Last year I posted a top ten financial frights list, but that was more of a general frights list. Things that could happen to anyone. This year, I’m getting more personal, and limiting my list to 5 frights, because if I had 10 I’d be sleeping off about 30 Xanax, not writing this blog.

Stock Market Roller-Coaster
I’ve mostly recovered, but I spent the early part of the year avoiding my 401K statements. It was just too scary to think about the 50% I’d lost. That was pretty darn scary, as I’m sure you know, too.

Credit Score Obsession
When I was applying for mortgages, I spent a lot of time stressing about my credit score. How much would each application ding my score? What about my credit limit reduction? What if we charge a little extra this month? What if an error shows up on my credit report? It only got worse when our mortgage went to underwriting. We were approved, but that was a really, really stressful six months right there, and I have excellent scores!

Buying a House
This is exciting, and exhilarating, and thrilling, and all that good stuff. It’s also the most terrifying thing I have ever done. (Note: I haven’t been through childbirth yet.) One day, you’ve got a big wad ‘o money in your bank account and you’re feeling pretty good. The next day you’ve signed an inch of paper and most of that money is gone. Eek!!!

Furnishing a House
Once you’ve got the house, you need furniture to fill it. We’ve bought precisely two pieces of furniture for our new house: a sofabed for the guest room and a patio set. And the patio set was a gift, so we didn’t even buy it. Everything else will have to wait. In fact, we’d planned to buy a dining room set for Thanksgiving, but it’s sold out until after Thanksgiving, so that patio set will come inside for Turkey Day. I know it’s extravagant, but I’m just fancy like that. One reason we’ve delayed buying furniture: the upcoming surgery. Another reason: buying furniture is exhausting. What color, what size, how many pieces, where to get it, how much to spend. Frankly, it’s that last question that gets me. I vastly underestimated the cost. So, rather than $5,000, we’re looking at closer to $10,000. Can you hear me screaming?

There’s nothing that will blow your budget like an unplanned medical expense. Okay, we can sort of plan for the surgery. The doctors say that there’s no rush, but my husband is in pain. The pain will only get worse. We have insurance and disability coverage, but there goes our furniture-buying plans until this is all over. At least the cats will have a while longer to play in our big, empty living room. My car is less happy about this development. It was due for replacement by the end of the year. Everyone say goodbye to Aryn’s new car. Can you hear me crying?

It’s fair to say that it was a pretty scary financial year for everyone. My frights weren’t as scary as most people’s, but they were scary to me. How was your 2009? Share your financial frights in the comments!

I’ve been having an internal battle with my goal to be frugal and my goal to avoid excessive packaging. I made my own produce bags. I carry canvas bags to stores with me, and not just grocery stores. I don’t buy a lot of packaged food and try to keep the packaging for the rest of my products to a minimum. But it’s not always easy. I’m currently faced with an opportunity to save a lot of money, at the risk of buying more packaging. What to do? Where do I draw the line?

Buy Big or Buy Cheap
I usually buy my personal care items like saline solution at Costco where I can get two 16-ounce bottles for $15. This seemed like a great deal, and a way to save a little packaging, until I discovered Renu coupons. MoneySavingMom posted that I could buy 2 ounce bottles of Renu at Target for $1.54, or 54 cents after the coupon. In some cases, it could even be free.

That put me into a quandary. Do I save $8 by buying more of the small bottles, but that also use more packaging, or do I spend more to reduce the packaging? The travel distance is the same, so no money/planet savings there.

I decided to focus on it from a convenience and packaging standpoint. Yes, $8 is a lot, but I’d need 16 small bottles to make up the same quantity as those two large bottle. The bulk of the plastic is in the base and the nozzle. Those big bottles have a slightly larger nozzle than the 2-ounce bottles, but I’m still using at least 12 times more packaging just in the nozzle if I buy a lot of the small ones. Each small bottle is in a box, as are the two big bottles. But 16 small boxes is way more packaging than one large box. No matter how I calculate it, I can’t choose $8 over the planet.

Buy Packaged or Fresh Food
Some of the mega coupon moms manage to buy mostly fresh food, but I usually see a lot of packaged food in there. It’s not always unhealthy, but it is always packaged. Stores don’t generally offer coupons for apples. I can’t eat most of that packaged food anyway, but even if I have a coupon for a gluten-free item, I’m more likely to make it myself from scratch, again because of the packaging issue. I’m not perfect when it comes to buying packaged food, but I try to make choices with minimal packaging.

For example, rather than buying 4 jars of pasta sauce with a coupon, I buy two cans of crushed tomatoes and make my own sauce. Once I have a garden, I won’t even need to buy the crushed tomatoes. I can make it all fresh. Rather than buying 3 cans of beans with a coupon, I buy a pound of dried beans and make my own beans.

Yes, it costs me more to buy fresh, but it’s worth it to me.

Free Diapers or Cloth Diapers
I don’t have a baby yet, but when I do, I plan to use cloth diapers. I will have to spend a decent sum of money to get those diapers. If you have to pay for disposable diapers, then cloth is cheaper. However, hardcore CVSers know how to get free diapers. Even if I could get free disposables, I wouldn’t. We currently dispose of 27.4 billion diapers a year in the US alone. Those diapers do not biodegrade. Our landfills are filled with them. I can’t in good conscience add to that, even if they’re free.

We each have to make our own decisions about what’s more important. For some people, saving money is the most important factor. I respect that choice, and I understand that for some families it truly is the only choice. My husband and I have decided to make the other choice. What about you? What are you environmental conundrums? Where do you choose frugality over the environment and vice versa?

Last week, the news was abuzz about that Bank of America and Citigroup had followed through on their threats to impose new annual fees. Several other banks rushed to announce that they won’t be imposing fees. The very idea that one of my cards could slap me with a new fee just for having the card in my wallet and not using it really makes me stabby.

My Policy about Annual Fees
I do pay an annual fee for my miles credit card from American Express. I also receive above-average benefits and service from them. I knew about the fee and agreed to it when I signed up for the credit card. At the time, I also needed a credit card for Costco, and decided that accruing miles was a good trade-off, so I’d opt for the miles card with a fee instead of a fee-free card.

I refuse to pay an annual fee for the rest of my credit cards. They don’t provide me rewards or additional services of any kind. All of my husband’s cards except one, his oldest card, are fee-free. So far, they’ve always waived the fee when he calls to ask. If they refuse next time, we’ll cancel the card.

Why the Bank Thinks We Should Pay Fees
So far, we haven’t received a notice that we’ll be charged a fee, but we’re in the “high-risk” group. High-risk meaning that we rarely use the card and pay it off in full every month that we do use it. Apparently they’re not making enough money off people like me. Honestly, if I don’t use the card, how much money does it cost to keep me around?

I understand that credit card issuers are strapped, but they chose to extend too much credit, which allowed some customers to take on too much debt. The banks did this so they could collect over-limit fees and late fees and interest and a slew of other fees. The fact they’re getting busted for their greed is not my problem. I paid off my debt. I’m a responsible card user. They make billions of transaction fees. They don’t need an additional annual from me.

The Annual Fee is a Punishment
Basically, banks are punishing their responsible customers for being responsible. True, they don’t stand to lose much if I leave, but they do stand to lose a lot of money if hundreds of thousands of responsible customers leave due to annual fees. I really don’t think they’ve thought this through. Punishing responsible customers will only result in an increase in the percentage of irresponsible customers in their credit pool. How is that a good idea?

What I Plan to Do
If we do receive a notice or spot the charge on a bill, our first step will be to call and ask to have it waived. With one card, we’ll point out that we have multiple other accounts with the bank and have been good customers for over two decades. With the other, we’ll point out that we’ve been good customers and do spend some money with them.

If that doesn’t sway them, we’ll simply close the accounts. Yes, our credit scores may take a hit, but we already have so much credit that I’m not terribly concerned. The dip will be minimal and short-lived. We still use substantially less than 30% of our available credit, even without two of our credit cards.

I agree that the way Americans use credit has to change, but banks should be encouraging responsible credit card use, not looking for new ways charge us fees. Especially if customers accepted the card when there wasn’t an annual fee attached to it. They can’t just change the rules in the middle of the game. Well, technically they can, but it’s bad business. I’m pretty sure they’ll discover that soon enough. Then they’ll be the stabby ones.

Have you been slapped with a fee? What did you do about it?

The end of the year is just over two months away, and at least three weeks of that will be gobbled up by various holidays. So, take the time now to assess what you need to do to maximize your money by the end of the year.

Spend Down Your FSA
If you have a flexible spending account, any unused funds will vanish January 1, 2010. Remember, this is your money that was magically whisked from your paycheck before you received it. To avoid losing it, you need to use it up. So check the current balance and then start scheduling doctor visits, refilling prescriptions, and stockpiling supplies. Review your plan to make sure which appointments/purchases qualify.

Reassess Next Year’s Contributions
Take a look at your budget and expenses. Did you need to scramble to use up the FSA funds? Then perhaps contribute less next year. On the other hand, does anyone in your family have a major medical expense coming up? Maybe you should increase it. Look at it this way, you’ll spend this money either way. If you put it in an FSA, it will reduce your tax base and actually save you money.

Take Stock of Your 401K
If you stopped contributing during the crash, take a good look at your accounts and see if it’s time to get back in. This is also a good time to rebalance your portfolio. The economy has drastically changed – it might be time to get out of some sectors or into others. If you hold a variety of mutual funds, see if one has grown faster than the others and is now out of balance.

Estimate Your Taxes
If you’ve received a raise, run a small business in your spare time, had a major life change, or a major life issue, take a look at your tax bill. You can go to to use the withholding calculator. It’s not perfect, but it will give you an idea of whether you’ve under- or overwithheld. If it’s the former, change your W-2 to withhold additional funds and avoid a penalty. If you’re latter, decide whether you want to that money back now, and change your W-2 to withhold less, or plan ahead for how you’ll use that refund when it comes.

Maximize Your Tax Deductions
If you’re going to owe more than you thought, look into maximizing your tax deductions. For example:

  • See if you have any real stock losers that you can write off against capital gains or $3000 of ordinary income.
  • Are you just shy of the 7.5% of AGI minimum to deduct health costs from your taxes? Go see the doctor. If you have something big coming up next year that will put you over the limit, delay all other health costs until next year, too.
  • Are you debating whether to buy a car now or in January? Buy before the end of the year for that one-time new car tax deduction.
  • Make a few charitable donations or clean out your house and donate the decent stuff to a charitable thrift store.
  • Take advantage of Cash for Appliances. Upgrade your HVAC or water heater to also take advantage of the related tax credit (make sure it qualifies for both, first.)

I’ll admit that I sometimes get sucked into that crappy show “Rehab,” if only to wonder why people willingly pay $50-$150 for admission and $20 a drink to hang out at a pool. This week featured one of the waitresses serving a cabana of Brits, whom she assumed wouldn’t tip. She reminded them that they needed to tip her repeatedly, to the point of being obnoxious, and then chased them down when the tip wasn’t sufficient. That, combined with my experience of ordering blinds, got me thinking – what’s the price of good customer service?

Do Servers Always Deserve 20%?
Sure, I have to agree that a bunch of guys with a $3200 a bar bill should have tipped their waitress more than $200. At the same time, was it appropriate to chase them out and tell them they “owed her” $600? She may think she gave them great service, but they may think that constant hounding for a tip was irritating and she therefore deserved less. I know servers work hard, and I never tip less than 15%, but I still think 20% is only for excellent service. Crying and carrying on because she got less than she thought she deserved was childish. If the establishment requires servers to tip-out, then that’s something they should take up with the establishment, not their customers.

Are You Willing to Pay More for Good Customer Service?
In some respects, I would be willing to pay more for a product if I thought I would need regular customer service. For example, when buying a computer, I would choose a manufacturer known for good customer service over one known for bad customer service. The prices would probably be comparable, but I might pay $100 more for a better manufacturer because something is very likely to go wrong.

On the other hand, I wasn’t willing to pay several hundred dollars more to buy blinds from the independent blind salesman who stressed his reputation and business manner. Instead I opted for 3-Day Blinds, which is also known for producing a quality product, and whose sales rep was equally nice and responsive. If anything, she was better because she wasn’t obviously nonplussed when we didn’t place the order on the spot.

The independent seller offered to look at the second estimate and “get within the range,” but that still sounded like he’d cost more. I don’t expect to need a lot of ongoing customer service for window blinds, so I opted for the better deal from a well-known company.

Does the Length of Involvement Play a Role?
At what point is the price more important than good customer service? If the service is part of the experience then I’ll pay more for it. When I bought homeowners insurance, I opted to pay a little more for a policy from an insurance agent who represented one of the bigger insurance agencies than to add homeowner’s to my current low-cost auto policy. The biggest reason was the customer service – the insurance agent was very friendly and attentive while preparing my quotes. She also thanked me for calling her. My current insurance company sent me to a call center, even thought I’d called the office where we bought the insurance. When it comes to insurance, this is a long-term relationship. Paying a slightly higher premium for an agent I know will be there for me is worth it to me.

What about you? Are you willing to pay a premium for good service? Where do you draw the line?

It’s only been a few weeks since my last update on new homeownership, but somehow my math was really off last time. I don’t have a special time machine that allows me to zip through five weeks in a mere three. Still, a lot has happened in the last three weeks, including some important new lessons.

Contractors Sometimes Give Cash Discounts
We got our carport roof fixed three days before the first rain. However, we learned far more from this experience than that we might have fortuitous timing. We also learned about the cash discount, and about asking for little extras once the contractor is there.

As I mentioned in my last homeowner update, we discovered some odd moisture in one corner of our ceiling. Out came the AC guy. Nothing. Next they sent a plumber. Nothing. Since the roofer had offered to squeeze us in a couple days later, I asked him to take a look at it when he arrived. He said he couldn’t find anything in the attic, but there was a patch in the roof above that corner that might need sealing. He did it for free. Then while replacing the carport roof, he found rotting boards. I agreed to pay for the repairs.

The original quote was $1200. When he arrived, he said we could save $100 if we paid cash. The quote to fix the rotting boards was $150, bringing the total to $1350 by check/credit or $1250 cash. Yet, when we paid him, he only took $1200. So paying cash saved us $150!

Blinds Cost More than You’d Expect
After living in our house for a little over two months, we realized that we really, really need to order blinds. One of our cats will be saddened by the loss of her sunbeam, but our budget will thank us when it our power bill goes down. I didn’t really have a budget in mind, but for some reason I was thinking blinds would cost $600 or $700 for all our windows. WRONG!

The first quote was $2400 for eight blinds and two shutters. The second quote was $1800. I’d made appointments with an independent contractor and a major company, expecting the indie to be cheaper. WRONG again. The indie guy came down to $2200, but the major company was offering additional discounts that brought the price down even further. Even though we liked the independent guy, we can’t spend an extra $500 for good customer service.

Holy Power Bill, Batman
We finally got our first power bill, and it was way more than I was expecting. My husband wasn’t too shocked by the amount, but I immediately ran around the house hunting for any lights I could turn off. Then I realized that our power bill includes electricity and water (which I knew), but it also includes sewer and garbage. I didn’t realize how much the two of those would cost. I didn’t even know we had to pay for the sewer. Still, that high bill heightened my motivation to get blinds and install a ceiling fan in our family room before next summer.

Furniture Costs More, Too
I really don’t know what I was thinking when I budgeted $1500 for living room furniture and $1500 for family room furniture. After pre-shopping online, the living room is now up to $3000 and the family room is up to $2000. As I mentioned yesterday, we’ve also delayed those purchases into next year.

Yes, we could probably find really cheap furniture, but we’d rather pay for quality now than have to replace a cheap sofa in a few years. Frankly, I was just being an idiot when I came up with my ballpark figures. I spent $2200 for an oversized sofa and chair-and-a-half in 1998. I don’t know why I thought I’d be able to spend less for more furniture 12 years later.

Sometimes I can’t believe we’ve already owned our house for nearly three months. Other times, I wonder why we haven’t gotten more done! We’ve still got five rooms and two ceilings to paint, ducts to have cleaned, furniture to buy, and a million more things.

Yep, it’s another post about the emergency fund and budgeting for everything, this time from a very personal perspective. It’s also about the importance of preparing for the unexpected.

You Never Know When Something Will Go Wrong
It’s called an “emergency fund” for a reason. Most of the time, these emergencies are relatively minor stuff, like your transmission going out. It’s expensive, but you can handle it. Then there are the personal emergencies that send your budget into a tailspin.

Last week we learned that my husband needs surgery. It’s not life-threatening, but it’s better to do it now than wait until he’s old and has more risk factors. He’ll also likely be out of work for several weeks. That’s where the challenge comes in.

On the plus side, this isn’t emergency surgery, so we have time to make arrangements and reduce spending to prepare for the gap in income.

Always Leave a Buffer for Emergencies
After my husband and I bought our house, we had a nice sum left over that we planned to use for furniture. I don’t know if I had a psychic moment, but I didn’t want to use ALL the money for furniture and then replenish the fund later. My husband did, because we’re having guests at Thanksgiving and don’t currently have enough places to sit.

Then that money slowly started vanishing. First, water mains started blowing up all over Los Angeles, so we got flood insurance. Then we opted for earthquake insurance. Those were unplanned expenses. Then we realized we really should get some sort of window coverings. There goes another $1800. We’d managed to spend $3200 without buying a stick of furniture!

And then we got the news. Suddenly we were glad we hadn’t bought the furniture yet.

Know Your Disability Benefits
Our first step was figuring out how much income we’ll have while he’s out. In addition to my salary, he gets state disability. In California, that’s about 50% of your salary, but it typically takes four weeks to actually start receiving benefits. He bought a cheap disability policy through his trade organization, but unfortunately it doesn’t kick-in for 90 days after the start of the disability. His employer also has a disability policy, which we’re getting details about.

Note that disability benefits aren’t taxable, because they’re insurance, so you get the full amount, unlike unemployment benefits, which are taxable.

We realized that we’d have enough to cover our monthly expenses, especially since he’ll be spending less while he’s recovering, but we won’t be able to make extra purchases or save any money while he’s out.

Plan Your Major Purchases and Irregular Budget Items
As I’ve mentioned before, I built an extensive lists of upcoming house projects and major purchases running out through December, 2010. We’ve been parceling those out along their scheduled deadlines, shifting a little here or there. The furniture was on the list for this month and next month. It was already built into our cash flow chart, too.

Our next step was to sit down with our budget and start cutting. We immediately took out $4000 in furniture expenses. We kept the fridge expense, because 1. not getting a new fridge soon will create a new emergency, and 2. Cash for Appliances is coming and could save us a decent amount of money.

We’ll just push everything back by a few months, and then once he’s back to work and we’re saving again, we’ll be able to reprioritize our list.

We’re very fortunate that we were able to build up savings, and that we have low enough expenses that we won’t be in trouble with one of us out of work for several weeks, however we vowed to increase our emergency fund even more after all this is over. You never know when something will go wrong.

This year we’ve all vowed to cut back on Christmas. Stores have quietly changed their stock from super-expensive whirly-gigs to the more traditional gifts and decorations (with some tackiness remaining.) These same stores are expecting lower traffic, and more people are looking for ways to share the joy without opening their wallets.

Pare Down the Season of Giving
The best way to pare down the season of giving is to decide now that you’re going to do just that. Start telling friends that you’re scaling back. Make plans to skip gifts.

Of course, you should save some money for the necessary holiday expenses, so set aside a portion of your monthly budget for the next three months. It may not be a lot, but it’s something.

Win My Holiday Savings E-Book
This year, I’ve expanded my holiday savings E-Book to include even more posts grouped by topic. You can find all of these articles on the blog, but now they’re organized. This E-Book also includes a handy holiday budgeting worksheet that isn’t available on the blog. It costs only $5 for a 45-page PDF. Visit the official Holiday Savings E-Book page to learn more.

One lucky reader will win a free download of the E-Book.

How to Enter
Entering is simple. Post your favorite holiday tip in the comments below. I’ll use a random number generator to pick one winner and email the download code. The deadline to enter is October 30, 2009.

So, what are your tips for saving money during the holiday season while still enjoying merriment and light?

On Friday, I recommended that you avoid buying consumer goods to help a cause, and instead send a cash donation. If you’re able to itemize your tax returns, you get a nice bonus for your donation in the form of a tax deduction. You have to be careful that the organization you donate to actually qualifies for tax-exemption, but you can also deduct some non-cash donations and other surprising things. You might able to deduct far more than you expected!

Deducting Cash Donations
Most people know that cash donations to charities are tax-deductible, but not all groups qualify as charities, even if you think they do. In order for your donation to be deductible, the charity must be a 501(c) 3 organization. Political groups and lobbying groups do not qualify. For example, despite being an environmental organization, the Sierra Club is not tax-exempt because it’s a lobbying organization. You can’t deduct your donations to it. The Nature Conservancy is a tax-exempt organization that does not engage in extensive lobbying, therefore your donations are tax deductible. Charities are required to give you a receipt for your donation and it should say whether your deduction is deductible. Keep that receipt with your tax documents.

Deducting Non-Cash Donations
You can deduct the current value of donated items that are in good condition. Be reasonable in your estimates. The sweater you paid $100 for five years ago is probably only worth $10 now, not $100. If you’re donating high-value items, have them appraised first.

Deducting Things You Buy
Donations for which you receive something in return are not generally deductible. For example, buying raffle tickets for $1 each would not be deductible. You might be able to deduct a portion of a ticket to a $200 a plate charity dinner. Usually the organization will tell you the deductible amount on your dinner ticket, invitation, or receipt.

You can deduct the cost of supplies you donate to a charity or use as part of your volunteer work. For example, a ream of paper and an ink cartridge for printing flyers. You can also deduct the cost of a volunteer uniform if it’s not something you can wear for other uses and it’s required in order to volunteer.

Deducting Transportation Expenses.
You can deduct the cost of transportation and lodging while volunteering, unless you volunteer as part of a vacation, you can’t deduct the cost of your seven-day trip to Hawaii if you only volunteer for three hours. You could deduct the cost of the trip if you volunteered all seven days for a significant portion of the day.

If you drive to a volunteer location, you can deduct the cost of gas and oil. If you don’t save the receipt, you can calculate it at 14 cents per mile.

Non-Deductible Items
Many people who volunteer want to deduct the value of their time, but you can’t do that. You also can’t deduct your personal expenses, such as meals and babysitters, incurred while volunteering.

Deduction Limit
There are some exceptions, but in most cases you can’t deduct more than 50% of adjusted gross income. Most of us can’t afford to give that much. If you can afford to donate half your income, it might be time to talk to a financial adviser about how best to manage your donations.

Obviously, you should donate to a cause or support a charity because it’s important to you, not because you get a deduction. The deduction is just a nice bonus. But if you do qualify for a deduction, don’t skip that bonus.

This week, we have three carnivals to share, so I’ll dive right in.

First, the Carnival of Personal Finance #226 hosted by All Financial Matters. In addition to my post about calculating the benefits of double health insurance, I also recommend Provident Planning’s article about permanent life insurance. I didn’t even know such a thing existed.

Second, the Festival of Frugality #199 hosted by Yes, I Am Cheap. In addition to my stabby post about gifts not equaling love, I also recommend Christian Money Mountain’s post asking how material you are.

Finally, Money Hacks Carnival #86 hosted by CreditCardOffers IQ. In addition to my post about things you should buy at the dollar store, I also recommend 10 tips for going green on the cheap.

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