Being Honest Almost Cost Me Money

The following post is by MPFJ staff writer Travis.  Travis is a customer blogger for CareOne Debt Relief Services, and also appears weekly at Enemy of Debt.  Travis candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband he provides a unique perspective on balancing debt, finances, and family.

“Honesty is the best policy.”

I’ve heard this phrase a million times, but apparently my cable company didn’t get the memo.

In preparation to move into our new home several years ago, I called our cable company to inform them of our move date.  They assured me that they would activate the service at our new address one day before they turned it off at our old address to avoid any kind of interruption of service.  The account would simply switch addresses, with the addition of activation fees for the new location.

I thought for a moment to argue the activation fees, but the excitement of moving into our brand new home far outweighed my need to question my cable company’s business practices.

The first bill came, and it was obviously not the same amount that I had been paying.   I just assumed that it had to do with the activation fees, and other things they likely didn’t tell me about regarding the location change of my account. I had too many other things to worry about at the time, so I just paid the bill.

When the second bill arrived, I assumed the amount due would be the normal amount I was used to paying.   To my surprise, it was actually significantly lower.  I examined the bill line by line and discovered that they were not charging me for cable internet. By looking online, I found that they hadn’t charged me for it the previous month either.

I heard that voice in my head repeat the phrase, “Honesty is the best policy!” so I called my cable company and told them what had occurred.   They corrected the mistake in their system, and confirmed that my next bill would include charges for my cable internet service.

Unfortunately, that’s not the end of my story.

When bill number  three came, it was sky high.  My mind raced as I poured through the pages of the bill.  They certainly did charge me for cable internet that month, plus the two previous months.  I hadn’t expected them to do that, but it seemed reasonable since I did indeed use the service. So I wrote out the check and paid the bill, and expected month four to be back on track.

 Wrong.

Month four’s bill featured broadband charges for BOTH our old address AND our new address.   It would take three more months to get my bill 100% accurate and to be refunded what they had overcharged me.  We were in our new home for 8 months before we received a correct cable bill.

Looking back at the ordeal, I certainly don’t regret calling to correct the initial mistake.  I couldn’t in good conscious accept having broadband service and not paying for it.  If I could do it all over again, I would have handled it slightly differently:

• I would examined the first bill and caught the mistake immediately
• I would have asked questions to ensure I knew what they were going to charge me for after the mistake had been uncovered.
• I honestly don’t know how I could have avoided the double charge.

I do wish I would have played the “What are you going to do to make this right?” card after they screwed up my bill as a result of me being honest.  My wife certainly would have, but my negotiating skills are not as finely tuned as hers.

How about you readers, have you ever had a situation where being honest ended up seemingly not being worth it?  How did it turn out for you?

Share your experiences by commenting below! 

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

How To Treat Your Car Like An Investment

The following is a guest post. Enjoy! 

New cars start to depreciate in value as soon as they are driven off the lot, but no matter what type of vehicle you drive there are several ways to slow down the rate of depreciation and protect your investment.

A car’s worth is determined by several factors, including its age, condition, mileage, and brand value. By keeping your car in peak condition and choosing a model that is known to retain its value well over time, you can increase your chances of making the best possible investment.

The following are a few ways to protect your car and even increase its value.

Protect your Car Inside and Out

One of the most obvious ways to keep your car in its best possible shape is to clean and condition it regularly. The interior and exterior condition of a car is one of the key factors in determining its market value. By washing and waxing on a regular basis, you’ll maintain its quality and keep it looking new. This is particularly important during periods of poor weather, especially if your car is covered in salt. Salt and grit can eat through sheet metal over time. Avoid smoking, eating, or drinking in the car. A vehicle with stained upholstery and the lingering odor of stale cigarettes will be a hard sell.

Research Brand Values                      

Some brands age more gracefully than others, so if you’re looking at your car from an investment perspective you’ll want to purchase wisely. It’s helpful to look at values of used cars at listings sites like Kelly’s Blue Book. New cars from trustworthy brands like Volkswagen and Ford tend to depreciate more slowly than others, while luxury and classic cars may also be good investments and even appreciate in value.

Take Care with Parking

Your parking location can not only impact insurance rates; it will also impact your car’s condition. Severe weather conditions can take their toll on your vehicle. Hot, sunny weather can crack vinyl dashboards and cold temperatures can cause engine troubles. Park in the shade or in a climate controlled garage if possible. When parking in public lots, try to stay away from other vehicles when possible to avoid scratches and dents.

Keep a Paper Trail of Regular Maintenance

It’s vital to stay on top of a regular service schedule if you want to treat your car as an investment. Routine care will keep your car running at its best possible level, keeping the engine healthy and reliable. It can also prevent potential breakdowns in the future. You’ll want to keep all of your receipts from tune-ups, oil changes, maintenance checks, and even car washes to create a record of your car’s care. By saving proof of this service, you’ll show any potential buyers in the future that your car has been kept in top condition.

Don’t Go Crazy with Customization

A common mistake made by car owners trying to increase their vehicle’s value is to customize it with crazy colors or turbocharged engines. This could be a turn-off to buyers, and a poor financial investment overall. Simply spending money on customizing your car will not increase its value, and in many cases can lower the eventual sale price.

These are a few factors to keep in mind when you purchase a new or used car. Taking care of your vehicle will keep it in peak condition and improve its eventual resale value when the time comes to trade it in.

***Photo courtesy of http://www.flickr.com/photos/10047629@N04/6057753185/sizes/m/in/photolist-

Financial Mistakes New Parents Make: Have You Done Any of These?

The following post is by MPFJ staff writer, Melissa Batai.  Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food.  She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.

Most people know from a young age that there are certain life milestones they want to hit–graduating high school, getting their first job, graduating college, getting married, having children.  In addition, they have an idea of how they want these milestones to look (in no small part thanks to advertising).

Think of wedding preparations.  There are at least a handful of magazines entirely devoted to the wedding itself as well as two television shows (Say Yes to the Dress and Say Yes to the Dress Atlanta).  Note that I didn’t say marriage, because let’s be real, there’s not much money to be had in marriage–the money for businesses and advertisers is all in the big day.  A bride and groom who aren’t careful can easily spend over $20,000 having the “ideal” wedding.  It may not actually be the bride and groom’s ideal, but the ideal they are sold on thanks to advertisers.

Unfortunately, advertisers also get their hands into raising a child.  There are even more magazines aimed at pregnant women and parents.  There are no less than 6 magazines (likely more) catering exclusively to pregnant women.

While these publications have parenting articles, they are also filled with advertisements from the practical (such as baby monitors) to the impractical (such as wee wee tee pees to put over  a little boy’s private area when you’re changing him to avoid getting an unexpected spray).  Then, there are the many parenting magazines, once again rife without advertisements as well as articles about how to parent (which, of course, usually contain ways to spend money on your child).

 

Advertisers Shaped Me and I Had No Idea

I’m no different than others in that I imagined reaching these milestones long before I ever did and imagined what my life would be like.  Though I may have taken longer than many of my peers to reach the milestone of having a child (I had my first at 33), both my husband and I knew we wanted to do parenthood right.  For us, though we didn’t realize it then, it meant largely following parenting norms in the United States, without question. 

That was a huge financial mistake.

From the moment our son was born 9 years ago, we made a series of financial mistakes that affected our bottom line.  We made these financial mistakes even when we were trying to be financially conservative and not spend a lot of money.  For instance, I bought used cloth diapers and used them exclusively for my son.  I bought many of his baby and toddler clothes at garage sales.

 

Falling Into the Must-Have Trap

But even while making these smart financial moves, I was wasting money on other “must haves” according to advertisers.  Here are just a few:

1.  Having a theme for the nursery.  We tried to go low cost on decorating the nursery.  We painted the room a neutral yellow, but we bought a crib for $300.  Since all 3 of our kids used it, that wasn’t such a bad investment, but I could have easily spent a lot less buying used.  I chose a teddy bear theme and bought the throw rug, lamp, and wall paper off eBay.  Still, that was $100 I didn’t need to spend.

2.  Formula feeding.  My son was born weighing almost 10 pounds.  He had a big appetite (and still does).  I breastfed him for the first 11 months, but others around me convinced me that I wasn’t meeting all of his needs and that he’d do better with formula.  For 12 months, he was supplemented with formula, which easily cost us $500 to $1,000 that first year.

3.  Moving to a larger apartment (or house).  We were living in a one bedroom apartment, which was a great fit for us.  However, knowing that we were going to try for a baby, we moved into a two bedroom apartment a full two years before our son was born.  The one bedroom could have been a good fit through our son’s first year.  Therefore, we spent 3 years paying more for an apartment that was bigger than we needed.

4.  Buying a new vehicle.  This is the most egregious of all of our purchases.  My husband and I had bought a practical Toyota Echo three years before our son was born.  The car was almost paid off and had a manageable car payment of $250 a month.

Still, since we planned on having more kids and the Echo was a tight fit with a baby and all of his gear, we decided to buy a new Toyota Sienna mini van.  Our new car payment was $470 a month, which was difficult to swing on our income.  To make matters worse, we didn’t have our second child for another 4.5 years!

The smart move would have been to keep the Echo until we had our next baby.  Not only would the Echo have been paid off, but we would have been able to drive it for 2.5 years free and clear and save for a larger car.  My husband and I both still kick ourselves over this dumb financial move.

 

Other Must-Haves that People Fall For

The four mistakes we made had a significant effect on our finances.  However, there are plenty of other financial mistakes new parents make that thankfully we didn’t make.  Do you recognize any of these if you’re a parent?

1.  Buying designer kids’ clothes.  Yes, the brand name clothes from Gap, Janie and Jack and other retailers are adorable, but they’re also pricey, and your child will only wear them for a short while.  Chances are also high he’ll stain them up.

2.  Buying baby equipment you don’t need.  There are so many duplicate items out there for parents to choose.  Do you buy a crib, a playpen, a bassinet or a side bed co-sleeper?  Some parents buy all four.  What about a bouncy seat or a swing?  Likely your child will prefer one over the other, but you’ve likely bought both.  Baby gear and equipment can add up quickly, and you may not even end up using the majority of it.

3.  Quitting work too early.  Many moms quit work as soon as they find out they are pregnant when, barring medical issues, they could work up through their 8th or even 9th month and sock away some money in preparation for the child’s birth.

4.  Contributing to a college fund.  Some people set up a college fund and start contributing as soon as the baby is born.  While this is generally a smart idea, if you’re not contributing fully to your own retirement, it’s better to save for yourself rather than funding Junior’s retirement.  You know the saying–your child can borrow for his education, but you can’t borrow for retirement.

So parents, let’s hear it.  Have you made any big financial mistakes because you’ve inadvertently been affected by the advertising executives who make you feel that certain products or lifestyles are a necessity?  What’s your biggest purchase or money move that you regret after becoming a parent?

Share your experiences by commenting below! 

***Photo courtesy of http://www.flickr.com/photos/paparutzi/1062532768/sizes/m/in/

Yakezie Carnival – September 29th, 2013 Edition!

Welcome everyone to the September 29th, 2013 edition of the Yakezie Carnival!

About This Carnival

For those of you unfamiliar with the Yakezie Personal Finance Blog Network, it is the web’s largest, most involved, and most organized group of personal finance and lifestyle bloggers. Participants in the network collaborate multiple times throughout each day on the Yakezie forums and through other mediums. You can view all of the details at the “About Yakezie” page by clicking here.

Each week, the members and challengers of the Yakezie Network submit their best articles to be featured in the Yakezie Carnival. And, today, it is My Personal Finance Journey’s honor to be the host!

Don @ MoneySmartGuides writes Top Money Saving Tips for the Techy Generation – There are many money saving tips but with the changing of technology, new tips are commonplace. Here are a handful of money saving tips for the techies.

Suba @ Broke Professionals writes Save on Entertainment Costs with Cable or Satellite – The price of everything is going up. Child care, groceries, transportation costs; you name it, you are paying more for it now than you have in the past.

Don @ Money Reasons writes Why Are Auto Insurance Rates Different In Some States? – You even wonder why auto insurance rates differ in some state dramatically than in others? Read more to find out why, and please comment on what you think!

LaTisha @ Young Finances writes Will I Have to Buy Health Insurance? – The Affordable Health Care for America Act was signed into law on March 23, 2010. The Supreme Court ruled that Obamacare is constitutional.

Ryan @ Cash Money Life writes Could a Splurge Be a Positive Thing? – Sometimes it is OK to splurge and spend a little extra on something fun or frivolous. But it’s important to know when to spend the money, and when not to.

krantcents @ KrantCents writes Financially Preparing for Future Goals – Life is expensive and meeting various financial demands often calls for early preparation. Maybe you’re planning an upcoming vacation. Or perhaps you want to save for your kid’s college education or plan your retirement. Regardless of your life goals, here are tips to prepare your finances.

Wayne @ Young Family Finance writes Easing the Pain of Student Loan Debt – With tuition prices getting higher, debts are hard to pay off. Here are some things you can do to ease the pressure of student loan payments.

Hank @ Money Q&A writes How To Save Money On Your Mobile Phone Bill – Mobile phone bills can be a burden on anyone trying to live on a tight budget. But, you can save money on your mobile phone bill with these great tips.

Maria @ The Money Principle writes Smart driving can be cheap – Smart have introduced another car in their range that specially targets the 21 year olds. Driving with Smart can be cheap, stylish and trendy.

Eva Baker @ TeensGotCents writes Starbucks Coupons – Shopping With Sarah – Sarah has found a way to get a great deal on her favorite drink. Did you know that you can buy Starbucks coupons – all sorts of coupons – even gift cards?

Crystal @ Married (with Debt) writes I Don’t Care if My Wife Hits the Lottery – I am going to discuss the things that I evaluated when I purchased my term-life insurance policy with a death benefit of $2 million.

Cindy @ MidLife Finance writes 10 Travel Tips I Learned During Summer Vacation…So You Don’t Have To – We actually had many great trips this summer — but learned several things (and avoided some problems) through research, experience and some fancy footwork.

Kyle @ The Penny Hoarder writes 5 Quirky Businesses Posting Growth in Difficult Climate For Retailers – Given how difficult it has been for many companies to get ahead, bosses and marketing teams have had to ensure that they come up with killer ideas in order to try and expand.

Roger the Amateur Financier @ The Amateur Financier writes 10 Truly Unusual Investments – A list of unusual investments, including collectibles, peer-to-peer, and crowdsourcing, as a means of diversifying investments and providing profits in the future.

Tushar Mathur @ Everything Finance writes Time Is Money So Invest It Wisely – Time is money, so invest it wisely. Do this by creating time to better yourself whether through reading, exercise or spending time with those you love most.

Corey @ 20s Finances writes How to Get Raise – If you want to earn more money, there are a number of things you should do.

Cindy @ MidLife Finance writes Flying Solo – Go when you want, and do what you please while you’re there. No arguing with someone else about food or pillows; if you’re in the mood for Mexican or an extra soft-top, you’ve got it.

Cat Alford @ Budget Blonde writes 5 Money Saving Tips for DIY and Design Projects – Want some money saving tips for DIY and design projects? Well, look no further than today’s post! I really miss doing DIY projects!

Michelle @ The Shop My Closet Project writes One Month until FinCon13! So excited! – I bought a ticket for this conference. I’d never gone to a conference outside of work conferences and I’d barely gone to conferences for work. I had no idea what to expect. It was the best $100 I spent last year.

Ted Jenkin @ Your Smart Money Moves writes Here’s Why Your Friends Are Going Broke – Most of the time when we talk about personal finance, topics including credit card debt, savings, investments, insurance, and coupons creep into the

Crystal @ Budgeting in the Fun Stuff writes The Art of Choosing Between An Experience And A Possession – So you have extra money – do you buy stuff with it or buy an experience with it? Here is my argument for the experience.

Michelle @ Diversified Finances writes My Emergency Fund Is Fully Funded – Our emergency fund is finally fully funded. WHEW! Since I am switching to full-time self-employment, we have been really focused on building it back up. A couple of months ago, I drained our emergency fund completely so that we could pay the ol’ student loans.

Michelle @ Making Sense of Cents writes Are you going to FinCon2013? Here are some fun things to do in St. Louis! – As some of you might know, the 2013 Financial Blogger Conference starts on October 17 (one month to go!). I am very excited, and it will be my first time meeting other bloggers, which still makes me sad that it’s been this long.

Emily @ Evolving Personal Finance writes How Much Effort Do You Put into Getting Rewards or Deals? – We went down a rabbit hole finding discounts for a department store purchase, but I’m not so sure it’s worth the time.

Kurt @ Money Counselor @ Money Counselor writes Buy a Foreclosed Home? – The U.S. home real estate market is recovering, but plenty of foreclosed homes remain on the market. Is now a good time to consider buying a foreclosure?

Anton Ivanov @ Dreams Cash True writes How to Get a Free Credit Score – Your credit score is just as important as your credit report. Our guide explains how to get a free credit score from Credit Sesame in just a few minutes.

Andrea @ So Over This writes Saving Up for a Down Payment by Yourself – As many potential homebuyers are quickly discovering, buying a house nowadays requires a down payment.

Buck @ Buck Inspire writes Backup Your Data Regularly To Prevent Data Loss Seth Brundle! – Last Labor Day, I had a delightful chat, for the podcast, with Benny Hsu of the Get Busy Living Blog and the creator of iPhone apps like Photo 365 and Gratitude 365. Ironically, he asked about my interview breaks and I told him how the Podcast Answer Man (Cliff Ravenscraft) freaked me out about using computers and software to do podcasts.

Monica @ Monica On Money writes Why You Don’t Need The iPhone 5S – Before I became frugal, I bought the iPhone 4, iPhone 4s, iPad, and Macbook Pro on the day that they were released! BUT, the iPhone 5S is different and you don’t need it.

Holly @ Club Thrifty writes Saying Goodbye To My Dream House – Even though we have the money, we cannot buy our dream house. Read more about the tragic details in this post.

Barbara Friedberg @ Barbara Friedberg Personal Finance writes Investing & The Fed: How Will My Portfolio Be Impacted? – The Feds actions are directly related to your investment portfolio. Learn what investing moves to make now.

Daniel @ Sweating The Big Stuff writes One Way Car Rentals Are Really Cheap – I rented a car from Boston to New York because it was significantly cheaper and more convenient than taking buses and shuttles to all the places I needed to go.

FI Pilgrim @ FI Journey writes How To Create A Strategic Plan For Your Finances – If you have ever been in business, you have probably been exposed to a strategic plan in some form. Here is how to create a strategic plan for yourself!

Ray @ Squirrelers writes International Diversification with Stocks – Diversification is often seen as important when considering asset classes for investments. But what about geographic diversification?

TTMK @ Tie the Money Knot writes What Should You Do if Your Spouse Can’t Quit Spending Money – Have a spouse that can’t control spending? This post discusses the topic and how people can approach different styles

Matt Becker @ Mom and Dad Money writes Buying a Car: How to Negotiate With the Dealers – Check out my exact step-by-step process for negotiating a killer price on your next car. The best part: it can all be done through email!

Robert @ The College Investor writes 3 Ways to Find More Money to Invest – If you’re looking to cut some costs so that you have more money to throw at your investments, here are three easy ways you can do just that

Robert @ Entrepreneurship Life writes Metrics to Measure Your Business Website – Every business today should have a website. Whether you run a restaurant, retail store, or service business, you should have a modern, functioning website. Here are some metrics to track to help you know if your website is making it to customer eyes and if it is meeting customer needs.

Mr. Utopia @ Personal Finance Utopia writes Are Frugal People Loners? – Does a frugal lifestyle inherently conflict with an active social life? Social activities can be expensive, so how does a frugal person stay on track?

Christopher @ This That and The MBA writes The Best Financial Lesson I Ever Learned – My bond funds have returned about 7% per year and my stock funds have returned about 4% per year. During the craziness of 2008, when the market crashed again, my colleagues were in a panic because they lost 40% of their money.

Mr. MWD @ My Wealth Desire writes 13 Ways to Solve Not Having Enough Money to Live on – I prefer making more rather than spending less, but I try to do both. Keeping bills low is certainly part of my financial plan.

Brian @ Luke1428 writes Plan Your Budget Around These 5 Expenses – Knowing how to allocate money to all your budget categories can be overwhelming. So for starters, begin your budget by looking at the Big Five expenses.

Little House @ Little House in the Valley writes Prefab Method Homes – Recently I found Method Homes, a prefab home company that has reasonable priced homes and great designs.

John S @ Frugal Rules writes Christmas Shopping That Won’t Break the Bank – It may a bit early to think of Christmas as it’s a little over four months away, but by planning out your spending you have a much better chance of buying gifts everyone will love and still be frugal and thus not busting your budget.

Miss T. @ Prairie Eco Thrifter writes 5 Ways to Cope with Moving Back Home – Here are 5 ways to help you cope with moving back home.

Deacon @ Well Kept Wallet writes Getting Out of Debt: 5 Steps to Eliminate Your Debt Quickly – When your are looking to accomplish something, it is a lot easier to make progress when you have some steps to take. Otherwise it can be challenging to even figure out where to start. You also don’t want to have too many steps, you want to keep it simple so that you don’t get frustrated in the process.

Pauline @ Reach Financial Independence writes Interview with Jason Hull, a $397 money course and $25 Amazon gift card giveaway! – Today I am delighted to welcome Jason Hull from Hull Financial Planning. I’ll let him introduce himself and his new Winning with Money course.

Pauline @ Make Money Your Way writes How to make money as a TV/Movies extra – Tonya shares how she made money as a TV extra and how it really is behind the scenes.

KK @ Student Debt Survivor writes Please Seat Us in the Happy Hour Section – Half price drinks taste so much sweeter. Sitting in the bar might save you, just ask your hostess before you sit down.

Anton Ivanov @ Dreams Cash True writes Portfolio Planning Basics – Opening Appropriate Investment Accounts – Learn about the different types of investment accounts, including retirement, taxable, Traditional, Roth, 401k Plan and IRA accounts.

Jessica Moorhouse @ Mo’ Money Mo’ Houses writes For Love & Money Friday – Financial Topics Every Couple Should Discuss – In order to get our finances all organized, my husband and I have decided to get together every Friday to discuss a new money topic. Here are just a few topics we’ve planned on discussing in the coming weeks.

Well, that wraps up this week’s Yakezie Carnival. Next week’s edition will be hosted by Jen @ The Happy Homeowner. You can submit your post entries at Blogger Carnivals.

Until next time!

-Jacob

Reverse Mortgage – What Is It And Can It Help You?

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

You’ve undoubtedly seen the ads on TV for reverse mortgages – former Tennessee State Sen. Fred Thompson is doing one of the more common commercials right now. It seems like a made to order situation for a senior citizen who is struggling with finances but doesn’t want to sell their home.

Reverse mortgages have their advocates – and no small number of critics too. But all of the hype aside, what is a reverse mortgage, and how can it help you or a loved one?

 

How does a reverse mortgage work?

Reverse mortgages are available from several different sources, but by far the most common is the US Department of Housing and Urban Development’s (HUD) mortgage arm, the Federal Housing Administration (FHA). They offer federally insured reverse mortgages in the form of Home Equity Conversion Mortgages (HECM).

Reverse mortgages work in opposite fashion from traditional mortgages. Instead of you paying the lender for the loan on a monthly basis, the lender makes monthly payments to you, as the borrower. As it does, the amount of your mortgage increases. And unlike a traditional mortgage, you do not have to repay the loan until you die, sell the house or move from it as your primary residence.

You have to be 62 years old or older, and use the money as an extra source of income, to make home improvements, or to pay for medical expenses. In order to do this, you have to either own the home free and clear, or have a very small remaining mortgage balance left.

The proceeds of the loan are tax-free, and there are no income restrictions for qualification purposes. The amount of the mortgage you can borrow is determined by the value of your home, your age (the older you are the more you can borrow), and of course the rate of interest. HUD has a reverse mortgage calculator that will help you to determine the amount you can borrow under the program.

According to the US Department of Housing and Urban Development, you can select from five payment plans:

1. Tenure – equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
2. Term – equal monthly payments for a fixed period of months selected.
3. Line of Credit – unscheduled payments or in installments, at times and in an amount of your choosing until the line of credit is exhausted.
4. Modified Tenure – combination of line of credit and scheduled monthly payments for as long as you remain in the home.
5. Modified Term – combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

Should you or a loved one take a reverse mortgage? Let’s take a look at both sides of that question…

The case for a reverse mortgage

Given the right combination of circumstances, a reverse mortgage can be worth considering. Some of the many advantages include:

• It gives you access to the equity in your home to pay for living expenses.
• It can allow you to stay in your home if you don’t have enough money otherwise.
• The proceeds can be used to repair the home or cover medical expenses
• You are not required to verify income.
• No monthly payments are required – the program pays you based on the payment plan you select (see the list of five payment plans above).
• In the HECM program, a borrower can live in a nursing home or other medical facility for up to 12 consecutive months before the loan must be repaid.

A reverse mortgage may work best if the purpose is to pay for home improvements, or to satisfy medical expenses, and in the smallest loan amount possible. This will avoid the complete stripping out of equity that a large loan amount will result in, or the ultimate destruction of equity that could result from the need for a steady income for many years.

The case against a reverse mortgage

Unfortunately, there are at least as many reasons to avoid reverse mortgages. Some of the more significant negatives include:

• You will have to pay mortgage insurance on the loan.
• The loan will ultimately cause you to lose equity in your home.
• If you change residences (other than the above mentioned move to a nursing home for up to 12 months) you will have to repay the loan.
• The amount you can borrow against the house will be less than what you will get on an outright sale of the property.
• You will have to pay origination fees in order to obtain the loan.
• If the equity is drained and you still can’t afford the house, you will have to sell, but with less equity coming out of the sale
• The loan will leave less money in your estate for your heirs.
• There are lenders who prey on the elderly and are less than reputable; the Federal Trade Commission offers some warnings and guidelines on this issue.

As a general consideration, if a senior citizen is in a position of not being able to afford to keep his or her home, it may be best to sell the property and avoid the reverse mortgage altogether. The sale of the home will result in a greater amount of proceeds, as well as avoiding the restrictions that come with a reverse mortgage.

How about you all? Have you taken a reverse mortgage, or do you know of anyone who has? Do you believe that it is an option worth taking – or disaster in the making?

Share your experiences by commenting below!  

Risk-Averse Strategies for Retirement Savings

The following post is by Amanda Green. Enjoy! 

Saving for retirement is not complicated, but you do have to make your money work for you if you want to realize the greatest returns. Deciding on a retirement plan for yourself should also involve your spouse. Ideally, the two of you would be able to pool your money together and create a plan to replace your income after you are unable to work. Some of these options, like an IRA, are flexible to help safeguard your savings when your income dips.

There are a host of options to choose from, and you should definitely shop around to find the best option for you.

IRAs

An individual retirement account is an investment that you have control over. You pick which companies you’ll invest in over time, and you can divert a portion of your income each year to the IRA. If you’re not covered under any other retirement plans, that portion may be eligible for a federal tax deduction too, making an IRA something of a safe haven for taxes. It’s not going to net you thousands in tax savings, but it will benefit you now and later.

IRAs are advantageous because you can pull money from them as needed depending on the circumstances. When you withdraw, that money is included in taxable income for the year, but you do not have to show proof of hardship. Therefore, IRAs are commonly used as savings vehicles for investments later in life.

Life Insurance

If you have dependents, you should consider investing in simplified issue life insurance. Chances are you won’t die before your 50’s but a whole life policy can help pay for college for the kids. If something does happen to you, a term life insurance policy can payout enough to cover your family’s expenses for many years to come after your passing.

As this simple guide to life insurance points out, this kind of investment is best for people who are not independently wealthy and have families who rely on their income. All policies do require a medical exam, and determining what you need to cover your family, does take some shopping. The payout can take care of a home mortgage or help supplement lost income. In general, try to take a policy that is worth three to five times your annual income.

401k

A 401k is normally offered through a company workplace, but recent changes have opened these plans to individuals as well. The plans began in 1978 to help alleviate some of the burden tax payers faced at the time by deferring their income to later on in life. Depending on the rules of the plan, you should be able to invest before or after taxes are taken out. 401k’s do have severe restrictions when employees wish to withdraw funds, often restricting withdrawals until the employee ages to 59 ½.

Annuities

Purchasing annuities is like purchasing insurance that is guaranteed to pay out at a later date. It starts with you making an investment into the annuity, then on the pre-determined date it matures and payments can be dispensed. From there, you have the option of receiving income monthly, quarterly, or annually. In some cases, you can also accept a lump sum payment.

Annuities are great alternative retirement income because you can arrange your payment structure to cover you for the rest of your life if you need to. The money you invest grows tax-deferred, but if you are planning on investing in an annuity you should thoroughly research the plan. Annuities can be expensive, which may create a scenario for debt in the short term.

Mutual Funds

Mutual funds are basically a pool of funds that come from many investors. Funds invest in securities such as stocks, bonds or money market assets. A mutual fund manager uses the fund’s capital to make capital gains, which translates to income for the fund’s investors. Most banks have mutual funds you can invest in, and mutual funds are open to anyone who wishes to contribute.

Tips on Investing

If you want to get the most out of your investments, plan to manage several at a time. You should not rely solely on a Roth IRA or 401k, just like you don’t want to pool all of your money into a mutual fund. You should take percentages of your cash and move it around to your investments, letting your money work for you over time. You’ll gain more over time and you won’t have as much trouble moving your money around when you need it.

Tips to Nurse Your Home Back to Life on a Budget

The following post is by fellow blog reader, Mark Tallery. Enjoy! 

Has your home’s health deteriorated because of old age? Are you faced with the hard dilemma of whether you should move to a new house or renovate your existing one? Well, as Jane Kennedy explains, there are many elements to consider. However, if you decide that you are not willing to give up on your house, here are some helpful tips that will save you a great deal of money as well as increase your home value.

 

Painting and Caulking

Painting is a relatively easy project for anyone. It is also one of the simplest ways to increase your home value as it brings back that fresh look and make it appear well cared for. Moreover, simply repainting exterior and interior walls can generate an extra $3000 to $4000 in home value.

In an older house, it is best to begin with a paintable caulk. All older homes have suffered settling and the abuses of the years. Caulk every single crack where baseboards, crown molding or other trim work meets the walls or floors. Caulk around windows and re-caulk all of the glass panes before painting. The next step is to use “Kilz”, which is a primer coat that also kills molds. Use this product on walls, ceilings and all trim work. It provides a smooth opaque surface on which to paint, and will not allow old stains to bleed through your new paint. Use a high quality wall and trim paint brand which also contains a primer. This will allow you to achieve complete coverage on old stained walls and ceilings, with only one coat of paint.

In many older homes, you will find cheap and quite ugly paneling on the walls. One very economic and easy way to resolve this issue without the need for hanging sheetrock or applying plaster is to paint over it. Simply remove the vertical and/or horizontal trim pieces and discard them. Leave the corner pieces. Use your caulk to fill all cracks between the 4 X 8 sheets of paneling, and then give it a good coat of the “Kilz.” One coat of the paint mentioned above will cover, and you will have walls that appear as if they are made of varying sizes of planks. It is an extremely attractive solution, and far less costly than any other.

 

Kitchen

The kitchen is always the most difficult room to remodel or upgrade in the house, other than the bathroom. Of course, the extent of the renovation will depend on your wants and desires, as well as your needs. You must carefully consider what is already there and whether or not you can work with any of the current installations in the kitchen. The important thing to remember, when doing a kitchen remodel on your own, is to work around the existing utility entrance and exit points. Otherwise, you will need both an electrical and a plumbing contractor. Replacement cabinets and countertops are readily available at home centers, and they are easy to install. If you plan to use the existing cabinets, you can always replace outdated countertops, and repaint the cabinets with oil-base enamel. After painting, it is easy to replace outdated hardware, such as door and drawer knobs and hinges, for more modern versions.

Another thing to consider is that renovating your kitchen is always a great investment. According to the AIC (Appraisal Institute of Canada), a kitchen remodel can yield up to a 100% ROI (Return on Investment).

 

Lighting & Plumbing Fixtures

New lights and ceiling fans are very easy to install in the same locations as the old ones. Each new fixture comes with step-by-step instructions. Just make sure that the appropriate breaker in the electrical box is turned off before you begin. It is also a good idea to purchase an inexpensive tester, and use it after putting the breaker in the off position, just to be doubly sure you will not get shocked. The same is true of replacing electrical outlets and switches.

Plumbing fixtures such as new faucets are also just as easy to install, with the included instructions. This is also true of garbage disposals, if you wish to have one, as well as hooking up the water line to the dishwasher or refrigerator water supply, on models which have automatic ice makers, or water and ice dispensers in the door.

 

***Photo courtesy of http://www.flickr.com/photos/35188692@N00/235866

How To Save Money on Clothes and Fashion

The following article is by MPFJ staff writer, Miss T from Prairie Eco-Thrifter. If you want to learn how to live your dream life in a sustainable, healthy, and money savvy way, check out her site here.

Whether you keep a basic wardrobe of clothes or are an avid follower of fashion, your clothing budget probably takes a fair chunk out of your income.

Clothes and shoes wear out, you need a special outfit for a one-off event or you just love to have the latest fashions; all these factors mean that you frequently need to go shopping. Here are some clever strategies that you can employ to help you save money on clothes and fashion.

 

Shop With Cash – Avoid Store Credit Cards

I used to do all my fashion shopping using my credit card; I mean, it’s the easy way to get exactly what you want, right? I ended up with multiple store and credit cards that I struggled to make the minimum payment on each month. This meant that my must-have shoes ended up costing me several times more than they were worth, along with nearly everything else I purchased. Now I only ever go clothes shopping with cash; the few cards I still have stay at home. This way, I can only buy what I have the cash for; I stay within my budget and still manage to have enough clothes to wear!

 

Take Note of What You Do and Do Not Already Have

The biggest way to save money is to be aware of what you already have in the closet. This might seem a strange tip, but how many times have you bought an item that you already had or was very similar? You also need to know what is in your closet so that you purchase items that can mix and match with what you already have. In fact, some fashion experts recommend that you only buy an item if you already have at least three things it will go with! This gives you several choices on how to wear each piece.

So, before you hit the shops, check out your closet and take note of any gaps in your wardrobe. Notice that you really don’t need any more tops to go with those gorgeous red jeans you bought last summer but that you have nothing that goes with the bright blue ones, for example. Even a sale item is not a bargain if you are not going to get any wear out of it, no matter how beautiful or funky it is.

 

Take Advantage of In-Store Sales

Contrary to popular belief, sale opportunities are far more likely in a store than online. Stores have limited space and so can only stock a few of each garment. Online stores have huge warehouses to carry large quantities and so are unlikely to need to mark-down small ends of lines. When a store sells most of a particular line, they generally put the remainder out on a sale rack to make room for the next range. This is why it pays to check out your favorite bricks and mortar stores often, to catch the bargains and save money.

 

Using Coupons and Promotions

Using coupons and store promotions to save money is a tried and true method and is as applicable today as it ever was. Take the time to check what coupons you have and keep an eye on promotions in your favorite stores. Signing up for store email newsletters is a great way of learning about sales before the general public and many stores have specials just for their email customers. Also check out the coupon websites regularly so you don’t miss a great deal. Don’t be too shy to ask in-store about any current promos that could be running; you might score yourself a good deal that you were unaware of.

 

Know the Retail Cycle and Spot Opportunities

Follow the fashion retail cycle to know when are the best and cheapest times to shop. Fashion has two main seasons but there are several smaller seasonal changes as well. Watch for new merchandise coming in and you can be sure that current stock will be marked down to make space. The main changeovers are after New Years and at the end of June and these are the times when the biggest markdowns occur. Also, the longer an item remains on sale, the lower the price can go, if you are game to risk waiting! Many savvy clothes shoppers save up their fashion budget to do most, if not all, of their buying at these times. While it is true that you are buying at the end of the season, if you are careful with what you select, you will get plenty of wear next year.

 

Compare Prices Between Different Stores

If you find something you love, check out the price of the same item at other stores. There is often a variation in price between different retailers so it pays to shop around to get the best deal. Don’t be afraid to ask for a discount in any store; you might get the manager in a generous mood or having a slow day and needing the sale. Remember the discount chains and the outlet stores; many of these have clothes and shoes at greatly reduced prices and brands that are barely discernible from the expensive labels.

A fashion consultant in one of my favorite stores once told me to keep to just two or three color palettes to save money. I have basic black and cream which I can then team with different colors. I can add fashion highlights and splashes of color with scarves, bags, shoes and jewelry.

 

Take Care of the Clothes You Already Have

As well as using these tips for saving money when buying clothes and fashion, remember to care for the clothes, shoes and bags that you have. Launder carefully, dry clean as appropriate, keep shoes clean and dry and hang clothes in your closet when they are not being worn. Learn to do minor repairs like replacing buttons and doing hems instead of just replacing the garment and enjoy the savings.

How about you all? What strategies do you employ to keep from spending too much on clothes and other fashion accessories?

Share your experiences by commenting below! 

 ***Photo courtesy of http://prairieecothrifter.com/wp-content/uploads/2013/08/iStock_000019937676XSmall-300×199.jpg

Is AAA Emergency Roadside Assistance Worth It?

The following post is by MPFJ staff writer, Shondell of Call Me What You Want, Even Cheap. She blogs about her recent car loan and mortgage pay off and a whole bunch more. Check out her blog right here.

What happens if your car suddenly breaks down or you accidentally lock yourself out of your car on a deserted road in the middle of nowhere? Well if you have AAA, you can call them immediately!

Established in 1902, the American Automobile Association, popularly known by its acronym AAA (pronounced ‘triple A’) is a federation of motor clubs throughout the USA and Canada. It is a not-for-profit organization that works for the benefit of its members and provides services like roadside assistance and auto insurance.

In order to access the services offered by AAA, you have to become a paid member. The association has three levels of membership: Classic, Plus and Premier. As of January 2013, annual membership fees are $69 for Classic, $114 for Plus and $137 for Premier.

 

AAA membership benefits:

A Classic membership gives you access to basic services that include the following:

• 24/7 Roadside Assistance (RSA) that includes towing, battery jump start, AAA battery replacement, flat tire change, emergency fuel delivery, minor mechanical first aid, extricating/winching services and vehicle lockout assistance.
• Free AAA maps, TripTik^® routing maps and TourBook^® guides.
• Discounts on auto and homeowners insurance.
• Access to discounts at over 150,000 retail locations around the world.
• Travel planning services from AAA Travel with exclusive savings and member benefits, which include airline tickets, tours and cruises, hotel and motel reservations, passport photo service, international driving permits, group travel and escorted and independent tours.

In addition to the basic services, the services provided by a Plus membership include the following:

• Towing of up to 100 driving miles
• Free emergency fuel (Classic members have to pay for the fuel)
• Increased vehicle locksmith coverage

In addition to Classic and Plus services, the services provided by a Premier membership include the following:

• Towing of up to 200 driving miles
• A complementary rental car for one day
• Home lockout services
• Trip Interruption Coverage (when you are travelling more than 100 miles from home). If your trip is delayed by an accident, car theft, mechanical breakdown, inclement weather or illness, you can be reimbursed up to $1,500 to cover out-of-pocket expenses, including meals and accommodations.
• Vehicle Return Coverage (when you are travelling more than 100 miles from home). If an injury or illness prevents you from completing your trip, then you can be reimbursed up to $500 to help you get your car back home.
• 24/7 global emergency assistance and personalized concierge services when travelling more than 100 miles from home.
• Travel accident insurance of up to $300,000 when purchasing airline, bus, train or cruise tickets through AAA Travel.
• Vehicle Inspection Program Rebate. You will receive a rebate of $45 off the current price of your next vehicle inspection program service.

The advantages of a AAA membership cannot be exaggerated, especially if you find yourself stranded with a broken down or locked car on a lonely stretch of a road. You will also appreciate the discounts on auto insurance, hotels, restaurants and thousands of retail outlets that AAA memberships give you access to.

 

AAA membership drawbacks:

Despite all the services that you will get access to as a paid member, AAA membership does not come without its drawbacks. Here are some of the disadvantages of joining AAA:

• Not cost-effective for homebodies: If you rarely travel far from home, then a AAA membership may not be cost-effective for you as the membership fees are too high for services that you will probably never use. A majority of members sign up only for roadside assistance (RSA) which they hardly ever need to use.
• Services provided by third party contractors: Many of the services offered by AAA are provided by third party contractors, which can cause logistic problems and may even compromise quality. For example, concierge services are administered by Allianz Global Assistance Services Company and Travel Interruption Coverage are underwritten by BCS Insurance Company.
• Complicity in questionable acts: On several occasions in the past, AAA has been known to work against the interest of its general members. For example, AAA has supported measures to curtail the freedom of motorists, such as the imposition of the federal 55 mph speed limit, installation of red light cameras and increase in federal gas tax. Thus, by becoming a member, you will be supporting these acts.

 

AAA vs. auto insurance

AAA membership is not an auto insurance policy and shouldn’t be viewed as such. One of the main reasons to become an AAA member is the emergency roadside assistance, called AAA Accident Assistance. Once you call for assistance, your car will be towed to the nearest repair shop listed in the company’s preferred provider list. The service staff will also call one of your family members, complete a vehicle claim and arrange a rental car for you while your vehicle is being repaired.

In the event that your car is totaled in an accident, AAA does not provide towing and repair as your auto insurance policy is expected to provide those services. However, AAA has an auto insurance (discounted for members) that pays you the cash value of the vehicle based upon its year, make, mileage and condition. The insurance also pays off your car loan if you have purchased the GAP insurance with the policy.

Many auto insurances also provide emergency roadside assistance, but they may require you to pay a higher premium for their service. They may also not have the network to provide assistance throughout North America and in other parts of the world. But perhaps the biggest advantage of AAA membership is that you can claim roadside assistance even if you are travelling in someone else’s car and not in your own car.

Considering all the advantages of AAA membership vastly outweigh the disadvantages. No wonder the association has over 51 million active members who regularly use its services. If you are a frequent long distance driver, then you should definitely consider becoming a member. Even if you never use any of the services, the ‘peace of mind’ you will get from knowing that help is just a phone call away makes it worth every penny you will pay.

How about you all? Do you have AAA or another form of roadside assistance? If so, how often do you find yourself using the service?

Share your experiences by commenting below! 

***Photo by Jeremy Stockwell

Could You Live on Half Your Income? You May be Surprised

 The following post is by MPFJ staff writer, Kelly Gurnett. Kelly runs the blog Cordelia Calls It Quits, where she documents her attempts to rid her life of the things that don’t matter and focus more on the things that do. You can also follow her on Twitter and Facebook.

I always used to read those posts by crazy PF bloggers about how they lived on one spouse’s income while paying down debt, or how stay-at-home moms made their husband’s single salary feed a family of seven. And I always admired them, in a “we could never do that” way.

Until we had to do it.

 

Cutting Our Budget in Half in One Week

In April of this year, my husband stopped working due to his Fibromyalgia. (We’re currently in the process of applying for disability benefits, but that could take anywhere from 2-3 years to go through.) He didn’t realize how quickly he would hit his wall and not be able to work anymore, so for us, it was pretty much dual income one day, single income the next.

The normal reaction in a situation like this is to panic—which I did, quite thoroughly. But after a while, I begin to realize that this was our reality now, and it was either sink or swim. We’d find a way to make it work because, well, what was the alternative?

So, over the course of one surreal week, we sat down with our budget and began to triage—a bit here, a bit there. I’m a freelance writer, and we got our health insurance through my husband’s employer, so his job loss meant we’d be relying solely on my unsteady income stream and paying out-of-pocket for the insurance we previously hadn’t figured into the budget at all.

That week of budget-slashing—and the lifestyle we’ve been living as a result of it—was an eye opener. If you think you know what your minimum requirements are budget-wise, imagine what you’d pitch if you had to slash your budget in half. Then live that way for a while. You’ll never look at money the same way again.

 

How We Nixed Half our Stuff

Of course, the first things to go were all the little luxuries we’d come to take for granted. We weren’t living the high life by any means, but we’d definitely given into lifestyle inflation over the years. So away went my husband’s Sirius radio subscription, our weekly date nights, my salon haircuts (I trim my own hair now—yes, even my bangs!).

Then it was time for the stuff that seemed a little less luxurious. Here are some of the biggies:

We sold my car. Even though it had been paid off for a while, there was no sense keeping it when I work from home and my husband wasn’t working at all anymore. So we sold it and used the money to pay off my credit card debt and my husband’s remaining car payments. No more car payments, zero credit card payments—and no more second-car expenses like extra gas, insurance, repairs, etc.

We took a machete to our grocery budget. We’re not quite as disciplined as the school teachers who embarked on a mission to eat for $1 a day, but we did thoroughly slash our usual food budget. No more frozen convenience lunches for me; it’s fresh salads with a week’s worth of veggies that cost cents per serving (better for my health, anyway). No more steak dinners from the local butcher—it’s diner staples like grilled cheese and hot dogs. And no more massive monthly grocery trips where we always wound up buying way more than was on our list because goodies just looked too good on the shelves.

Now, we shop a lot more like Europeans—every few days, my husband runs up to the corner grocery store to get whatever we need to hold us over for the next couple days. We’ll stock up on sales on as they come and buy some items from a wholesale club because they’re fantastic deals (and our membership hasn’t run out yet). But it’s a lot easier to stick to the bare necessities when you’re just making a quick run for the immediate future.

I started to become my parents. My father used to drive me crazy by turning off my bedroom light every time I went to the kitchen for a drink of water. I’d be gone for two minutes and come back to find my room dark. Well, I have now become that person.

Any room we won’t be in for more than a couple minutes means the TV and lights get turned off. Laptop inactive for a bit? Off it goes. Over the summer, I ran my fan until I literally could not stand it anymore and had to give into the A/C. Laundry is run only when I have a full (plus) load, on the coldest water setting with the minimum amount of detergent needed. I use toothpaste tubes and shampoo bottles and bars of soap until they physically cannot be used up any further.

Yes, they’re all little things, but the little things do add up—and, more importantly, by getting into this new thrifty-as-can-be mentality, it’s easier for me to let go of the bigger things we used to enjoy because I’m fully aware of how much our situation has changed. So much of living above your means (or from paycheck to paycheck) stems from simply not having an urgent reason not to. When we could afford massages and weekly trips to Target, we did them, even though we could have been putting that money towards an emergency fund that would have seriously helped us out right about now. When you’re constricted by the sudden loss of an income, you begin to realize just how little you really “need” (more on that in a moment).

We’ve gone bare bones on entertainment. We do allow ourselves tiny indulges, largely because I work 50-60 hour weeks and my husband gets stir crazy, so it helps us keep our sanity. We go to the movies occasionally at the local $2 cheap theater, and we sneak in bottled drinks and snacks to avoid concessions. We signed up for Redbox promo code text alerts and regularly get free movie rentals. Our “meals out” don’t go above the price of a buy-one-get-one Subway deal or a Burger King value menu spree. But let me tell you, those $2 movies and value menu meals are fantastic! I never thought I would be so grateful for a fast food cheeseburger, but your perspective changes in situations like this.

 

The Surprising Thing I Learned

In addition to being amazed that we managed to cut our budget in half in a week, I’ve also been amazed by what that means: We didn’t need nearly as much stuff as we thought we did.

There are still plenty of times when I’d love, at the end of a long week, to have one of our old date nights out, complete with cocktails, dinner, and a movie in a theater with seats that recline. But for the most part? I really don’t notice a huge difference in our day-to-day lifestyle.

Yes, the threat of sudden big expenses like one of our dogs getting sick could put us into a tailspin now, and that’s never far from my mind. But in terms of how much we enjoy our life together on a daily basis, nothing has shifted all that much. If anything, we enjoy things more now because we don’t take them for granted the way we did before.

Would I be thrilled to have our second income back? Absolutely. But do I feel like we’re deprived without it? Amazingly, no. I wish me of several years ago could have learned that lesson.

How about you all? Could you live on half your income? What would you slash?

Share your experiences by commenting below!

image:  http://www.flickr.com/photos/76657755@N04/7408472762/