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“… Making A List and Checking It Twice …”

October 24, 2011 By

Whether you celebrate Christmas, Hanukah, Kwanza, or another holiday, the holidays are a time of gift giving.  For some, the temptation is there to spend more than the budget really permits.  Here are some tips for managing gift giving expenses.

  • Make a list of those for whom you intend to buy gifts and set a dollar limit for each one.  The price of the gift is never indicative of your love or respect for the recipient.
  • Shop early … don’t wait until the last minute to go shopping.  Shopping early and often gives you the opportunity to comparison shop and make certain that you are obtaining the best price on the product you’re purchasing.  It also affords you the luxury of not being pressured into buying “what you can get” rather than “what you want to get”.
  • Large, extended, families may decide, as a group, to draw names and only buy a gift for a limited number of people (perhaps only one person) rather than for every family member.  My friend Brenda tells me that her family elected to do this; and, that it allows each family member to give a special gift to each person on their exchange list rather than having to give small inexpensive gifts in order to stay within budget.

As we move into the month of November, Santa is not the only one who should be making a list and checking it twice.  A little bit of planning now will empower you to enjoy the spirit of holiday giving without fearing the costs.

Filed Under: Holiday Savings, Money Management, Personal Finances, Saving Money

It’s Beginning to Look a Lot Like Christmas (Already?)

October 18, 2011 By

Anyone who knows me knows how much I, and my family, love the Christmas Season; and, how much we enjoy decorating and entertaining.  Typically, we can’t wait to get started.  But, I must confess that I was truly shocked this past weekend when I went into my favorite warehouse store and found an entire section of the store offering a HUGE array of holiday decorations for sale.  I mean, come on!  The ghosts and goblins of Halloween haven’t even begun to fly about the neighborhoods yet!!  Obviously, neighborhood merchants and national retailers are already implementing plans to help us overspend for the holidays … which got me to thinking.  How can we save money and still enjoy the holidays and make them memorable for our loved ones?

Ironically, the first thing that I thought of was the year my wife and I became engaged and decided that, since we would be paying for our own wedding, we needed to find ways to save money that could otherwise be spent.  With Christmas fast approaching, we decided that this was as good a time as any to put our savings plan into action.  We decided that, rather than spend large amounts of money on gifts for friends, we’d make gifts instead.

One of the gifts was a wreath made with a metal wreath ring and macramé yarn.  The yarn was cut into pieces of approximately 3”.  Each piece was then formed into a “U”, placed under one of the ring wires, and the two ends were fed through the closed end of the “u”.  When each ring of wire on the wreath was full of yarn, a wire brush was used to brush out the yarn creating a fluffy, cloth wreath that could then be decorated with inexpensive artificial poinsettia blooms, pine cones, bells, and red ribbons.

When these gifts were given, our friends received a very special and unique gift.  While these wreaths did not cost a lot of money, each was special.  Each was made with its intended recipient in mind and decorated in a way that we felt was most appropriate and would be most appreciated by the recipient.

At the mid-point of October, some will say that it’s far too early to think about Christmas gifts.  But, I would suggest that now is the time to begin planning the gift giving and deciding how we can make these holidays special for those we love without breaking the family budget.

In the coming days and weeks, I’ll share some ideas and would welcome suggestions that each of you can provide.  Together, we can enjoy the season without having to fear the bills that come in January.

Filed Under: Holiday Savings, Personal Finances, Saving Money

Charge Cards vs Credit Cards

October 14, 2011 By

While working with a client recently, I noted that she was using the terms credit card and charge card interchangeably.  When I pointed this out to her, she asked if there was actually any difference between the two.  In fact, there is a significant difference.  To fully understand the difference, it is necessary to review a little bit of history.

Prior to the advent of either type of card, consumers generally could not buy merchandise until they had accumulated sufficient cash to pay the price in full.  There simply was no way to obtain the goods or services without the cash.

In the 1920’s, some merchants began offering “buy now and pay later” plans.  These plans allowed consumers to buy that specific merchant’s products or services and make payments over time.  This type of account is representative of charge cards.  They are only accepted by the specific merchant or firm that issued the line of credit.

In the very early 1950’s, a program was introduced that allowed people to purchase meals at any participating restaurant regardless of brand or affiliation.  At the end of the month, the balance on the account had to be paid in full.  Although it was not possible to carry a balance from month to month, this program was an early type of a credit card.

The first credit cards that permitted account holders to carry balances from one month to the next were introduced in the late 1950’s; and, the marketing and use of these accounts became very widespread in the 1970’s.  Today, consumers in the United States are carrying in excess of $790 billion in balances on revolving credit cards!  1

As we consumers move forward in our economic lives, debating how to pay for the goods and services that we want or need, it will be important to keep these differences in mind as they will impact how (and how much) we pay for our purchases.

1 Federal Reserve Statistical Release dated October 7, 2011; data is through August 2011.

Filed Under: Banking, Checking Accounts, Money Management, Personal Finances, Saving Money

Will That Be Debit or Credit?

October 7, 2011 By

The news that several major banks are planning to charge consumers a monthly fee for using debit cards appears to be an attempt to drive consumers to a greater use of credit cards.  Why?

  • First, new regulations have taken effect that limit the fees that these banks can collect from merchants whenever a consumer uses a debit card.  It does not appear that these same limitations will apply to the use of credit cards.
  • Second, consumers have been making a conscious effort to pay down credit card balances and to voluntarily limit their use of credit.  Lower balances mean less interest can be collected by the banks, further cutting into their profits.  If the banks can drive credit card balances up again, interest receipts should increase and profits should rise.
  • Third, many banks are already charging consumers fees for the privilege of carrying one or more of the bank’s credit cards in their wallets.  The fee may be called a monthly or annual service fee; a membership fee (one must wonder what the consumer is a member of); or any one of a number of other euphemisms for a cardholder fee.  Increased use of credit cards is likely to lead to new accounts being opened and an increase in fees that can be collected by the banks.

If you are one of the many consumers who has resolved to reduce your debt and live within your means, stay firm in your commitment to living in a personal cash economy.  It may be hard to break the credit habit; but, your family’s financial well-being hangs in the balance.

Filed Under: Banking, Checking Accounts, Money Management, Personal Finances, Saving Money, Saving Money

Major Banks Plan to Charge Fees for Using Your Debit Card

October 2, 2011 By

News reports on Friday, September 30th, indicated that several major banks were planning to begin charging customers a monthly fee for using debit cards.  These fees could be as high (at least for NOW) as $5 each month.  That’s $60 each year!

After spending years and millions of dollars convincing customers that using a debit card was THE way … fast … convenient … easy … to pay for purchases at the grocery store, gas station, dry cleaners, and every other merchant with a swipe machine at the register, now the banks want to charge you, the consumer, for the privilege of spending your own money.  The bankers have decided that they aren’t making enough money by charging the merchants for this service.  Now, they want to dig into your wallet, too!

I’m confident that the bankers will tell you that you really have no alternatives … you can’t slow down or stop the wheels of commerce from turning.  However, I’m going to suggest that you DO have options.  They are …

  • Pay Cash – the commercials will try to convince you that the use of real money (rather than plastic) will cause the wheels of commerce to come to a screeching halt if you don’t swipe your card.  That’s OK!  It’s YOUR money and you have the right to spend it in whatever manner is best for you.  If you aren’t in the habit of carrying cash, the good news is that, at least for now, the bankers aren’t planning to charge you for withdrawing your money from your own bank’s ATM’s.  Rather than getting charged for swiping your card through the merchant’s machine, get your cash from you own bank’s ATM and pay cash.  This saves both you and the merchants money … and lower merchant expenses could lead to lower prices.  Don’t believe me?  Look at the gas stations that charge one price for their gasoline if you pay with cash and a higher price if you pay with a credit card … and, in some cases, with a debit card!
  • Change banks – yes, it is inconvenient; but, as a consumer, you have a right to demonstrate your genuine displeasure with your bank’s new policy.  Vote with your feet, and with your money, by taking your business to a bank that values your business and doesn’t feel compelled to squeeze every last penny out of your pocket in order to enrich its stockholders.
  • Join a Credit Union – credit unions are not-for-profit financial institutions that are owned by their members and operated for the benefit of those members.  Traditionally, credit unions have avoided many of the fees that traditional banks have charged and kept costs low for their members.  Many credit unions offer the same services as their traditional banking counterparts but charge lower, more reasonable, fees … in some cases, services are provided without the imposition of (yet another) fee.

Yes, you do have choices … but only if you are willing to make the changes that are necessary in order to send a message to your banker

Filed Under: Banking, Checking Accounts, Money Management, Personal Finances, Saving Money