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Friday, July 3rd, 2009

Important Recession Lessons from Big Companies

We’re all looking for ways to cut spending, increase our savings and generally adjust to life in a time when credit is tight and jobs are scarce.

Here’s a look at some of the changes major corporations are making and what we little guys can learn from them.

  1. Bring Home the (Irregular) Bacon: According to CNNMoney.com, Marriott hotels found they could save two million dollars a year by switching their bacon from regular, rectangular strips to irregular slice – without sacrificing taste.Make it work for you: Now is the time to experiment with less expensive alternatives to your usual purchases – cuts of meat, brands of soap, Netflix packages. Don’t let a habit - also known as a rut! - keep you from looking for cheaper alternatives.
  2. Reevaluate the Extras: When airlines began charging extra to check bags, board first, have snacks, etc., many Americans were less than amused. But we also learned to pack lighter and bring our own food along.Make it work for you: Most of us pay for stuff we don’t really need or use. Take the time to reevaluate your spending to find and cut unnecessary items. Whether you opt for a cheaper cell phone plan, fewer cable channels, slower Internet or a different thermostat temperature, you could end up saving noticeable money.
  3. Share Whatever You Can: As a recent MSNBC article describes, two Chicago-area wedding planners discovered they could save serious money by moving their complementary businesses into one storefront. Make it work for you: Sharing can mean a lot of things – trading nights of babysitting with friends, pooling funds with neighbors for a big purchase like yard equipment, renting a room of your house to a boarder, etc. Even carpooling or joining a vehicle-sharing company like ZipCar can save you money by spreading the costs over a large group of people.
  4. Don’t Rule Out Filing Bankruptcy: As GM and Chrysler have shown us, even major U.S. corporations sometimes need the protection of the bankruptcy court.Make it work for you: If your finances are beyond rescuing on your own, consider filing bankruptcy. This type of protection is a last resort, but it exists for a reason – to give struggling consumers and businesses a chance to start over financially. Check out these articles on celebrities and bankruptcy.

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Saturday, June 6th, 2009

Saving Money — Are You Doing it Right?

Whether you’re recovering from filing bankruptcy or just trying to save money like the rest of us, you’re probably familiar with basic budgeting techniques: know what you make, examine how you spend your money, spend less than you earn, etc.

But are you doing it right?

Examine these tested money-saving tips:

  • Know the sellers’ tricks. If you’ve ever experienced that rush of excitement when you see a really good sale price or thrilling new item you didn’t know about, you’ve made a retailer somewhere proud. We all love the feeling of “discovering” a good buy, but keep in mind that vendors want to sell to you. Tricks like rearranging merchandise often to create a sense of urgency and creating hype around a sale are classic. Don’t let the artificial thrill of limited-time offers trick you into making purchases you otherwise wouldn’t.
  • Save first, then spend. Studies have found that people tend to part with “found money” more quickly than hard-earned dollars. So next time you get a check from Gramps or find a ten in the pocket of last winter’s coat, put it in the bank for a while. It seems that after such money has spent time in a savings accounts, we tend to be less willing to part with it.
  • Don’t ignore the big picture. Hopefully, you’re diligent about comparing per-unit prices at the grocery store, buying generic when possible and taking advantage of sales on necessities to pinch pennies. But are you as careful with bigger-ticket items? Make sure you’re crunching the numbers each time you plan to make a major purchase like a new appliance, a family vacation or a car. And keep in mind that the up-front cost is only one aspect: consider likelihood of repairs, repair costs, maintenance/energy costs, etc.
  • Shop with cash. It’s not surprising to learn that people tend to spend more money when no cash leaves their wallets – in other words, we drop more money when we shop with plastic. So use cash to limit yourself: decide what your budget is for a shopping trip and leave your credit cards at home. Even minor impulse buys can add up over time.
  • Compare prices wisely. A study of consumer behavior found that when deciding between choices of varying prices, we tend to practice what’s called “extremeness aversion.” If you see a really high-priced item and a really low-priced item, you’ll tend to go with the one in the middle. Call it the Goldilocks Effect. You can avoid this by researching what you want to buy ahead of time, deciding on features and a price range that suits you and sticking with that when you shop.

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Tuesday, June 2nd, 2009

Energy Bills Don’t Have to Rise with Temperatures

If it's after Memorial Day that means we can start talking about summer weather, right? (I say this even though it's cold and rainy in Chicago right now.

So as temperatures do, eventually, start to warm up, it’s time to start thinking about ways to keep your temperature and your energy bills down. Luckily, it can be done. Here’s how.

  • Don’t ignore the old advice. Though you’ve probably heard this suggestion a hundred times, it never hurts to repeat it: turn off appliances you’re not using. This goes for computers, TVs, radios, phone chargers, etc.
  • Check your air filters. Old, clogged air filters can decrease the efficiency of your air conditioner and heater, meaning you’ll use more energy and get less benefit. At the start of each season, replace old filters with fresh ones. Some estimates say a clean air filter could save you 5 percent a month.
  • Take advantage of more sunlight: Instead of turning on lights whenever you enter a room, see if you can rely on natural lighting. Plus, in the summer, fewer lights on means less heat released into the room.
  • Power down the computer. If you’re at home more during the summer, you may be tempted to leave your computer on all day. But this can guzzle energy and produce more heat. Shut down or put into sleep mode machines you aren’t using.
  • Cook at night. If possible, use the oven and stove during cooler hours of the day to avoid over-heating the house. Dishes like pasta salad, chicken salad and fresh fruit taste great chilled and can be made ahead of time. If you can’t prepare food before meals, try grilling – it’ll keep the heat outside.
  • Try windows and fans. Fans use less energy than air conditioning, so if you can stand it, try to cool your house without using the AC. According to a recent story by the Dallas Morning News, for every degree below 78 you set your thermostat expect to pay 5-7 percent more for your utility bill at the end of the month.
  • Guzzle yourself cool. Never underestimate the power of cool drinks like iced tea, lemonade and plain old water. Keeping yourself well hydrated is one way to make the heat seem less oppressive.
  • Adjust automatic appliances: If you have a timer for outdoor lights or a thermostat, make sure you take advantage of it. Keep the house warmer when you’re away and save the AC for when you’re home. And make sure automatic lights don’t come on until the sun’s down.
  • Close the curtains: Using heavy curtains to block harsh sunlight really can lower the heat in your house.
  • Look for Energy Star: If you’re in the market for new appliances, look for ones with high energy ratings. And use them wisely. This means only do full loads of dishes and laundry and use cold water.

Remember, a little savings can go a long way. A 5 percent savings may not sound like much, but if your bill is $200 a month then you could save $30 by the end of August. And that's enough to buy ice cream for everyone on Labor Day.

If you're doing everything you can to cut back and you're still struggling to make ends meet, it may be time to think about filing bankruptcy.

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Posted in Finance 101: Secure Your Future | Comments Off

Wednesday, May 27th, 2009

Disney Hops on Financial Literacy Train

Disney has teamed up with T. Rowe Price to create an exhibit that helps kids (ages 8 – 14) develop basic financial literacy skills – because we all know how much fun diversifying our portfolios can be.

The exhibit, which is located in Epcot, reportedly allows kids to earn currency for their piggy banks through games. The various “levels” require players to engage in increasingly sophisticated thinking and decision-making.

The exhibit includes interactive games that are designed to show techniques for:

  • Setting financial goals: Players begin by choosing a real-life event they’d like to save their video coins for.
  • Saving money: One game lets kids choose between guiding falling coins toward “savings” or “spending” buckets.
  • Spending wisely: At the game’s end, kids learn that too much spending translates into not meeting their financial goals.
  • Diversifying investments: Yes, Disney has tackled this issue, albeit at a kid-friendly level. Players must hide their coins in various locations so the game’s villain (a wolf to the hero’s pig) cannot find them.
  • Avoiding inflation: To impart this lesson, players must manipulate levers to keep the wolf (presumably appropriately big and bad) from devaluing their saved currency.

There's no word yet on whether they'll include a special section on bankruptcy.

Playing Online

Besides the Florida exhibit, Disney has launched the Great Piggy Bank Adventure Game on the Internet for non-travelling families to enjoy.

Can All These Games Really Help?

It’s certainly debatable whether getting really good at a video game about saving money will translate into any real-life financial literacy, Disney’s informational/promotional Web site (innoventions.disney.com) points out that the experience might “inspire families to discuss financial planning” and otherwise launch more broad financial literacy activities.

And it’s never too early to start teaching your kids about how to manage money.

For Older Kids: Good News

Obama signed the Credit Accountability Responsibility and Disclosure Act of 2009 (aka the Credit Cardholders’ Bill of Rights) into law May 22nd, and one of its new protections if for young adults (that is, under 21) with credit cards.

Now, in order for your older teens to get a credit card, you have to cosign for them.

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Wednesday, March 25th, 2009

Starting a Savings Plan

Whether you’re recovering from bankruptcy or just trying to improve your finances, saving money is essential.

How to Save Money

The secret to saving is to do it little by little. This isn’t winning the lottery, but over the years, the small amounts you sock away will accumulate.

Forced savings: If you don’t think you can resist spending what you earn, consider a plan that forces you to save. Many employers offer retirement accounts that automatically deduct money each month from your paycheck. Or, if you have a mortgage, you’re building equity in the home with every payment – another type of savings.

Mini-savings: Even saving toward specific goals can save you money. Consider opening a savings account strictly for purchases – a new car, a stereo, etc. Rather than paying interest on a loan, you can make a purchase when you have enough money in your account for a one-time payment.

Gradual savings: If you’re like most Americans, you don’t have much money left over after each paycheck to stash away. But that shouldn’t keep you from hanging on to whatever you have. Even 20 dollars a month will accumulate with help from compound interest.

Why Save? Think About It.

The safety net. If you’re hit by job loss, reduced income, divorce, injury or a natural disaster, you’ll likely have unexpected expenses.

Many people who file for bankruptcy do so because some surprise cost overwhelmed them financially. A savings account can help you in a crisis.

The money-saver. As you know, if you’ve ever taken out a loan to buy something (home, car, etc.), interest payments add up quickly. If you have enough money saved to pay sticker price with no help from a lender, though, you’ll save money in the long run.

Even if you have only enough savings to make a larger down payment, you can keep interest costs lower.

The money-earner. The beauty of savings accounts is compound interest: when you put money in a savings account, you earn interest on the principal amount (whatever you initially deposits) plus whatever interest your account earns.

So, the longer you let your savings account sit, the more money it earns you, and you don’t have to lift a finger.

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Posted in Finance 101: Secure Your Future, Post-Bankruptcy Debtor Education | Comments Off

Tuesday, December 23rd, 2008

Bills Keeping You Down? Check Out These Tips on Saving Money

Whether you’re recovering from filing bankruptcy or just trying to improve your financial situation, you’re probably looking for ways to make sure your finances are in top shape.

If you’re ready to start spending and saving a bit more wisely, you’ve come to the right place.

This page is designed to offer you some everyday tips for hoarding a little more of your hard-earned cash.

Pack it Up: Buying lunch every day may not seem like a major expense, but small purchases add up fast. Whether you pack five lunches on Sunday night or throw some food in your bag each morning before work, you could end up saving hundreds of dollars each month.

Shop Generic: Your grocer likely carries store-name brands of your favorite foods, and many of these taste no different from the pricier name brands. Save money at the grocery store by buying generic for a week or so – you can always switch back to name-brands if you don’t think the taste matches up.

Clip Coupons: Coupons are not just for grandmas anymore. Web sites like couponmom.com and others offer amazing savings on everyday purchases.

Make Some Coffee: Don’t worry – we’d never ask you to sacrifice your caffeine fix for the sake of savings. But, if you’re buying java by the cup every day, you’re likely dropping hundreds of dollars a year on the habit. Home-brewed coffee is much cheaper.

Walk it Out: This is a double whammy. Consider dropping a pricey gym membership (especially if you don’t use it that often) and walking to complete minor errands. This will save you on gym costs and on gas.

Crunch the Numbers: Is your cell phone plan the most logical for your talking and texting habits? What about your TV and Internet packages? Figure out how much you spend each month and see if you could cut back.

Put on a Sweater: Yes, we know you hated it when your dad told you to put on a sweater when you complained of being cold as a kid, but the man had a point: heating costs add up quickly, so if you’re chilly inside, consider layering.

Barter: Before currency was common, the barter system allowed people to trade goods and services without exchanging cash. Consider trading favors with friends (take turns babysitting each other’s kids, for example) or joining the retro-chic Swap Meet trend. Invite over some friends and tell them to bring clothes they’re no longer wearing – then trade the night away.

Thinking About Filing Bankruptcy?

If you’re struggling with mountains of debt and are having a hard time paying your bills, filing bankruptcy may be a good debt-relief option for you.

Talk to a bankruptcy attorney today.

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