

Here are a few things to remember to get the most car for the fewest dollars. First, you should determine how much you can afford to spend. Your overall monthly budget should include: your loan payment, insurance costs, gas, maintenance, and repairs. To figure out your monthly loan payment, you can use the “Calculators” on our website at umassfive.org.

Second, call or visit UMassFive to get your auto financing in place. Being preapproved can help you negotiate with the dealer about the price of the car, not a monthly payment. What good is getting a great deal on a car if your financing is costing you hundreds of dollars more in interest charges? In addition, we can tell you the true trade-in value of your current car so the dealer doesn’t underestimate your trade in.

This also would be a great time to “shop” for auto insurance. The market has become very competitive in recent years and you may be surprised by how much you can save. Just remember when you comparison shop, use the same types of coverage between policies. A policy may seem really inexpensive, but when you look closer it may offer limited protection and coverage or high deductibles you may not be able to afford. Also ask about discounts, as insurance agents use these as incentives to get your business.

Once you have found your vehicle, there are a few things you need to do before you sign on the dotted line to avoid a costly mistake. First, run a vehicle history report to determine if it was ever salvaged, stolen, or recalled, or if someone has altered the odometer. This is free and easy at Car Fax: http://www.carfax.com/. Most dealers will provide this report. Second, have your own mechanic put the car on a lift for a full inspection. This may cost you a few hours of his time but uncovering a major repair issue could save you hundreds of dollars and avoid a costly purchase!

Remember to give us a call when you are ready to buy because we have the experience to help you avoid mistakes and provide an auto loan that fits your budget.

What Makes for a Good Credit Card?

The “Complete Credit Card List” (found at http://www.indexcreditcards.com/) lists over 1500 credit cards. While an impressive database, it is far from complete. For starters, it doesn’t list our credit card, or any other credit cards from smaller institutions. Even this conservative number presents a staggering array of options. Which credit card is right for you? While there are a variety of personal factors that will influence your decision, there are some general guidelines that will significantly restrict the list from which you choose. After all, with so many credit cards out there, there are sure to be some winners and some, well, stragglers.

So, what makes a good credit card? All the information you’ll need can be found in your credit offer. Here’s what we recommend you look out for:

1. No Annual Fee – In the last year, the percentage of bank credit cards with annual fees rose from 14% to 21%, and the fee amount stood at a median of $59. Even if your annual fee falls below this median, it’s a cost that may well stay with you for the life of your credit card. The longer you hold credit cards, the better your credit score will be, but you shouldn’t have to pay a premium to take out and maintain credit. For some people with damaged credit, it may seem like your options are limited. However, there are a lot of credit cards that do not require annual fees.

2. Low Interest Rate – It’s a good idea to know your credit score before looking for a credit card. That way, you’ll have a good sense of the interest rate that will be available to you before you apply for the credit card. Clearly, the lower the better, but if you are offered a credit card with an interest rate of higher than 15%, run away! If you have been rejected from every other credit card, take some time to learn more about credit and build your credit through a secured loan or some cheaper form of credit. At 15% interest, your balance is rising at 1.25% every month. That means that on a $10,000 balance, you’re spending $125 on interest alone.

3. No Balance Transfer Fee – If you’re looking to switch your credit card debt to a new, better carrier, the first sign of a questionable credit card is a transfer fee. Many offers will stipulate anywhere from 3-5% fee for transferring money. That means that if you transfer $10,000, you can pay as much as $500 on fees alone! Many credit cards with 0% Introductory APRs will rely on this as a source of income in the first year. Even some credit cards without a 0% interest APR will do this, meaning that it can take you a few months just to break even!

4. No or Low Cash Advance Fee – If you can avoid it, don’t take out a cash advance on a credit card. If for no other reason, it encourages overspending. Be cautious of fees when there is a set fee for each cash advance and a higher interest rate on cash advance purchases. If there’s a $30 cash advance fee and you take out $200, and the interest rate on cash advances is 19.9%, you are frequently going to pay that on $230, not just $200. Look for cards that offer low fees and no separate, higher interest rate, or that offer no fees with only a slightly higher interest rate. If you’re in a tight spot, there’s no need to dig a deeper hole!

5. Locally Owned by your Institution – A good credit card is owned by your institution, not farmed out to a credit card company. Some credit cards are branded with a bank’s name, but have no other connection. In these instances, the bank simply collects a profit for getting someone to purchase a credit card. The same can be said for store cards, which are almost certainly not owned by an institution. When you run into a problem, a financial institution with whom you’ve built a relationship is far more likely to help you than a credit card company that deals in volume. Don’t forget to search locally, as small banks and credit unions often keep their credit card portfolio in house, and the credit card processor(s) and service representatives are usually a lot more accessible.

6. No Penalty Default Rates – New laws have restricted the penalty default rates, so that a consumer must be given 45 days worth of notice before it takes effect, and it can only be applied to new balances. Existing balances can only have interest rates changed after a 60 day delinquency, followed by a 45 day notice. Still, if you pay late, does that mean your rate will rise dramatically in 45 days? That still means you’re either paying more or going hunting for a new credit card if your issuer can’t be persuaded to change their mind. (It is always worth it to check, though). That’s a hassle you don’t need. An ideal card lacks penalty default rates.

7. Overall Lower Fees than Average – Thanks to the new credit card laws, late fees have dropped from an average of $39 in March 2010 to a range of $25-35 in January 2011. Credit cards that fall below or are at the lower end of this range are keepers. Also new with the credit card reform law, over-limit fees are only applicable if you allow over-limit spending on your credit card, and many credit card issuers offer very low, or no over-limit fees.

Comparing two or three credit offers should give you a better idea of what variety is out there regarding credit card agreements. If you take the time to look carefully and explore your options, you can save a lot of money with a good credit card. For more information, check out our Understanding Credit workshops, available monthly at our Northampton and Hadley locations, and bi-monthly in Worcester.