Yesterday the big story was the FDIC’s request for prepayment of three year’s worth of fees by member banks to shore up its dwindling reserves. Don’t panic. The FDIC is still secure. You don’t need to close your accounts or rush to the bank to withdraw your money.
The FDIC Has a Treasury Credit Line
According to NPR, the FDIC has a $100 billion credit line from Treasury that it can draw on if its own funds run out. Then it can ask for the Treasury Secretary for an extra $400 billion if necessary.
Banks Have Ample Reserves
According to NPR, some banks are upset about this request because they believe it could weaken already weak banks. However, there is also $800 billion in unused capital sitting in the Federal Reserve. A mere $45 billion of that will be used to shore up the FDIC. This helps the FDIC avoid a “bail-out” and ensures it has enough money to rescue the banks it expects to fail in the future.
No, They Won’t Warn You of Impending Failure
A friend of mine was very upset when Washington Mutual was seized without warning. She felt she should have been warned so she could take her money out. But warnings and fears are exactly what causes banks to collapse. By keeping the information secret until the bank is seized, the FDIC avoids the run on the bank that results in people losing their money. So far only one bank failure has resulted in a loss of money – IndyMac, and that was a result of a Congressman shooting his mouth off and scaring the public.
This Won’t Crush Banking
Yes, it may hurt already weak banks. Those banks probably would have failed anyway, and can request an exemption from this additional fee. Strong banks can afford to pay. They’ll grumble, but according to NPR they would rather pay than be seen asking for another bailout.
Keep Banking As Usual
Unless you have large amounts of money in a single financial institution, keep banking as usual. If you do have more than the amount of money covered by the FDIC in a single bank, go ahead and split that money up. You should do that anyway.
My husband and I own all seven seasons of the West Wing on DVD. We figured we’d start watching them from the beginning once the show was over. Yeah, that never happened. We’ve watched maybe 20 episodes, most of them after catching a repeat on TV and wanting to see the rest of that episode or the episode after it. Definitely not the best investment, although we didn’t pay for all of them. Some were gifts. If I had to do it over again, I wouldn’t buy them. Instead, I’d use one of these options to watch a TV show that I missed when it aired.
Watch It Online
Obviously this wasn’t an option when The West Wing started, but this is how I caught the first half of the first season of Heroes. I heard so much good talk that I watched one episode on the NBC website. One episode led to two and suddenly I’d watched all nine episodes on a tiny screen on the computer. Now Hulu makes it easy to watch almost any show online. Of course, Hulu episodes are usually only available before the DVD is released, but it’s handy for people who don’t have cable and don’t want to wait for a show to come out on DVD.
If you don’t mind paying a little bit for each episode, you can also download most shows from iTunes. I haven’t tried it, because it seems like $1.99 per episode would quickly add up to the price of a DVD set. Note: there’s another way to watch online, but I don’t support piracy.
If you have a Blockbuster or NetFlix subscription, you can simply wait for the DVDs to come out and watch the whole season at once. Or, you could go even cheaper and see if your library has them. Rent the season for free!
If your library doesn’t have it, see if you’ve got any friends who are fanatics and will loan you their copies. This works especially well for sci-fi shows like Battlestar Galactica and Stargate or serial shows with tight plots like Lost or 24. Their fans are hardcore and buy the DVDs to go back and check anything they might have missed.
Sell the DVDs You Already Own
We haven’t sold the West Wing seasons we have because my husband likes to keep his DVDs, even if he doesn’t watch them. He plans to watch them “someday.” Right after he reads all those unread books and burns all those unwatched videos to DVD. If we were to sell them, we’d use eBay or Half.com where we could net anywhere between $8 and $20 per set. It’s not a lot, but it’s not nothing. If you find that your DVDs won’t sell, include them in your next garage sale or donate them to the library.
Cut the Cable Bill
Now you can effectively cut the cable bill. When TV went digital, my best friend opted not to buy the converter for her tiny analog TV. Now she just rents DVDs or watches the shows online. By cancelling cable, you’ll save yourself time (no more commercials) and money ($60+ a month). You might even be able to break the TV habit completely.
Of course, there is a downside. You won’t get to see all those new shows that flame out after just a few episodes. You also won’t get to see the new hot show the very day it airs. But really, with the age of DVRs, it’s hard to know when anyone watches anything anymore.
This year Halloween falls on a Saturday, so you can be sure you’ll be invited to lots of parties. Fortunately, you can create a great costume for cheap. Check out my 10 Halloween costume ideas from last year, and then consider this new crop created for this year.
5 Cheap Halloween Costumes for Adults
Adult Halloween costumes are frequently topical in nature, especially during heated political times. This could definitely be called a heated political time.
Get a bedraggled suit from the thrift store, then stuff fake money in the pockets. Apply zombie makeup to your face. Now you’re a victim of the financial meltdown and also partaking in this year’s hottest monster trend.
Upside Down House
Get a pair of large cardboard boxes. Paint one to look like a house and cut the other into a triangle for the roof. Cut a hole in the top of the triangle large enough to fit your legs. Attach the roof to the house. Now for the fun part, cut out the bottom of the house box. Stretch two fabric straps over it so it will hang over your shoulder. Now you’re someone who is upside down in your house. Sometimes it feels good to laugh at misfortune, really.
The jokes about the Appalachian Trail and Mark Sanford continue. So, dress up as a hiker, but with a twist. Men, toss a red lace bra over your shoulder or place lipstick marks on your neck and cheek. Women, wear a red lace bra over your hiking outfit. Print a map of the Appalachian Trail and carry it in your pocket with the label showing (or just label a blank sheet of paper and stick it in your pocket.)
Celebrity Baby Bump
The tabloids are obsessed with the baby bump. Every celebrity, pregnant or not, has one. So, you should have one, too. Get a slinky ballgown at the thrift store and then stuff a beach ball or pillow inside it. Carry a trophy of some kind labeled “Oscar.” Now you’re a celebrity with a baby bump. When you enter, try to have friends yell and take your picture like you’re a real celebrity. Walk around claiming that you’re not pregnant and you don’t know what they’re talking about.
Dress up as a cat in form-fitting black clothes, black whisker makeup on your cheeks, and cat ears. Now print a LOLCat slogan on white paper and tape it to your chest. I saw this particularly amusing one that might work for Halloween.
5 Cheap Halloween Costumes for Kids
Kids are a little easier, and a little harder to find cheap costumes for. Some kids want the storebought costumes so they look perfect, but explain why homemade is better – they’ll be unique. No one will look exactly like them. All of these can be adapted for boys or girls.
You can never go wrong with a good pirate outfit, and it’s also the easiest costume to make. Baggy pants, a loose white shirt tied with a scarf at the waist, an eyepatch, a sword, and a pirate hat. Bonus points for giving the kid a pouch packed with gold coin chocolates. Make it a sheer bag so other people can see what’s inside.
I don’t know why, but hobo costumes were popular when I was a kid, and still are it seems. These are also easy to make. Just find a child’s suit two sizes too big at the thrift store and stuff it with newspaper to make the belly pop-out. Add a bowler hat, a stick with a handkerchief bundle tied to the end, and some dirt stains on the cheeks and you’re golden.
Yes, you could buy a Transformers costume, but that’s so boring. Instead, get some boxes and wrap them in tinfoil. Attach construction paper buttons and plastic bottle cap knobs. Cut holes in the tops and bottoms to fit your kid through, then glue the boxes together. Attach shoulder straps. If your kid wants a robot head, make sure you cut a large eye screen out.
Rather than go the obvious Harry Potter route, you can make a simple wizard costume if you have a bit of sewing skill. Sew a long tunic with large sleeves in a metallic fabric. Cut a small branch off a tree and whittle it down for a wand. Now roll a manila folder into a cone and staple it together. Cut the bottom edge into a smooth circle. Cover the whole thing in metallic fabric. Voila – easy wizard costume – claim it’s Dumbledore if they really want Harry Potter.
With the kids going crazy for Twilight, the vampire is also sure to make a strong showing this Halloween. You can go classic vamp in black clothes, black cape, and white face with red lips, or do the modern vamp – black clothes, glittery white skin, and sullen expression. The classic is probably easier for homeowners to figure out at the door when the kids come asking for candy.
So now you have twenty cheap Halloween costume ideas. Don’t let anyone tell you that you have to spend a lot of money to make Halloween fun!
Most people who don’t live in hurricane regions don’t think they need flood insurance. Then a plugged storm drain overflows into their home and they discover that homeowner’s insurance doesn’t cover it. Regardless of where you live, you should consider adding flood insurance to your policy.
Where to Get Flood Insurance
Flood insurance is provided by the National Flood Insurance Program. Although you buy it through your homeowner’s insurance agent, it is administered by the program. Visit Floodsmart.gov to find a local agent if your insurance agent doesn’t offer it. Renters and homeowners can both buy flood insurance, although renters would want to limit the policy to contents only.
What Is Considered a Flood
If your water heater breaks or your roof collapses in a rain storm, your homeowner’s insurance usually applies. However, if the flooding comes from the ground, for example, from a rainstorm washing down a hill, a plugged storm drain running over, or water gushing from a broken water main, then your homeowner’s policy typically won’t cover it. Flooding can happen anywhere, anytime, even if you don’t live in a high-risk flood zone.
Insurance rates vary depending on whether you live in a high-risk or moderate/low-risk zone. Your zone is determined by flood maps prepared by the government. You can also elect to cover the building only, the contents only, or both. Finally, the rate is affected by your chosen deductible and level of coverage. Policies range from $100 to $1500, with the average being $540 a year.
Different portions of the policy cover different portions of your home.
Building coverage includes anything permanently fixed to the home, including:
Structure and foundation
Refrigerator and contents
Plumbing, electrical, and HVAC systems
Contents coverage includes the things that aren’t bolted down:
Personal belongings and clothing
Free-standing freezer and contents
Washing machine and dryer
Preventable moisture or mold damage
Currency or precious metals
Loss of Use
Basements receive only very limited coverage unless you add a special rider.
Although you may never need flood insurance, you should consider it if you live on or near a hillside or live in a city that is strapped for cash (which is most of them.) You never know how old those underground pipes are or when they might break.
Yesterday while driving to work, I heard a report about some of the people who have lost their homes in the Georgia floods. They are renters and their rented homes are gone, along with their stuff. They went to shelters seeking money, but found only food and a place to sleep. The Red Cross can’t provide vouchers until it gets government money and the state is strapped. If these people had renter’s insurance, it would be a different story.
Why You Need Renter’s Insurance
For the most part, renter’s insurance covers the loss of your belongings due to fire and theft from your rented home or apartment. Your landlord’s homeowner’s insurance does not cover your possessions and typically won’t cover your loss of use if the place is lost if in a fire.
What Renter’s Insurance Includes
Renter’s insurance primarily covers your possessions. Most policies also provide some money for loss of use, which will help you find a new place to live if your apartment is damaged in a fire. Once again, don’t count on your landlord’s insurance.
My renter’s policy included a minimal amount for liability, in case a guest was injured in my apartment. This is included automatically, and you don’t need to worry too much about it because this is one area where your landlord’s insurance typically applies.
As with most insurance policies, you can add riders to your policy if you have expensive computers, jewelry, or collectibles.
Flood and Earthquake Insurance
In California, you’ll be offered the option of buying earthquake insurance in addition to renter’s insurance. Don’t do it. Earthquake insurance is designed to cover the structure and has a very high deductible. The cost of the insurance simply isn’t worth it.
Flood insurance is something to consider, especially if you live in a flood zone, like those renters in Georgia. If your apartment floods and your possessions are destroyed due to a water pipes or appliances in your apartment breaking, your original policy should cover you if it includes “discharge of water.”
Your landlord’s policy may also apply if the flooding is due to improper or negligent maintenance, but you’d have to sue him or her to get any money. In the meantime, you’ll have to cover your expenses out of pocket.
Cost of Renter’s Insurance
My $20,000 policy cost $240 a year, or about $20 a month. I had it deducted from my checking account every month, and after a few years the price actually went down due to customer discounts.
True, you may never need to use your renter’s insurance, but it’s a small price to pay for the peace of mind in case anything every goes wrong. If you’re floating down your street in a dinghy, you won’t regret your insurance for a minute, I promise.
I can hear the collective groan, but yes, it is time to start thinking about Christmas if you plan to make gifts. You don’t want to be a bleary-eyed crafting fiend the night before Christmas. Leave that to the elves. If you’re looking for something fun, affordable, and cool, here are six ideas for this Christmas.
Canvas Floor Mat
We have several doors in our house that are too low for rugs, but I want that extra buffer after people wipe their feet on the outdoor mat. My mom created these canvas floor mats that are as thin as a piece of fabric, but hold up well. To make them, buy pre-treated canvas rolls (usually treated with Gesso) at the art store, along with acrylic paint, brushes, and stencils. Cut the mat to size and then use carpet tape on the back to “hem” it. Sketch your design on paper, then paint the mat. If you’re not artistic, use the stencils. Let it dry, and then apply several coats of clear shellac. When it’s dry, it can be cleaned with a mop.
Visit a paper store to buy pre-folded white notecards. Next go to the craft store to buy stencils, watercolor paint, and brushes. Paint a pretty design on ten cards, then tie them and ten envelopes together with a ribbon. You could also use stamps rather than paint. Few people write notes these days, but most women still love pretty stationery.
My sister had trouble organizing her jewelry one year, so I made her a pretty pegboard. I simply bought a piece of white corkboard and stapled on a fabric frame. She mounted it to the wall and hooked her necklaces over clear pushpins. You could get fancier by covering the corkboard in attractive fabric in the recipient’s office or bedroom colors. You’ll only need a yard, so you should be able to find cheap scraps at the fabric store. Buy complementary ribbons and place diagonal strips over the canvas to form diamonds. Use upholstery pins to hold down the strips where they cross.
For the more sentimental people on your list, make teacup candles. You can find cheap teacups at the thrift store. They don’t have to match, but avoid cracked cups. Then visit a craft store for paraffin wax and dye dots or unscented candles, and wicks. If you’re using candles, cut it off the wax first. Now melt the wax in a double boiler. Pour it into the cup. Tie the wick around a pencil with a piece the depth of the cup extended from the center. Dip the wick into the teacup and rest the pencil on the edges to hold the wick in place while the wax cools.
This one is simple and fun for you, too. First, buy wine in a cool bottle (bottle color or shape, not the label.) Drink the wine. Soak the bottle until the label comes off and wash the inside and out thoroughly. Paint the bottle with a non-toxic paint suitable for glass. Stick an oil dispenser tap in the top and you’re set.
Buy cheap wooden frames at the craft store, and then hot blue buttons, beads, seashells, or other fun, funky items in an attractive design to the frame. Place a photo of yourself and the recipient inside. It’s a keepsake and a way to show you care.
Baked goods are always popular, but you pretty much have to make those a few days before you give them or make a lot of room in your freezer. Need more ideas? Check out my list of seven more traditional homemade Christmas gifts.
Last week, a farmer’s market opened next to the White House. It’s even called the White House Farmer’s Market. I believe this is what we’d call the peak of the farmer’s market trend. So what does this mean for you? If you haven’t already discovered the wonders of the farmer’s market, it’s time to go. Chances are there’s a market very near you.
Finding Local Markets
New markets open every week. To find your local market, Google your city + “farmer’s market.” If you can’t find anything, try searching for your county or visit Local Harvest to search their database. Depending on your region, the market may not be open year-round, but you can probably get in at least one or two weekends now to whet your appetite for the return of the market in the spring. Visit Local Harvest, the farmer’s market organization’s website, or call the number you find online to find out the opening and closing dates.
Shopping Local Markets
If this is your first visit, don’t bother making a list. Although I plan my menu and then go to the market to buy what I need (and buy a few things that aren’t on the list), I’ve been going long enough that I know what’s in season. Give yourself a few weeks to get a feel for the cycle of the seasons at your market. You may find that some things are available year-round, while others are only available for a month, or even just two weeks. If you see a favorite item that’s expensive at the grocery store and has a short season, snap it up when you see it. It may be another year before it’s back.
Saving Money at the Market
Now that farmer’s markets are trendy, not everything will be cheaper than the prices you’ll get in a grocery store. However, the food will be fresher, more plentiful, and better tasting. As an example, a head of organic lettuce from my farmer’s market is $1.50. A head of conventional lettuce from the grocery store is $1.69 for a head half the size. True, the organic head might have holes in a few of the outer leaves, but I still get way more for my money. At the peak of the season, my grocery store might drop their price to 99 cents, but I’m still only getting about half a head of lettuce for that price.
If you’re really determined to save money at the market, you should plan to shop late in the day. The pickings will be slimmer, but you’ll find bargains on some of what’s left. In this case, it’s best to buy what you can and then plan a menu around those items.
What to Bring
I often see people loaded down with plastic bags at my local farmer’s market, which makes it difficult for them to walk around. Before heading out to the market, gather a few items:
Tote bags – I bring two, one for each shoulder. One of them is a cooler bag from Trader Joe’s in case I buy meat or eggs.
Produce bags – If you’ve made produce bags, bring them with you. If you haven’t, rinse out the plastic produce bags you got on your last grocery store visit and bring those. Most of the stands at my markets have large white plastic bags, which can make it difficult to see the produce once it’s in the fridge. I only use their bags for lettuce and grapes, both of which tend to shrivel in my net produce bags.
Cash - Bring lots of cash. I usually bring $40, $60 if I have meat, bread, and eggs to buy. If you have smaller change than $20 bills, the farmers will appreciate it, but they always have change. Most food stands can’t take credit. Some markets do have “market bucks,” which are vouchers you buy at the info booth and spend like cash and you might be able to buy those with credit if they’re available.
Pen and paper – If it’s your first visit, bring pen and paper so you can note the prices to compare to your local grocery store.
Imagination – If you see something unusual, consider buying it and then figuring out how to use it. You can ask the farmer for ideas, too. They usually have a couple preferred ways to prepare a specific vegetable.
What Not to Bring
Don’t bring an attitude. If the market is popular, parking may be a problem. Certain stands will also be crowded. There will be strollers, small children wandering, and people with rolling baskets or bags. Just be patient and keep a smile on your face. Everyone there is nice.
Now that we’ve moved into our house, it’s time to update the budget yet again. I’m excluding our new home purchases because those come out of a separate fund from our other household expenses.
We cut back our spending for the first half of the year, partly because we spent all of our time looking for a house and were too busy to do anything else, and partly because we were saving as much as we could toward the house and its future contents. Now we’re spending like crazy to replace all the stuff we’ve been waiting to replace.
So, six months after I last did our budget, and now with a mortgage and property tax, here’s where we stand compared to six months ago:
Auto. Fuel has crept back up, so we’re spending more there. Plus, winter gas is more expensive than summer gas. My commute is roughly the same, but my husband’s commute is a quarter of his old commute, so we’ll have to see if this reduces our spending here. We’ll also soon be buying me a new car, so our service bill will go down, but we’ll be adding a car loan bill.
Clothing. Clothing has remained about the same, but my husband needs new suits, so we’ll be seeing a spike there. Most of the current clothing budget is dry cleaning for his clothes, too.
Dining. Our dining out budget shot way up. Part of that may be the eating out we did while moving, but my husband still buys lunch way more often than I would like.
Medical. Our medical expenses went way down thanks to my new insurance doubling up with my husband’s insurance.
Pet Care. This went up and will stay up. We haven’t yet decided whether our cats will be allowed outside, but they’ll now be getting annual outdoor shots and checkups in case they make a break for it.
Property Tax. This is a new one. It will take a good portion of our budget for a few years, but thanks to California’s wacky property tax system, it won’t rise at anywhere close to inflation. Instead it will increase a fixed percentage every year based on the purchase price. Note: that’s why California is always broke.
Student loans. These are lower again, too. Once again, it’s because of falling interest rates. We don’t expect this to last forever, but we’re enjoying it while it does.
Utilities. We haven’t yet received a water bill, so our utilities may go up even more, but we’re trying to rein in our energy use.
This budget is about $1500 more than our February budget, but the majority of that can be attributed to higher housing costs. Only a couple hundred are a result of our day-to-day spending. We still need to work on that, but I think we’re doing pretty well. Thanks to the tax savings, we’re still saving a good chunk of money every month.
I’m back with another blog round-up. This week we have three carnivals to share, so let’s get to it.
First, the Carnival of Personal Finance at Simply Forties. In addition to my post taking a look back at my financial year, I also recommend Divident Growth Investor’s six things he learned from the financial crisis.
Finally, the Carnival of Money Hackers #82 hosted by the Four Pillars. In addition to my post extolling the benefits of learning to sew, I also recommend CraftSew’s debate about whether crafting is frugal. Her answer: it depends on the type of craft.
NPR’s Marketplace has been running a series called “Small Town Hall” where they talk to kids about money and financial issues. After watching several clips, I have to say, these are some really smart kids and I started to wonder who taught them these things. Then I wondered who should be responsible for teaching our kids about money.
Parents and Money
Our first money lessons will come from our parents. Kids start to pick up financial information early on, and it sticks. Parents should be mindful of the ways they use and talk about money around their kids. I was fortunate to have financially wise parents who taught me good lessons.
My parents gave me an allowance fairly early. It was a small amount, and they gave me a piggy bank to keep it in. Once I got some saved, I could decide to spend it or take it to the bank. Being thrifty, I hoarded me money, but I do remember going to the store to buy a Peaches and Cream Barbie doll that I picked out myself.
My parents also helped me open my own savings account when I was five and it was so exciting. They took me to the bank where I talked to the woman at the big desk and signed my name on a piece of paper (my dad also signed.) I learned how money grows and what interest is. Of course, interest was 5% back then, so it was more of a lesson than it would be now, but it’s a good lesson nonetheless.
Money Discussions at the Table
Of course, the most important facet of my childhood financial education was our dinner table discussions about money. My dad explained financial concepts we may have heard in the news or at school, taught us about saving up for things, and discussed purchases with my mom. Money was never a taboo topic in our house. My parents were honest with us when money was tight, and when it wasn’t.
Schools and Money
Unfortunately, not every kid has financially savvy parents. In addition to the lessons I learned from my parents, I also took two classes in school that taught me about budgeting and economics. I didn’t take these until high school, however. If we want people to form good money habits, we may need to start teaching money lessons much earlier, like in elementary school.
How Money Works
I recall a lesson in first grade where I had to match up the coins and the bills and figure out how much each was worth. We had another lesson where we learned how to save towards a goal. These are both things that should be taught at home, and most kids will learn how to tabulate money, but they might not learn how to save for a goal if their parents aren’t financially savvy. The earlier we can drive this lesson home, the better off our whole society will be.
I took what was essentially a budgeting class in high school. The first was what they called a marriage class, but it had way more to do with money than it did with relationships. Each class member was assigned a spouse at random. We were then assigned jobs, salaries, debts, mortgages, and number of children/age. From that, we had to develop budgets. Throughout the quarter, the teacher also presented us with financial challenges and bonuses at random. For example, my “husband” was a butcher and I was a secretary. We were faced with a major medical expense on our small salaries. We were supposed to work out budgets together, but it seemed that most “couples” saw one partner take the lead because the other was clueless. For example my “husband” thought he should buy a Corvette with his butcher salary and would not be deterred until I took the checkbook away from him. I learned something, but I’m not sure my “husband” did.
Word of warning to anyone planning to introduce this class: do not let real-life couples be married in the class. At one point, a girl got so upset about a lesson that she grabbed her boyfriend/”husband”‘s backpack, threw it out the door, and ordered him not to come back.
Economics and Investing
After completing my marriage class, I took economics. In addition to lessons about the basics of supply and demand, we each received a packet with the materials for operating a business on paper. We learned about profit and loss, budgeting, sales, expenses, income, etc. We also had a section on investing. We had to pick one company, monitor its stock, and then present a financial report at the end of the quarter that also included information we’d gathered about the company’s goals and finances.
All of the above laid the groundwork for my current financial situation. Yes, I could have learned it as an adult, but it was much easier to learn it at home and in school. While I wish kids would learn this at home, schools need to provide some financial lessons as a buffer for those kids who don’t learn good lessons at home.