Happy Halloween! People must be scared by all the bad financial news, because I’ve got just two carnivals to share this week.
First up, the Festival of Frugality #149 hosted by Living Well on Less. My post listing 7 homemade Christmas gifts that don’t suck was an editor’s pick. I also recommend Finding Financial Peace’s tip for shopping post-holiday sales for next year.
Next, Money Hacks Carnival #36 hosted by Free From Broke. In addition to my post about joining an adopt-a-family program, I also recommend Prime Time Money’s advice for starting to save for the holidays early. You might not need help from others, but avoid holiday debt is still a good idea.
Halloween is the season of thrills and chills, but financial frights probably are another story entirely. Here are ten ways to avoid those financial scares that will have you quivering under the covers until Christmas.
You’ve Lost Half Your Money in the Market
Yes, the market has taken a dive off a very steep cliff. But before you hide in the back of the closet, consider this simple solution: don’t look. Don’t log into your online account, don’t open that statement. It’s sounds like the opposite of the usual advice, but there’s nothing you can do about the money you’ve already lost.
A Jack O’Lantern Burns Your House Down – And Insurance Isn’t Enough
If you bought your homeowners policy a long time ago, it may not be enough to cover the current value. Make sure your policy includes replacement cost coverage. You may have to pay a little more for it, but a few hundred now is better than several thousand later.
Your Company Goes Belly-Up
You can’t prevent your employer from going out of business (unless you’ve been charging first-class trips to Vegas on the company dime), but you can build up a nice emergency fund to help you get by until you land a new position.
Your Car Blows Up
The good news: now is a good time to get a deal on a car. The bad news: it’s harder to get an auto loan. Once again, your emergency fund is your friend and so is a stellar credit report. Start polishing that baby up!
Your Spouse Comes Home with a Pricey Sports Car/Diamond Necklace
Ah, the mid-life crisis. Although you can’t necessarily avoid the crisis itself, you can learn to communicate about money before it happens so that your spouse will now he or she has to think twice before shelling out major bucks for anything.
Your Doctor Recommends a Treatment and Insurance Doesn’t Cover It
Step 1: panic. Step 2: get a second opinion. Step 3: negotiate the price with the doctor. Ask if you can get the rate insurance would typically pay if it were covered. Step 4: dig into the emergency fund. That’s why you have it.
Your Kid Got Into Stanford, but Wants to Major in Music
Although lots of Stanford grads earn gobs of money, but many others don’t, especially those in the more “creative” or “humanitarian” majors. Sure, the college offers it, but it should probably be a minor unless your kid is the next Yo Yo Ma (in which case, he deserves a scholarship.) If your kids insists on the major, recommend a lower-priced state school.
Your Neighbor is Building a Turkish Palace
Hear that sound? That’s the sound of your home value evaporating. If your neighbor starts to build a monstrosity, call the permit office to make sure they received approval. If they did, hire a lawyer to file an injunction so you can try to get that permit revoked. That neighbor won’t like you, but everyone else on the block will.
Your Electric Bill Shoots from $100 to $500 in One Month
This happened to my friend. In one month, her bill skyrocketed. First she made sure no one in her house had bought any servers, then she called the electric company. It seems they had a glitch in the computer that estimates the usage between readings. She demanded that a meter-reader be sent out. He came, he saw, she didn’t have to pay the outrageous bill.
Surprise! You’re Expecting Sextuplets
Step 1: panic. Step 2: start planning now for the future of six kids. Step 3: call the local news. Welcome Today, Good Morning America, and every other news organization to your door regularly so you too can receive the largesse from diaper companies and everyone else who sees your story. Maybe then a TV production company will knock on your door and you can have your own TV show, too.
These are my financial frights. What financial disaster do you fear most? Tell me in the comments.
I know that technically the ghosts of past, present, and future are Christmas characters, but Halloween seems like a good time to talk about the ghosts of financial decisions past. Here are three good and bad financial choices I made and the ways in which they’re still affecting me.
Three Good Financial Decisions
Although I’ve made many bad financial choices over the years, I’ve also made some good ones. Here are the best choices I made:
Working Through College
I worked about 30 hours a week during my freshman and sophomore years at a community college. I was also living at home, so I didn’t have many expenses. That meant I was able to save a lot of money for my second two years. I moved away my junior and senior years. I don’t think I worked my first semester away, but then I started working on-campus just a few hours a week and continued that through my senior year. Between my savings, working, and help from my parents, I graduated without any debt.
Buying My Toyota
My first car was a very poorly made Pontiac. When the entire electrical system started to fail, my parents used their connection at a local Toyota dealership to help me get a brand new car. Not only did the auto loan help me build credit faster, but I still have that car. It turns 12 at the end of the year. Although it has some scratches and dings, I’ve only had to perform the usual wear-and-tear maintenance so far.
Going to Grad School
Even though it cost about $40,000, getting my Masters allowed me to switch careers. I wasn’t happy in the entertainment field, but I couldn’t get out of it. I completed my Masters in two years and landed a job in a totally new and fast-growing field within six months. Now I earn more than I would have in my old field and I’m happier.
Three Bad Financial Decisions
Unfortunately, I’ve made far more bad financial choices than good ones. It’s just par for the course I guess.
Choosing a Low-Earning Major
I did initially love working in the entertainment industry. It was fun and exciting, but it also required hours and hours of work for very low pay. Sure, I had the potential to earn a fortune, but I didn’t have the luck or connections to make that happen. Instead I was creating debt. I only got out of debt via an inheritance, and then found a slightly higher-paying entertainment job that made me miserable.
Buying Stock with My Inheritance
Okay, normally this wouldn’t have been a bad idea. Unfortunately, I invested in 1998 and then watched the market crash in 2000. My Roth spent another 6 years not earning anything before I finally sold it to pay for grad school. I wish I’d gone with my first instinct to buy a small condo with the inheritance. Los Angeles was at the bottom of a slide. If I’d bought, I would have had to sell when I got married because it would have been too small for us. Now I’d be sitting on a pile of down-payment money instead of scrounging for it.
Marrying a Guy with a Lot of Debt
I don’t regret marrying my husband, but realistically, his student debt is bad for my finances. It limits our ability to buy property and save for retirement. However, his professional degree will eventually move us into the realm of the very-high earners, so even though it’s not the best situation right now, eventually his degree will be a very good financial decision. Besides, I love the guy.
Everyone regrets at least one or two financial choices, but we often don’t realize it until later in life. What are your best and worst financial decisions?
If you search for real estate or homes for sale, you’ll find dozens of websites vying for your attention. In my research, I’ve found that I consistently visit just a few of these sites. Here are my favorite research sites, each with a different purpose.
Preliminary Real Estate Research
I like to use Cyberhomes to do my preliminary real estate research. Although I sort of know the neighborhoods I want to live in, they make it easy to check out nearby schools and see what sorts of people live there. I also like that I can use the side nav to change my options without rerunning the whole search.
Home Price Research
Two sites are the best when it comes to determining a home’s true price. I use both Redfin and PropertyShark to check out past sales prices, property tax rates, and other key details that are important if you’re planning to make an offer. It can also be a good way to be nosy. Just what did that Short Sale originally pay?
I don’t use Zillow because they create their own estimates and the prices don’t seem to be completely accurate in a falling market. I’m seeing a lot that are way over-valued.
Find Local Open Houses
Trulia now has an open house search. You can enter multiple zipcodes and the kinds of properties you want to see. Click the “listing preview” button to see the date and time for upcoming showings. You can also try OpenHouse.com.
Receive MLS Listings by Email
I discovered, quite by accident, that Just Listed can help you get MLS emails. I filled out a few details (I didn’t even go as far as address and phone number), and now a receive MLS emails whenever new listings in my original price range and zip code are posted. It’s a great way to get a feel for the local real estate market. I’ve watched prices decline and discovered details like HOA dues that aren’t included on other sites.
The Big Daddy of Real Estate Websites
Realtor is the site owned by the National Association of Realtors. They have the most real estate listings and you can fine-tune the search for must-have features. I wish their listings were more detailed – they don’t all include square footage – but they do make it easy to add additional zip codes to your search or change the prices.
Of course, none of these sites are a substitute for a professional real estate agent. Redfin will act as your intermediary, but I wouldn’t do that as a first time home buyer. Maybe I’d consider it if I was moving up, but I want professional guidance on my first time out there in the market. Use these sites to start your research, get a feel for what’s on the market, and figure out what you can realistically expect to find in your price range and prospective neighborhoods. Then call in a professional to help you work out the touring and bidding.
As a first-time home buyer, I want to make sure I find the right home. I’ve realized that determining my criteria is an important first step. If you plan to buy soon, follow these home buying tips to set your criteria and steer your search to the right homes for you. There’s no sense wasting time on the wrong houses once you start to look in earnest.
Visit Open Houses
Start going to open houses in your area. Condos, townhomes, houses, it doesn’t really matter. You also shouldn’t worry about price. The most important thing is to look. See what trends are appearing. How big or small are the rooms? How are the kitchens? What’s the storage like? Do you see any deal-breakers? Are there any must-haves? Make a note of them for the future. You should also try different neighborhoods to see which feels most like home to you.
Don’t Worry about Cosmetics
Don’t worry about carpeting, wall colors, or cabinetry during the home buying process. All of that can be replaced. Look at things that are harder to change like room size, kitchen layout, number of closets and bathrooms, number of rooms, and floorplan.
Determine the Number of Bedrooms and Bathrooms
Start by figuring out how many rooms you need now. For example, my husband and I need at least two bedrooms and one and a half bathrooms. We’re looking at three bedrooms because we plan to stay in our first home at least 5-7 years. If a baby arrives, we don’t want to try to squeeze all of us and an office and a guest bed into two rooms.
Set a Price Range
Now that you have a sense of the possibilities, it’s time to start using home affordability calculators or talking to a mortgage broker to figure out what you can really afford. Knowing your number will help you determine how demanding you can be in the next stages of the home buying process.
Determine the Neighborhoods You Like
The neighborhood really does have an effect on how much you enjoy your home. So figure out what you need in a neighborhood. Are schools important? Do you like to be able to walk places or are you fine driving fifteen minutes to the grocery store? My current neighborhood is very walkable. Even when I lived in the suburbs, I didn’t live more than a five-minute drive from a grocery store. I know that I would hate living anywhere with a long drive to the conveniences. Fortunately, I live in Los Angeles, where most neighborhoods are pretty walkable (or bikable) as long as you just want to buy a couple items at the store, drop off dry-cleaning, or find a neighborhood restaurant.
Commuting is a whole story. The home buying rule used to be that you drove until you could afford it. Now that’s just crazy. Since home prices are re-entering the stratosphere, take your commute into account. A neighborhood may be lovely, but the two hours it takes you to get there every night will make your miserable.
List Your Deal Breakers and Nice-to-Haves
So now you have this long list of things that are important to you. Figure out which are deal-breakers and which are just nice-to-haves. Early in the open house process, my husband and I realized that two things are deal-breakers for us: kitchen size and laundry hook-ups. We haven’t decided between a condo and a house yet, but I will not buy a home that doesn’t have an in-unit laundry hook-up. I also won’t buy a home with a poorly laid out kitchen and no kitchen storage. Now I can walk into a place and know within three minutes whether or not it meets the two basic criteria. In fact, I will tell the real estate agent not to bother showing us places without laundry hook-ups.
If you think this will take too much time, don’t worry. There’s no need to rush the home buying process these days. Unless you spend the next four years looking, you won’t miss the market bottom. Markets don’t rebound like a basketball. Instead they hit the ground and roll for a while like a semi-inflated basketball. The most important part is that you find the right home for you, in the right neighborhood, and at the right price. Otherwise, you’ll just have to start the process over again in a few years.
If you search the web for “financial calculator,” you’ll find hundreds of sites. Many of them present calculators borrowed from other sites, some present calculators that are at best difficult to use and at worst inaccurate. Then there are a few sites that offer simple, powerful calculators. Here are my favorite calculator sites.
General Financial Calculator Sites
Several sites offer a wide range of calculators. Only a few sites do many different calculators well. Here are my top picks if you want to find a lot of options quickly:
Dinkytown: Stupid name, great site. I frequently use their tax calculator. I haven’t found their debt calculators easy to use, but I love everything else. Go here for retirement, loan, auto loan, savings, small business, and investment calculators.
Bankrate: In addition to helpful articles and advice, Bankrate offers a powerful suite of financial calculators. Use their tools to budget, compare mortgage rates from actual banks, run retirement calculations, and determine your taxes. You can even calculate your lunch savings if you’re not sure you can really save money by brown-bagging it.
CNNMoney: The venerable financial magazine offers a wide range of financial tools and calculators. Their options are centered around four primary areas: retirement, investing, real estate, and financial planning. I particularly like the Ideal Budget tool which tells me the percentage of my budget each spending area accounts for.
I rely on two sites for most of my mortgage calculators. I’ve found these to be the most reliable in my calculations.
Mortgage Professor: Find out everything you ever wanted to know about mortgages, and run through every conceivable mortgage scenario you can think of. His robust mortgage calculators are simply the best I’ve found. In his home affordability calculator, you’re asked to input the price, and then he calculates how much you have to earn to afford it.
Bankrate: Bankrate also offers powerful mortgage calculators. Unlike those at Mortgage Professor, their home affordability calculator doesn’t make you choose a prospective home price first. Instead it tells you how much you can afford.
John Laing Homes: Yes, it’s from a home builder, but the calculator is comprehensive. Once you’ve determined your likely monthly payment, go to Wish List > Loan Amount Tool to enter your income, housing costs, and all other monthly expenses to see whether you can really afford it.
I used several different calculators while creating my debt payoff plan. You can find debt calculators all over the web.
Mvelopes: This is my favorite debt calculator. You can enter as many debts as you have, with interest rates and monthly payments. Then you can play with different additional monthly payments. In addition to giving you the best payoff plan, it shows you principal and interest for each monthly payment until the predicted payoff date.
Two sites offer the best tax calculators around. One might surprise you.
IRS: The IRS withholding calculator is actually pretty cool. It really only works at the beginning of the year, though. As bonuses or raises roll in, it becomes less reliable. Use it to figure your withholding at the beginning of the year.
Dinkytown: As the year progresses, you get a more accurate tax prediction at Dinkytown. They also offer a wider range of calculators than the IRS.
Of course, no calculator is 100% accurate, but these will give you a picture of what you can reasonably expect. And, of course, they’re free, so you can run calculations as often as you want.
Here we are again with the weekly blog carnival round-up. The way the market’s going, this is just about the only thing you can count on to be predictable! As usual, we’ve got three carnivals.
First, the Carnival of Personal Finance #175 at Budgets are Sexy. In addition to my post about daily money talks for couples, I recommend Million Dollar Journey’s post about divorce being a wealth killer. So have those talks to preserve your marriage and your wealth.
Second, the Festival of Frugality at Mighty Bargain Hunter. In addition to my post about the advertising and spending connection, I recommend FruGal’s post about frugality now being promoted by trendy magazines.
Welcome to my new occasional series: That Makes Me Stabby. It will focus on stupid economic news that really makes me angry. A lot of things have made me stabby this week. Most of them centered around AIG’s endless shenanigans, the election in general, and the dire prognostications of various financial experts. The thing that ticked me off the most, though, was the new economic stimulus proposal being floated. Once again, I think they’re totally missing the mark.
The Proposed Economic Stimulus Package
So far, we don’t know much about the proposal because it’s still being argued, but the Los Angeles Times summarized the key point: “members of both parties in Congress believe the government must find a way to put more money into the hands of average Americans, especially with consumer spending accounting for more than two-thirds of gross domestic product. ”
Barack Obama floated a package that centered around infrastructure, unemployment extensions, energy-assistance, and tax breaks for businesses that increase hiring.
The Democrats also want to add on more money for healthcare and mortgage renegotiation.
Republicans would like to do more to shore up banks and offer additional tax breaks to large businesses.
There is also some talk that the package could contain more stimulus checks to encourage spending. Because the first one worked out so well? I feel stabbiness coming on.
What’s Wrong with the Proposal
I’m not opposed to a new stimulus package in general. The stimulus checks, bank infusions, mortgage renegotiations, and tax breaks for big business are the parts that make me stabby.
Rebate Checks: We paid for the prior checks through more borrowing, so I will have to repay those checks through higher taxes someday. And they didn’t even work. Most people used them to pay off debt or saved the money. So what makes anyone think people would spend them this time? We can’t keep relying on consumer spending to dig us out of this hole!!
Bank Infusions: We already infused capital into several banks. Will yet another one change anything? I don’t think so. The first one hasn’t even taken effect yet.
Mortgage Renegotiations: Congress keeps talking about propping up home values and helping people stay in their homes. That’s a slap in the face to those of us who were responsible and waited until we could reasonably afford a home, or recognized that homes were over-valued and decided to wait until prices were more appropriate. Although home values may have over-corrected in some areas, they’re still way overvalued in others (like California.) Once home values reach historic levels, then the market will stabilize. Artificially propping up values simply shifts the suffering to later. It doesn’t make it go away permanently.
Tax Breaks: If Congress starts handing out more tax breaks, who exactly is going to pay for all this stimulus? We can’t keep leveraging the future to pay for current mistakes. Eventually, someone is going to have to pay for this. That’s a nice FU to the future children of the world, isn’t it?
What the Package Should Contain
I liked the original plan floated by the Democrats. It focused spending on infrastructure improvements. This is an excellent idea and doesn’t make me in the least bit stabby. I support infrastructure projects for three reasons:
Job Creation: Infrastructure projects create real jobs with decent salaries. These projects usually last years, which means they will keep people employed for years. Rather than giving people a few hundred bucks to spend, let them earn many thousands of dollars so they can support their families, pay their bills, and buy stuff.
Increased Tax Base: Again, it goes back to job creation. When people are working, they pay income taxes. The more people there are working, the more money the federal government receives. Then maybe we could afford to pay off all this debt we’ve accumulated through the other attempts at fixing things.
Improved Infrastructure: Duh! The U.S. needs to make major infrastructure investments anyway. Our roads, bridges, levees, and railroads desperately need improvement. Rather than wait until these projects are emergencies that cost us far more to fix, let’s put the projects into the system now when we have time to do it right for a reasonable price.
So there you go. I feel better now. How do you feel about the new stimulus proposals? What would you like to see? Also, what makes you stabby right now?
Over the years, I’ve received good Christmas presents and bad presents over the years. Some of the bad ones were just weird, and there’s no avoiding that. However, some of them well-intentioned but totally missed the mark. Choosing the right Christmas presents can be hard, so here are my tips for finding the best ones, whether you go with homemade gifts or store-bought.
A High Price Does Not Equal a Good Christmas Present
You can spend a fortune on the latest gizmo or the current hot gift, but it won’t mean anything if the recipient isn’t interested in it. Rather than showing your love by spending a lot of money, show your love by giving a gift that says you thought about the person when buying it.
A Good Deal Does Not Equal a Good Gift
Many people rush out to morning-after-Thanksgiving sales to snatch up gifts that are on supersale. I saw a woman on the news announce that everyone in her family was getting a $14 DVD player. But how many of those people actually needed or wanted a new DVD player? Instead of searching for the good deal and then figuring who to give it to, decide what to get people, and then look for good deals on those presents.
Think about the Recipient’s True Interests
If someone you love is interested in sports, than a jersey featuring their favorite player might be a great gift. If the person has a marginal interest in a team, then a jersey won’t be the right gift even if you got a great deal on it. I like to build theme gifts that take into account the recipient’s hobbies and passions. A budding chef might enjoy a good cookbook and a set of wooden spoons. A sushi lover might enjoy a nice lacquered sushi tray and gorgeous chopsticks.
Think about the Recipient’s Taste
I’m lucky in that my mom knows my taste and buys me clothes I actually want to wear, and in colors that look good on me. I have many friends whose mothers buy them clothes their mothers want them to wear, or that their mothers like. These clothes either get returned or stuffed in the back of the closet. If you don’t know someone’s taste, don’t buy them a gift that incorporates personal style.
Think about the Recipient’s Time
I’ve seen people recommend “experience gifts,” in the sense that you take someone on a trip or to an event. I received one of these once, and although the gift was well-intentioned, it was given during my last semester of grad school. I had no time, but felt obligated to go. It also cost me money because I felt obligated to pay for my own meals. I truly valued the time we spent together and enjoyed the experience, I just wish it had been a joint decision rather than a “gift.”
Think about the Recipient’s Needs
Some people have everything or simply don’t have many needs. My dad has everything he wants and most of the stuff he needs, so we buy him wine or chocolate as Christmas presents. He enjoys both and make him happy without bogging him down with stuff he doesn’t need. My best friend has tried several times to get me a coffeemaker. I don’t drink coffee. I never received one, though, because her machine always broke just before she tried to give me one. Finally she realized that the universe didn’t want me to have one (and neither did I).
Ask for a Gift List – Especially for Kids
When it comes to kids, it can be very hard to buy them the right thing. I also ask my cousins for wish lists from their children and then choose something off the list. I know that I would either duplicate a toy they already have or give them something they don’t want if I tried to guess.
Listen for Hints Throughout the Year
Throughout the year, I listen to the desires stated by my friends and family, and then buy them things to fulfill those desires at Christmas. One summer, my mom mentioned she wanted to learn how to make fancy breads. I researched gourmet bread cookbooks and bought her one along with a pizza stone (also good for bread.) She was stunned and loved it. On the receiving end, I’ve mentioned desires to my best friend in passing and received them at Christmas. When you fill desires like this, you get to hear, “Oh my God, I can’t believe you remembered!” or “How did you know?” Those are the best.
Before you start shopping for Christmas presents this season, remember this one key thing: the gift is about the recipient, not you. Don’t give something you want the person to have, give something they want to have. That’s the best way to show them that you truly put thought into their gift. It’s also the best way to ensure they’ll like what they got.
Editor’s Note: Due to several comments that included personal, identifying information, I’ve closed comments on this post. If you need help, please contact the resources below. I can’t personally help you get the support you need.
This morning I received an email from a single mother of three who is out-of-work and struggling to pay her bills. She wanted to know how she could sign up to receive help from an adopt-a-family program this Christmas.That email broke my heart. I did some research and sent her a few resources in her location. Unfortunately, I fear that there will be many more families receiving from an adopt-a-family program this year, and many fewer families supporting these worthy charities. If you can afford to help out less fortunate families this year, please do. Please see my previous post about Christmas charities to find out how my extended family supports needy families.
If you or someone you know needs help this Christmas, here’s how to get it.
Where to Find an Adopt-A-Family Program
Most adopt-a-family programs start requesting donations in early November, which means needy families must be found before then. If you’ll need help this holiday season, contact your local resources now to be added to the rolls. Start with these resources:
If you’re a member of a local church, ask the pastor if they have community support program. Many churches have programs that provide financial support to member families in need. At Christmas, they also include those families in their food drives and gift drives. The recipients are usually anonymous, so you don’t have to worry about embarrassment. However, if you’re active in your church, fellow congregants may be even more generous if they know they’re helping “one of their own.”
The Salvation Army operates Christmas programs around the country. If your local church doesn’t offer a program, contact the Salvation Army to find out how your local program works. Visit their site to find your local branch, then call and ask to speak to the person managing their Christmas charity drive.
Child and Family Services Department
Each county or state operates a Child and Family Services department. Often these departments provide lists of families in need to local charities. If your family is struggling, contact your county office to find out what sort of help is available to you. If they can’t help you directly, they can help you locate the office or program that can. To find your local county’s office, either look at the front of the white pages under “government,” or search for your county and “family services” in Google. Example: “los angeles family services.” If you’re struggling, they can also help you enroll in food and medical benefits programs.
Google an Adopt-a-Family Program
Finally, you can simple enter the name of your city or county next to the words “adopt a family” to find programs in your area. For example, “los angeles adopt a family.” Call several to find out if you qualify for their program.
With so many families seeking help this year, it may be more difficult to qualify, so keep trying until you get the help you need. And for those of you who are doing okay this year, please give to an adopt-a-family program if you can.