As I mentioned last year, Good Morning America recommended that your holiday budget be three times your daily income. Divide your annual salary by 52, then by 5, then multiply by 3. If you make $52,000 a year, you can spend $600 this holiday season.

Is Three Times Your Daily Salary Too Much?
However, with cutbacks and job losses, it seems that more people plan to spend much less than that. I’ve totaled my expected expenses, and including gifts, food for various parties, and holiday travel, we’re spending about $500. We could spend far more if we used the GMA budget, but that seems like way too much, especially since we don’t have kids. I recommended a more reasonable Christmas budgeting method last month.

What Is a Reasonable Budget?
Because it’s just the two of us and our gift list is pretty short, $500 seems reasonable. We’d probably push it closer to $1,000 if we had children or space for a Christmas tree. I could also see that budget climbing fairly easily if we had to fly, which we don’t.

When it comes to the holidays, you don’t want to seem cheap, but you also don’t want to face massive credit card bills in January. It can be difficult to balance the two, but doing just that is necessary to keep your annual budget on track.

Announcing My New Holiday E-Book
I’ve just published my first e-book, which is a compilation of 22 posts about saving money at Christmas. It includes a detailed budget worksheet that you won’t find on this blog. Use that to determine your true holiday budget beyond the big things like gifts and travel.

The e-book costs just $6. In honor of its launch, I’ll be giving away one copy to a lucky reader. To enter, simply post a comment below with a valid email address (only I will see that), or email me at Aryn (at) SoundMoneyMatters (dot) com. Entries close Friday at midnight Pacific time, then I’ll send the winner a free copy.

This week we have another three personal finance carnivals in the round-up. We also have some interesting financial news: Americans have stopped shopping. Wow. Is this the start of a brave new world? While you ponder that, here are my picks from this week’s round-up, complete with two editor’s picks for yours truly!

First, the Carnival of Personal Finance #178 hosted by the Digerati Life. SVB made my post about credit card debt forgiveness and editor’s pick. Thanks SVB! I also recommend Stumble Forward’s analysis of spreading the wealth around. My post was a little controversial, and so is this one.

Next, Money Hacks Carnival #38 hosted by Taking Charge. My post about how to car buying websites was an editor’s pick! I also recommend Money to Spare’s analysis of current gas prices and where they’re headed.

Finally, the Festival of Frugality hosted by On a Quest to Be Debt Free. In addition to my car buying tips, I recommend Main Street Meltdown’s post about how much the dollar store really saves you.

When I was a kid, we didn’t have DVDs, let alone DVD players in cars. I’m sure that DVDs are a good way for kids to pass time in the car, but I think a more interactive approach would be better. (Note, I don’t have kids. I reserve the right to change my mind when I’ve got two wee ones kicking the back of my seat for six hours.) If you’ve got a long drive and kids, here are a few fun and cheap travel games for you and your family.

Magnetic Travel Games for Kids
When I was a kid, magnetic travel games were very popular. We had a little set with checkers, Chinese checkers, chess, and a few others. We also had a miniature Connect 4. We set them up on the fold-down armrest on the back seat, that also acted as an anti-conflict device. Before you hit the road, visit a local toy store to browse for a magnetic car game set.

Trivia Cards
We also had a set of Jr. Trivial Pursuit. We didn’t bring the whole game, just a box of cards we used to quiz each other and the pie pieces to keep score. We made a rule that you got a pie wedge when you answered five correct questions. If you have Trivial Pursuit Family or Disney, take the cards on the road with you.

Classic Car Games
You can play classic car games without the violent slapping when Bugs are spotted. Instead, turn them into quests to see how many state license plates you see, or count the number of Priuses on the road. The first kid to reach 20 gets a cookie.

20 Questions is another easy one to play, and you can incorporate things you can see from the road.

Pipe Cleaners and String Games
Pipe cleaners and string are among the cheapest travel games out there, and they keep little hands from sneaking across the seat to poke a sibling. Visit a craft store to buy a pack of pipe cleaners in a variety of colors. They can be bent and formed into all kinds of fun shapes like hats, eyeglasses, and other accessories. String games usually require two people, so buy a book of string games and colorful yarn, then let your kids figure out how each set of instructions works.

Mad Libs
Who doesn’t love Mad Libs? I loved making up sentences when I was a kid. The wackier it sounded the better. Mad Libs are still available at any grocery store or drug store. Check the magazine aisle for these and other fill-in-the-blank travel games and books.

Coloring Books
Paint by number and watercolor books are tough, but crayons are still safe for the backseat. Give each kid a coloring book of their favorite characters. If you have pieces of cardboard, give one to each kid to place under the book so it holds up better. My sister and I each had a lap desk – a piece of enameled plywood attached to a cushion.

If one of you can read without getting sick, read aloud to everyone in the family. It will help the pass time quickly, and reinforce the importance of reading. Take a family trip to the library to find the right book for everyone.

My family made several successful six to eight hour drives when I was a kid. Sure, there was some hitting and fighting, but these travel games kept it to a minimum. At the very least, we all made it to our destination without injury and without Mom screaming at us to behave. That alone is a worthy accomplishment.

I came really close to banging my fist on the steering wheel when it became very clear that the government intends to bailout General Motors. What? How is this a good plan? And why is it my responsibility to rescue them? So, today brings us another post in the That Makes Me Stabby series.

Why General Motors Wants a Bailout
Basically, GM wants a bailout because they failed to run their business properly. Unlike Toyota, which operates efficient factories in non-union towns and plans for the next 25 years, GM was content to stick with high-cost union towns and plan for the next 25 minutes. Rather than develop a wide range of cars, they chose to put most of their eggs in the truck/SUV basket. Now they can’t sell those cars to save their lives and they have nothing else to offer.

Toyota, in the meantime, cut its losses when its Tacoma truck failed and opted to build more small cars instead. GM wants us to give them money so they can rebuild their line, which they’ve previously failed to do.

There’s also the problem of reputation. Again, I look to Toyota, which focused on building high-quality cars and developed a reputation for durability. GM cut corners and built crappy cars no one wanted. They apparently make better cars now, but they can’t shake the impression that their cars are unreliable.

At this point, GM is so deep in the hole that their only hope is to get bailed out so they can merge with Chrysler.

Why Is This a Bad Idea?
Robert Reich said it best in his Marketplace piece this morning, but I’ll sum up his arguments, which I totally agree with.

1. We already have a system in place to deal with this and it’s called bankruptcy. Companies with bad business models go bankrupt. Their creditors get in line, debts are negotiated, and the company reorganizes into a leaner, better-managed company. It doesn’t typically shut down, and I don’t expect that GM would vanish if it went into bankruptcy. Several major airlines have emerged from bankruptcy and continue to fly years later. Yes, jobs would be lost, but they’re going to be lost anyway.

2. Bailout proponents argue that bailout out GM will save jobs. However, GM wants the money so it can merge with Chrysler. What happens when two companies merge? Streamlining, which is code for lay-offs. Car lines will have to be cut, duplicate admin functions will be cut, etc. Why does anyone think this is a good idea?

Furthermore, the argument that we have to save the “Big 3″ doesn’t hold water if the bailout will ensure that two of them merge, resulting in the “Big 2.”

3. If we keep bailout out these companies, what motivation do they have to become more nimble in responding to shifts in the economy? Again, I look to Toyota. How is that they, along with Honda and other Japanese auto manufacturers, saw demand shifting, but the Big 3 didn’t? Why should we reward an inability to plan for the future and respond to market realities?

Out of all the bailout plans, this one might have me the maddest. If GM didn’t want to fail, they should have made better cars. It’s not our responsibility to bail them out because they chose not to. It was their responsibility to earn my money. They didn’t, so they didn’t get it, and I don’t want them to have it now, either.

What do you think of the GM bailout plan? What’s making you stabby this week?

When it comes to Thanksgiving centerpieces, it’s best to go simple. You could spend a fortune on a giant cornucopia overflowing with gourds, nuts, and flowers, or you could keep it simple with a small vase, some fall leaves, and candles. Here are a few of my favorite ideas for Thanksgiving table decorations.

The Simplicity of Fall Leaves
This is probably the easiest to put together. Come Thanksgiving morning, go outside in search of well-formed colored leaves. I find that they look the best if they’re still on the tree (and have a bit of moisture), rather than completely dry and crumbly. Just arrange them around a couple of silver candlesticks on the center of the table. If you’ve got a few gourds or mini-pumpkins, add those to the mix, too. It’s simple, attractive, and leaves lots of room for food.

Delicate Floral Centerpieces
Some people don’t feel that a table is complete unless there are flowers on it. If you’re not one for arranging your own flowers and don’t like the look of grocery store arrangements, check out some of the lower-priced Thanksgiving flowers at FTD. Some of them are even on sale.

An Array of Candles
If you like to keep the lights low while everyone is gorging on carbs, skip the live decorations and instead dot the table with votive candles. Place a pair or trio of tall tapers in the center for drama. Just make sure you leave room between the votives for food. If you have silver serving dishes you’re not using for food, place short pillar candles in sugar bowls and other small dishes for an eclectic arrangement.

Acorns and Gourds
Acorns, gourds, and whole walnuts scream Thanksgiving. Create a table-long “centerpiece” by scattering a few gourds and nuts down an orange or brown runner. Again, make room between the nuts and gourds for platters of food.

Don’t Go Overboard with Thanksgiving Centerpieces
The most important thing is to not go overboard with your centerpieces and decorations. Don’t be like Sandra Lee and create a Thanksgiving “tablescape.” You don’t need leaf-shaped place card holders, oversized topiaries, harvest wine glasses, and a small pumpkin favor for everyone. You don’t even need a full set of matching dishes and silverware. Feel free to mix and match, because no one will see those plates once they’re piled high with food. Instead, focus on serving good food in a warm atmosphere.

If you’re really stumped for your table decorations, then don’t use any at all. There’s no law that says you need a Thanksgiving centerpiece. I doubt I’ll be able to fit one on my tiny table, so I’ll simply set out the silver candlesticks we received for our wedding, use our crystal for the first time, and serve up a delicious dinner. If my husband doesn’t like it, he can go cook his own turkey.

As I mentioned previously, my sister and I used to bake holiday gifts for our relatives. Not only are they cheap gifts, but it’s fun, quality time with your kids. We made a wide variety of cookies and fudge, but a few stood out as my favorites to bake. Once you choose your recipes, set aside a weekend to bake. Plan to give about 20 cookies or pieces of fudge for each gift.

Holiday Recipes for Kids
Fudge seems difficult to make, but it actually couldn’t be easier to make. Watch the supermarket circulars for supersales on the ingredients.

Here are some tasty recipes to try with the kids:
No Fail Fudge
Best Ever Fudge
Million Dollar Fudge
Rocky Road Fudge
Chocolate Fudge

Thumbprint Cookies
Thumbprint cookies were my absolute favorite thing to bake when I was a kid. There’s nothing better than having permission to poke food with your finger. Try these recipes:

Raspberry Thumbprint Cookies
Thumbprint Cookies
Pecan Thumbprints
Chocolate Thumbprints

Stained Glass Cookies
Stained glass cookies are another fun option for kids. Like fudge, they look fancy and difficult, but are actually very easy to make. Try these recipes:

Stained Glass Cookies
Stained Glass Cookies
Stained Glass Cookies

I don’t know why, but Snickerdoodles feel Christmassy to me. They’re a classic cookie that don’t get made as often as sugar or chocolate chip cookies. Making these at the holidays is a special treat for your friends and family.


Candy Cane Cookies
When packing your holiday cookie tin or basket, tuck in a few of these candy cane cookies to complete the festive look. Again, kids will love making these simple cookies.

Candy Cane Cookies
Candy Cane Cookies
Candy Cane Cookies

Peanut Butter Cup Cookies
These are like the thumbprint cookies, but with mini peanut butter cups in place of jam or Hershey’s kisses. Here are some recipes:

Peanut Butter Cup Cookies
Peanut Butter Cup Cookies

Packing Your Holiday Cookies
Once you’ve got everything baked, it’s time to pack them. We had two methods when I was young: cheap mugs and holiday tins. If you have craft store coupon, wander the aisles and see what you can find. You’ll also need tissue paper and thick plastic wrap.

1. Start by lining the mug or tin with the tissue paper.
2. Now add a layer of plastic wrap large enough to cover the tops of the cookies once it’s filled.
3. Fill the tin with cookies or fudge. If using cookies, use several different kinds. With fudge, it’s best to fill the whole thing.
4. Fold the plastic wrap over the opt and attach the lid. If you’re using a mug, twist the plastic up and tie a nice ribbon around it.
5. Print a nice card to attach to the mug or tin with a phrase like “Happy Holiday from our family to yours” or “Happy Holiday from the Smith Family to yours.”

If you have a lot to bake, it can take a whole weekend to assemble everything. Crank up the holiday tunes, pour ample eggnog, and let the kids like as many spoons as they want. When they’re done, you’ll all have a fun family memory and cheap gifts for friends and family members.

When Joe the Plumber confronted Obama about small business taxes, my first thought was that this guy doesn’t know enough about business income and expenses to run a small business properly. If this business makes more than $250,000 a year in profits and has employees, then it shouldn’t be set up as a sole proprietorship. At minimum, it should be a limited liability company. So for all of you who are concerned about small business taxes under Obama, here my quick guide to setting up an LLC.

How to Set Up an LLC
There are two basic ways to set up an LLC: 1. Hire a lawyer, and 2. Use an LLC filing service. Setting up an LLC is easier and cheaper with a filing service because all you have to do is fill out an online form and the service does the rest of the work.

Of course, if you have a large business or a complicated structure, then you should hire a lawyer because they can advise you about which business structure is best for you. An LLC is usually appropriate for a small business, but there are occasions where a corporation is a better option for you and your employees.

The Benefits of an LLC
An LLC offers two primary benefits: tax flexibility and a legal shield. If you have a business with employees or do business with the public, then a legal shield is vital. The tax benefits become important once your business starts to do well and you have to report large profits as personal income.

Tax Flexibility
With an LLC, you can opt to have your company taxed as a corporation or choose pass-through taxation. With pass-through taxation, the profits (after expenses and deductions) is taxed as self-employment income on schedule C. If you have a large business with several employees, then you may want to elect to be taxed as a corporation. In this case, you would receive a wage and dividends and would be personally taxed on the income from those sources, however the corporation is also subject to a separate corporate tax. On the other hand, corporations can deduct more expenses, which could reduce the profits to a taxable amount lower than it would be as personal income. Consult your tax preparer or accountant before choosing your designation to determine which is best for your business

Benefits are often a deciding factor in this issue. If you operate as an LLC, then health benefits, parking, and other benefits for you and your employees are taxed as income. Benefits you and your employees receive from a corporation are not taxed.

Legal Shield
A legal shield is even more important than the tax flexibility an LLC offers. LLC means “limited liability company,” and it does exactly that. When you operate under this structure, your personal assets are protected from lawsuits against your company or creditors if your company goes bankrupt. In our litigious society, that’s a very important protection. Many small business owners have lost their homes and businesses to a lawsuit because they were operating as sole proprietorships.

When setting up an LLC, consult with an accountant to ensure that your personal and business records and accounts are kept separate. If the funds or assets are mingled, a lawsuit may be able to pierce the legal shield.

Most small businesses don’t earn more than $250,000 or have employees for whom benefits are an issue, but you should strongly consider a more formal business structure as your business grows. Even if Obama doesn’t raise taxes on incomes over $250,000, the benefits of protecting your business and assets far outweigh the costs of setting up the LLC.

The election is over and now we can return to normal life. Three personal finance blog carnivals have already done just that. Here are my top picks from this week’s carnivals.

The Festival of Frugality #150 was hosted by Bargain Briana. In addition to my post regaling you with ten financial frights, I recommend Credit Withdrawal’s post about the day he had to explain the difference between being poor and reducing spending.

The Carnival of Personal Finance #177 was hosted by The Sun’s Financial Diary. In addition to my post about the ghosts of financial decisions past, I also recommend The Financial Blogger’s theory that education is at the root of our financial crisis. You have to learn to make good finanical decisions somewhere!

The Money Hacks Carnival #37 was hosted by Living Almost Large. In addition to my post about real estate websites, I also recommendWhere Are You Now’s review of the new online money management tool Rudder.

Once you’ve determined your new car criteria, it’s time to visit the new car buying websites. I’ve tested several and found a few that I rely on for the most reliable information as well as the simplest interfaces.

Gas Mileage Ratings
The government fuel economy site is simply the best. You can compare several cars, and you can input your local gas prices and annual mileage to get a true estimate of the actual cost to drive the car. If you want a simpler comparison, use Cost2Drive to calculate the typical cost from place to place.

Vehicle Reviews and Average Prices
I primarily use Edmunds and Vehix to do my new car research. I default to Edmunds because I find it easier to use. Vehix tends to want to push you to a dealer site, while Edmunds puts the research at the top. I haven’t tested Consumer Reports because you have to pay to access their reviews. I’m still in the free research stage. I especially like the Edmunds True Market Value, which tells you what people really paid in your area.

Auto Trims, Colors, and Options
When it comes to new cars, the manufacturer’s site is the best place to go to look at trims, colors, and options. Most of them will let you select a model and then customize it. Some will also estimate a price for a car with those options, but your actual price will vary depending on our location and negotiation skills. You could spend hours playing around on these sites.

Hard-Nosed Negotiating
The site isn’t pretty, but Car Buying Tips tells you exactly how to compile price reports and negotiate with dealers. If you’re willing to haggle and haggle hard, visit this site to learn the method from the master.

Discount Programs
Several organizations offer discount purchase programs. They’re worth checking out if you’re a member. Costco offers members a no-haggle auto discount from participating dealers. I know someone who bought a car through the program and was very pleased. AAA also offers a car buying program through its local state branches.

Vehicle Pricing
Once you’re ready to buy, use a site like CarsDirect, Yahoo Autos, Edmunds, or Vehix to collect dealer offers. Since they will be receiving your email address and probably your phone number, use a junk account and only your home phone (not your office or cell phone). Review the various offers, then take them with you wherever you shop to see if they will match or beat the offer.

Auto Loans
If you belong to a credit union, start by checking their auto loan rates. If you have a good credit score, you may qualify for a better offer from the dealership, but it’s best to start with an offer from a local credit union or bank to give you a bargaining chip. Costco and AAA also offer auto-financing programs if you don’t belong to a credit union.

I’ve never negotiated for a new car on my own. My last car was purchased with my dad through a good friend of the family. I’m nervous this time, but I’m taking my time to collect a lot of information before making my choice and I’ll use as many programs as I need to in order to get a good deal.

Once I buy a house, I will also be in the market for a new car. My little Toyota has held up well over the last 12 years, but it’s getting to be time to buy a car built in the current century and with nice features like an MP3 player jack or remote locks. I’ve sort of been looking for a few years, which helped me establish my criteria. Here are my tips for determining your criteria before you visit a dealership.

Figure Out What You Need in a Car
The first thing I did was figure out what I wanted in a car. I started by thinking about the things that annoyed me about my current car. For example, the tape deck. I’d like an MP3 jack in my new car so I could plug-in my iPod during my commute. After trying to force a friend’s stroller into my trunk, I’d also like something with more cargo room. So that means I’m looking at a recent car and probably a hatchback. I also expect that gas prices will go up again eventually, so I’d like decent gas mileage and a lower carbon footprint.

Figure Out What You Don’t Need in a Car
Even more important to the car buying process is figuring out what you don’t need so that a dealer can’t sell you on a feature you’ll never use. I mostly drive on city streets and Los Angeles freeways, so I don’t need four-wheel drive. I also don’t need a seat-heater, a multi-CD changer, a major stereo, or the ability to go from 0 to 60 in a second. The ability to go from 0 to 60 in the time it takes me to climb an on-ramp would be nice. I’m also not interested in the fancy stuff like a moon roof or dual climate control. Although I’d like more cargo room, I don’t need to be able to tote around a soccer team.

Look at Other Cars on the Road
After determining that I either wanted a larger sedan or a hatchback, I started to look at other cars on the road and in parking lots. I peeked in the windows at the backseats, peered at the trunks, and checked out the dashboards. I noticed body styling, too. I don’t want something boxy. That narrowed my choices somewhat.

Settle on a Budget
Before you start eyeing an Aston Martin, sit down and figure out what you can really afford to pay every month. I don’t recommend leasing. Use an auto loan calculator to determine the expected payment for a range of prices. Now look at your budget. How much can you reasonably spare every month without reducing your savings goals? Remember that you’ll also be paying higher insurance costs when you get a new car.

Find the Cars the Suit Your Needs Online
Tomorrow I’ll review several car buying websites. For now, I recommend that you check a new car research site called It allows you to select your criteria and price range and then shows you cars the fit the bill. It’s a very cool little tool. If gas mileage is a big concern, visit to compare gas mileage ratings for various cars with your current car. You may be quite surprised by the result.

Take Test Drives
Once you’ve narrowed the options, head to the dealership to take a few test drives. Don’t fall for any offers to buy now, just drive a few cars and then leave. You need time to let that test drive sink in.

Above all, don’t be the person who goes to the dealership with a vague idea and drives home with a new car. Most people who do that are back buying a new car a few years later. It’s better to take your time to figure out what you want, and then head to the dealership.

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