Welcome to the Carnival of Personal Finance!  It’s officially Cyber Monday 2008, the online doppelgaenger to Black Friday.  This term was coined by the American Retail Federation three years ago after a majority of online retailers saw their sales go up the Monday after Thanksgiving.  Snopes found that the busiest online shopping day is not Cyber Monday but a couple of weeks after.  Regardless of whether online shoppers are only lukewarm about today, one thing’s for sure: there’s way less danger of getting injured by an online shopping cart.

So enjoy the Carnival, and head over to Amazon or eBay with full assurance that the Internet will completely protect you from e-bruising by other online shoppers!

Posts on Budgeting

• Mighty Bargain Hunter gives ways to save on food, clothing, and shelter.
• Canadian Dream: Free at 45 reveals his spending weakness.
• Studenomics asks if you’re cash-strapped this holiday season.
• M is for Money talks about zero-based budgeting.
• Green Panda Treehouse asks a hard question: “Do you pay your mortgage or your medical bills?”
• Penny Jobs asks a good question for tough times: “What can I cut back on?“

Posts on Career

• Economic Crunch runs through a checklist for taking advantage of benefits on a new job.  (These things can be a nice supplement to your salary.)
• Monagomoney offers parallel advice with five things to do if you get laid off.  (Hopefully you’re not needing both this advice and the previous advice in the same day.)
• Dog Ate My Finances (ha!) will take Common Sense for $200, Alex.  (Note:  Careful punctuation is crucial in this blog’s tagline.  Imagine, if you will, a misplaced colon: “Mid twenties.  Big salary.  Paying for some mistakes:  a wedding, and life.”  The name would then have to be changed to Alimony Ate My Finances.)
• Beating Broke asks: “What is freedom worth?“

Posts on Credit and Debt

• Free From Broke chats about medical treatment and how it can affect your credit.  (Especially if the costs are big.)
• Credit Toolbox discusses some aspects of refinancing consumer debt.
• Blueprint for Financial Prosperity has a list of 0% balance transfer offers.  (Fifty different offers.  You should be able to do a 0% transfer of the national debt with this volume of plastic.)
• Ask Mr. Credit Card: “Should teenagers have credit cards?”
• Discover Debt Freedom has some advice for someone trying to get out of debt for the first time.
• Single Guy Money has a credit score checkup.
• My Family’s Money talks about two states’ propositions on payday loans.
• Destroy Debt discusses debt settlement and some factors to consider before doing it.
• Think Your Way To Wealth gives a closer look at the Baby Steps plan.
• Debt Goal tells how to say “no” to your children this holiday season correctly.

Posts on The Economy

• Wide Open Wallet has some ideas as to what the government should be doing during the recession.  (I have my own thoughts but I like to keep this blog clean.)
• Everyday Finance – the Blog of a Thousand Tabs — has some choice words to say about repricing employee stock options.  (Ahh, stock options.  What a cool dream.)
• Amateur Asset Allocator postulates on what a privatized social security system would look like.
• Funny about Money observes that the Dow is up, in spite of it all.  (Yeah, I don’t buy it either.  The market’s always right, but remember, it’s still down over 5,000 points from its high.)
• Frugal in the Fruitlands reviews The Two-Income Trap.
• The Sun’s Financial Diary reports on the extent of the malaise in the banking industry.
• Earn What You Spend discusses some of the relevant financial news as the incoming administration gears up.
• No Credit Needed questions whether spending patterns are in line with the direction the economy is heading.
• Brip Blap gives a superb answer to the question: “Do you need a bailout?“

Posts on Finance

• The Strump wonders why we don’t like to talk about money.  (It’s dangerous, especially if you were wise enough to sell your stocks a while back.)
• InsureBlog discusses discounts and medical plans.
• Accumulating Money talks about Social Security insurance.
• Harvesting Dollars suggests making this year’s bonus season different.  (Assuming you get a bonus, of course.)

Posts on Frugality

• Just Thrive explains three rules for giving the perfect gift without necessarily spending a lot of money.  (Money is tight, so make the most out of your gift-giving.)
• Debt Free Saver has a very simple suggestion for holiday gift-giving.  (It gets back to the basic of gift-giving!)
• Money Ning asks whether we always think that saving money is worth it.
• Monroe on a Budget rattles off some practical Christmas gift ideas.
• The Smarter Wallet has some tips for the early-bird traveler.
• Online Saving Blog tells how to avoid the Black Friday hype.
• Uncommon Cents discusses personal opportunity cost.

Posts on Investing

• Investing School explains the important aspects of bond funds.  (I love how he reminds us that even US Treasuries can default. I happen to agree, but rates will go way up before they do that.)
• Crash Market Stocks goes through the basics of buying and selling options contracts.
• The Financial Blogger wonders if the Dogs of the Dow have had their day.
• Intelligent Speculator questions whether corporate bonds are really safer investments.  (Than, say, Forever Stamps.)
• Dividends4Life discusses how to manage your dividend portfolio in a downturn.
• Four Pillars discusses whether we’ve reached the death of index investing.
• ABCs of Investing gives a quick tutorial on index funds.
• Dividend Growth Investor discusses why companies should pay dividends.
• Greener Pastures talks about the Standard & Poor’s Aristocrat Indexes.
• Monevator shows how to get rich by playing a video game.  (Nice spin on things.)
• Cash Money Life recommends making some year-end retirement account moves.
• The Dividend Guy sold some dividend cut stocks.
• The Dough Roller asks if you follow the 50-50 rule of mutual fund investing.  (Click to see what the fifties are.)
• No Debt Plan continues the “No Debt Plan” series with a post on investing for retirement.  (Very nice post.)

Posts on Money Management

• Crackerjack Greenback questions whether you can really trust your financial adviser.  (It makes good sense to follow the money.)
• Smart Money Daily takes a look at whether winning the lottery is all it’s cracked up to be.  (After reading the post, I’ll probably never buy a lottery ticket.)
• About.com Financial Software lists eight good iGoogle financial gadgets.
• Wisdom Journal lays out ten economic truths we cannot ignore.
• Christian Personal Finance advocates letting your finances see the light of day.
• Sound Money Matters asks: “To gift card, or not to gift card.“  (That is the question.)
• American Consumer News doesn’t buy the two months’ salary thing.  (I don’t either.  But if I were a high-powered CEO with a yearly salary of $1, well … “Here’s your Secret Decoder Ring.  Will you marry me?”)
• My Wealth Builder lists a few personal finance strategies that have helped during times of economic crisis.

Posts on Real Estate

• Living After Foreclosure has some suggestions if you’re facing foreclosure.
• Insurance Toolbox comes through with seven practical tips for reducing your homeowner’s insurance expense.  (Some of these tips have other good side-effects in addition to lowering your insurance bill.)
• Growing Money Blog posts a rental property update.

Posts on Saving and Taxes

• Stumble Forward gives five tips to creating a stellar emergency fund.  (Covers the basics well.)
• Blogging Banks posts the best CD rates around.
• Dollar Frugal is sounding the charge and telling people to continue hypermiling.  (Great advice.  Gas prices are low because of the recession.  They’re still going to go way up as supply crunches hit.)
• The Happy Rock pits Black Friday against Buy Nothing Day.
• Deposit Accounts talks about flexible spending accounts.
• Money Smart Life compares a couple of online bank accounts.
• Saving To Invest has some end-of-year tax tips, among other things.  (Gee, I can’t imagine anyone would have capital losses this year to deduct, as kind as the market’s been to people, but just in case you do …)
• Online Banking Blog shows how to choose the best bank account.

Other Posts

• Happiness is Better lists three keys to banana-free living.  (Sounds a-peeling.)
• Curious Cat discusses a financial Thanksgiving.
• Free Money Finance asks if you’re using your dollar coins.  (All the time, man!)
• Chief Family Officer has an emergency preparedness checklist for personal finance matters.
• Digerati Life wonders if there’s any good time to start a business.
• Budgets Are Sexy is uber-tempted by sales e-mails.
• Living Almost Large asks if one should feel guilty for success.  (Absolutely not!)
• Prime Time Money gives six ways to argue less about money.

She’ll want that stimulus check now! Is it possible to win a million dollars and still file for bankruptcy in 2 months? Apparently so!

How to become a millionaire? Well winning a game show is one way to do it. But then again, here’s this story of such a “millionaire”, which I can only describe as a tale of riches to rags, or maybe of rags to riches to rags.

There’s this woman — no other than a State School Superintendent — who won a million dollars on the game show “Are You Smarter Than A Fifth Grader”? She won the grand prize and pledged to donate it to various schools. But since her win 2 months ago, her husband’s home building company has failed, forcing her family to file for bankruptcy.

Click this link or the image to see this CNN video.

Goes to show you just how tenuous our financial situation can be at any point in time. For many people, it only takes a layoff, one bad business cycle, one bad trade in the stock market or one major illness to wipe out the family’s fortunes. I covered a lot of this when I wrote about the only 3 reasons why people go bankrupt.

The game show winner is still honoring her promise to gift her winnings to schools, with the funds sheltered in a “gift foundation” that is supposed to be protected from her creditors. Hopefully, her donation stays intact and untouched throughout bankruptcy proceedings.

Now what else caught my eye this week? Some more reads from the financial web:

• The Sun’s Financial Diary: FDIC Problem Bank List Now Includes 171 Banks
• Money Smart Life: Black Friday Deals or Cyber Monday Savings?
• My Dollar Plan: An Administrative Error Could Cost You Your Retirement
• Bible Money Matters: Christmas Is For Debt?
• The Wallet: What’s Your Black Friday Strategy?
• Personal Finance Analyst: Online Consumer Education and Rip Off Report
• Happy Rock: The “Paying Cash” Experience - 2 Months Later

Recent Carnivals

• Carnival of Personal Finance
• Festival of Stocks
• Carnival of Money Hacks
• Review Bloggers Carnival
• Total Mind and Body Fitness Blog Carnival
• Best of Me Symphony

This is a post from The Digerati Life.

Bookmark It

FNBO Direct Provides Great Rates and Great Service

With interest rates continuing to be slashed across the board, finding attractive yields on savings accounts is becoming even more difficult. At the very least, you’d like to have your savings try to keep up with inflation, but even that can be a tall order these days. Of course, interest rates aren’t everything, and you also want a bank that is secure, provides great service, and has a useful online interface. Luckily, FNBO Direct is a great opportunity to receive a competitive interest rate, remain FDIC insured, and have access to a pretty nice online interface.

FNBO Account Features

• No account minimum
• 3.25% APY as of this writing
• FDIC insured

Just like opening an account with most online, or even traditional banks, you will need to provide some information in order to sign up, verify your identity, and link to other existing accounts. To open an account with FNBO Direct, you’ll need:

• Your Social Security or Tax ID Number.
• Your Driver?s License or ID card issued by a state DMV.
• Employer information.
• Information about any loans or mortgages that you may have to help us confirm your identity.
• For instant funding, you will need your current bank account and routing numbers.
• If a joint account, the other applicant’s information.

Sign Up Today

There are obviously a lot of choices when it comes to savings accounts, but with rates continuing to decline, making sure your money is working its hardest is increasingly important. While I’m not a big fan of rate chasing, I think FNBO Direct is a good place to stick it out. In the past, they have been one of the last banks to drop rates when it was time for a rate cut, and the rates are consistently at the higher end of the spectrum. So, sign up today for your own FNBO Direct account.

FNBO Direct Savings Account Review - High-Yield Savings at 3.25%

This Thursday is Thanksgiving in the United States.  If you’re traveling, please do so safely.  And especially with all of the market turmoil and uncertainty, please do what you can to focus on what you have and be thankful for it.

Here are this week’s posts selected for the Carnival of Debt Reduction, starting with the earliest submission:

• Tough Money Love has some choice words for credit card issuers and some debtors who would benefit from a bailout.
• Money Help and Tips comes through with a quickie on how not to abuse your credit cards.
• Destroy Debt lists over six dozen ways to save money while saving the environment.
• Financial Wellness Project wrote a guest post over at Clever Dude reviewing You’re Broke Because You Want To Be by Larry Winget and highlighting twelve rules of debt elimination.
• Deposit Accounts Blog gives a few ways to save money by trimming household expenses.
• Master Your Card shares six things she’s learned from being in debt.
• Economic Crunch played a high-stakes salary-negotiation game that paid off handsomely toward her debt reduction.
• Fix My Personal Finance has some thoughts on how to boost savings.
• Studenomics explains an interesting debt-ranking system.
• Bible Money Matters illustrates a way to control spending using the envelope system.
• Debt Reduction Formula has some reflections on money and debt.
• Budgets Are Sexy asks if you really have to use your credit card for things.
• Debt Free Destiny asks how freely your cash is flowing.
• Credit Card Assist lists the top three ways to build better credit.
• Finance Tips 101 asks if you’ve considered debt consolidation.
• Discover Debt Freedom gives a few suggestions for rescuing your finances.
• Digerati Life asks how the economy has affected how you save money.
• Broke Grad Student lists eight resources for finding college scholarships.
• The Smarter Wallet gives a number of frugal tips for clothes-shopping online.
• Saving Advice rattles off a number of ways to feel better without spending a lot of money.
• Credit Addict explains how to evaluate balance transfer credit card offers.
• The Happy Rock reviews Dave Ramsey’s Baby Steps.

Next week we have Green Panda Treehouse hosting.  Have a great week!

Additional casualties and signs of economic recession: laid off bloggers and your favorite web sites for sale!

Do you see what’s in store for you next year? Well, I’ve peeked at my crystal ball and can see the same thing you’re all seeing, an ugly 2009 as the economy continues to contract. Still no relief in sight (or maybe just a little, with Obama stepping in with a pep talk and an action plan).

Still, the tremors reverberate in the blogosphere.

More and more bloggers are reporting that they’ve been laid off, or are afraid that they will be. Some of the ones I know:

• Trent Lapinski’s Blog: Dear Barak Obama, I?m 22 I Just Got Laid Off, and I Can?t Afford College - Please Help (ugh! This was hard to read.)
• Amateur Asset Allocator: I Was Laid Off Yesterday
• Finance Your Life: Job Security: I Am Safe….Right?
• Shaun’s Real Estate Adventures: This is Why I Want Passive Income
• The Smart Passive Income Blog: Nevermind. I Just Got Laid Off

Judging by the dates on these posts, changes have been coming fast and quick! I’ve also mentioned that TechCrunch has this layoff tracker while Gawker (the online media name that bloggers look up to ) is selling off The Consumerist, and Valleywag (what!? one less Silicon Valley blog?) and trimming its staff. You can see how the online world has been taking its hits.

The trends have been reflecting reality for a while now, so when are they announcing that we’re officially in the dog house?

I’ve also talked about how we’re coping with the recession in Silicon Valley, but whatever else I’ve got to say about this can fill a book. Anyway, it’s been the subject of deep conversation between me and my close friends and family these past few weeks.

More Signs of Economic Recession Where I Live

Just to see how widespread the financial pain is, I’ve polled the people I know for their stories and concerns — here are just a few:

• A couple of people I know have been laid off in the last two weeks. These are people who work at smaller companies that are now embarking on cost cutting measures. With the VC spigot closing off, startups that aren’t solvent will be forced to cut back heavily or close down completely. Startups are living on borrowed time. These events are reminiscent of massive layoffs in Silicon Valley in 2000 during the tech bust, so it’s not new to me. I should get used to this happening every 5 to 8 years, I guess.
• Friends of mine who are consultants are experiencing delays in payments. Uh oh. They’ve done the work, but there’s some worry they’ll end up on a long list of creditors waiting to get paid.
• Too close to home! I never thought it would happen, but someone I know pretty well actually is in the process of losing their house. The story is complicated — he was a victim of a drawn out scam that got exposed by the housing downturn. And I’ve heard rumors of acquaintances going on short sales on expensive homes they purchased only a few years ago (and which I had the pleasure of visiting during house-warming parties galore way back when).
• I heard about how there are scores of luxury cars just sitting on Long Beach right now, with no takers. I got this story from a guy who’s well insulated from the crisis because he’s sitting on a huge pile of cash (he’s very conservative with his savings). Yet, he’s concerned about the effect of currency exchange on his international business.
• Some of us self-employed folks are seriously thinking of joining the many out there who’re already chasing what few jobs are around. I read that Cisco’s job listings have dropped by 93% in one week, from many thousands of openings to a trickle of a few hundred.
• I miss “happy” news. Could this be capitulation? Or close?

Break Open Your Emergency Funds

For many whose lives have been viciously upturned by the forces of the economy, it sure feels that this recession isn’t “normal”. But the reality is that this is probably what a “true” recession feels like. The waves of an economic downturn are much like dealing with the effects of an impending tornado. The tornado spares some while it devastates others. You just pray it doesn’t hit your household when it comes, although you can expect it to do a number on your landscape.

This has become a time of emergency for many. Our situation clearly emphasizes the importance of having enough insurance to cover ourselves when such a “disaster” hits — and when I mean insurance, I am referring to emergency funds and enough liquidity to tide you over during the storm. Does this mean we should have at least 1 years’ worth of expenses in cash? Maybe so, especially since nasty recessions can last that long! If you’ve got unemployment benefits covering you for 6 to 9 months plus a one year stash of cash, you could get through this nail-biting ride.

So let’s hunker down in the basement and see if we can ignore the angry winds out there for now. I’m doing it by starting the ball rolling on some portfolio rebalancing efforts (gah!) and selling off investment losers.

So let’s check what else is on the minds of our favorite financial bloggers, shall we?

• Consumerism Commentary: Take Control of Your Finances Part 5: Build A Better Budget
• Five Cent Nickel: Ted Turner on The Economy
• Free Money Finance: Is Your 401k Dying?
• Credit Karma: Are You Financially Prepared For Disaster?
• Rich Credit Debt Loan: Getting Rich By Leveraging Debt
• Lazy Man and Money: Oil’s Well That Ends Well
• Brip Blap: The Results Oriented Work Environment
• Frugal Dad: Looking For Happiness In All The Wrong Places
• Gen X Finance: Is an Extended Warranty on a Used Car Worth It? The Good, Bad, and Ugly of These Service Contracts
• Million Dollar Journey: Common Job Interview Questions
• One Mint: Can You Take A Loan On A Simple IRA?
• My Simpler Life: Fitting In Household Chores
• The Personal Financier: Thoughts on Citi in Trouble, Market Swings, Stock Charts

Notable Mentions Around The Web

• MSN Money Blog mentions our post on 10 signs of a stock market bottom.
• WSJ’s The Wallet Blog mentions our post on last minute gift ideas.

Recent Carnivals

• Carnival of Financial Planning
• Work At Home Blog Carnival
• Carnival of The Vanities
• Money Hacks Carnival

This is a post from The Digerati Life.

Bookmark It

We’ve got the recession in full swing in Silicon Valley and our region, along with many others, is experiencing job losses left and right. So how are we coping with things right now?

Over at the US News Alpha Consumer blog, Kim Palmer has begun a new series called “Recession 2.0, Do You Feel It?”, where she’s asked a few bloggers to share their latest thoughts on this financial slowdown. Well, I just turned in my article yesterday on how we’re dealing with the recession here in Silicon Valley, and it’s now been published.

Coping With The Recession: Income Check

In that article, I wrote with some detail about the adventures (and travails) of two self-employed people who have 2 dependents. My spouse launched his start-up around 2 years ago called BestInClass.com, and only recently did I go off to do my own projects (mostly to do with writing and internet related stuff). We’re doing fine, given the economic setting we have right now, but is what we’re doing enough to keep us afloat in Silicon Valley, where the cost of living is ridiculously stratospheric? That’s the million dollar question.

Well, we continue to trudge on, with just a wee bit of concern about our current income levels. If we continue to bleed green for an extended period of time, we’re going to make a few adjustments (like focus on snaring more service-oriented contracts), but it looks like we’re going to hold on to status quo for now.

Cutting Costs….Hard: There Go The School Funds

Some major change in attitude though, in our household. If you’re a parent (or maybe even if you’re not), you can empathize with this story: there’s a little kid, one of our sweet neighbors, who regularly comes by to sell stuff to raise funds for his school. I’m normally pretty generous and buy items from him every time he drops by. I do the same and order a load of items from my own kids’ schools to support our school district. Unfortunately these days, we’re now watching our money like hawks and account for everything that leaves our pockets. This means that $25 scented gift candles and various overpriced assorted bric-a-bracs, chocolates and what not are no longer part of our discretionary budget. So for the first time ever, I had to leave our little neighbor boy empty-handed. The sad part of the story is, the rest of the neighborhood had the same idea (I took a peek at his order list, and it was pretty much empty).

When times get tough, priorities rule even harder.

Carnival Roundup

Now for the latest from the carnivals! MoneyNing gives us the Smile Edition of the Carnival of Personal Finance. David Ning just quit his job to be a full-time problogger too, did you know? Congrats to him for making the huge step! Anyway from his list of financial articles, I picked a few neat ones to showcase here:

• Free From Broke: Never Mind A New Economic Stimulus Package - Save Yourself! Here are more thoughts on the second stimulus check.
• Cash Money Life: Year End Retirement Plan Moves
• The Wisdom Journal: Money Is 100 Percent Emotional

Next up, The Festival of Frugality was put together by The Financial Wellness Project. You’ll find these posts among other money saving articles in their awesome list:

• Passive Family Income: Turn Frugal Behaviors Into A Game
• Shark Investor: How YOUR Saving Advice Caused The Financial Crisis
  
• Money Beagle: Saving Money By Mulching The Leaves

Recent Carnivals

• Carnival of Money Stories
• Investing Carnival
• Carnival of Money Hawks
• Road To Financial Independence
• Carnival of Debt Reduction
• Total Mind and Body Fitness Blog Carnival
• Best of Me Symphony
• Kids and Money

This is a post from The Digerati Life.

Bookmark It

If you’ve purchased a used car from a dealership in the past few years, you’ve undoubtedly encountered the extended warranty option. To be clear, while most of these are described by the salesmen as warranties, most are actually service contracts. A warranty is built into the price of the vehicle, whereas a service contract costs extra and is purchased in addition to the vehicle itself. A warranty and service contract both generally achieve the same goal, just keep in mind that if you have to purchase it on top of the vehicle itself, it’s probably a service contract.

On the surface, the added protection of covering your vehicle for an extended amount of time seems like a good idea, but before you jump in, make sure you understand what you’re getting yourself into. These are products that are pushed because they make money for the dealer and salesperson. There are times when buying the service contract can be a great idea and save you money, but there are plenty of situations where it is completely unnecessary and will just end up costing you money. And worst of all, there are actually some companies that are little more than scams.

Consider Your Situation First

Before you decide on whether or not you could use an extended warranty or service contract, consider your situation. First, does the vehicle you’re intending to buy have an existing manufacturer’s warranty that will carry over to you? If so, how many miles or years are left before it expires? Many auto manufacturers are including longer warranties that in most cases are transferable. So, if you’re buying a car with a 70,000 mile existing warranty and it has 15,000 miles on it when you plan on buying it, that’s entirely different than buying the same car with 65,000 miles on it. In the first scenario, buying the extended warranty would be a bad idea with so much life left in the existing warranty, whereas the second scenario might point to an opportunity.

Consider the Cost

To be blunt, many of these service contracts are expensive. That doesn’t automatically mean they are all a rip off, but you do need to consider the likelihood of needing repairs, what those repairs would cost, and then determine if it makes sense. Depending on a number of factors such as what is covered (i.e. is it comprehensive, or just powertrain?), the deductible, and the length of contract, prices can vary from just a couple hundred dollars to a couple thousand dollars.

What you’re ultimately doing is placing a bet that you think your repair costs over the length of the contract will be more than you paid for the contract itself. For instance, if you paid $800 for coverage that will last you about two years, you have to ask yourself if there is a good chance that over the course of those two years you’ll need to have $800 or more worth of work done. If it isn’t very likely, you might as well save your money. But if you think that is clearly a possibility, it might make sense. It’s like buying insurance. You never know if you’re going to need it, and if you don’t use it, it feels like wasted money. But if you do need it, you’re sure glad you have it.

Other Benefits to Consider

Another thing to consider with these types of service contracts or warranties are the possible other benefits. Many will offer a free loaner car when you have to bring your vehicle in for service. That can be extremely helpful if you’re in a situation where you need a car or don’t have many options for sharing a ride. Some may also pay for the cost of a rental car as well. So, if you’re in the shop for a few days, this can be a nice benefit to have.

In addition to getting a spare car when yours is in for repairs, some contracts also provide free towing service in the event you break down. While this isn’t as big of a concern if you have AAA or some sort of roadside assistance, if you don’t have these, it can be a fantastic benefit. Again, it’s something you hope to never have to use, but if you do, you’ll be thankful you have it.

Dealership Repairs vs. Mechanic

One thing you need to consider is the cost difference between dealership repairs vs. having your local mechanic handle it. Obviously, the dealership is going to charge more for parts and labor. It’s what they do. And if you buy a service contract, that generally means you have to take it to the dealer, or at least an approved location in order to have the work covered. Of course, if you have the coverage, you’re not paying for it out of pocket, so you don’t think much of it.

But, that’s where you have to decide if it’s really a value or not. If you’re shelling out money for additional coverage, what would happen if you took your vehicle in to a local mechanic instead? You would have to pay out of pocket, but since you’d be paying less for the same repairs, it still might end up cheaper than buying the service contract to begin with.

My Personal Experience

I’ll give you an example with a personal experience I’ve had with used cars and service contracts. We have two used vehicles. In one case, it was clear that buying additional coverage would be a waste. With the other, it was a little bit harder of a decision. With the second car, it had 23,000 miles, and the manufacturer’s warranty only went to 30,000. Since I would be the one driving and I put on around 18,000 miles a year, the prospect of running out of coverage after just three months from the purchase was the first indication we might want to consider adding coverage.

Then we had to decide what type of coverage we wanted. Just powertrain coverage, or something more comprehensive that covered everything from a broken door latch to the electrical system. Looking back at my scenario, I do a lot of driving, on rough roads, and harsh winters. The chances are pretty good that there will be more than a couple repairs needed over the coming years, so comprehensive was looking like a better option, but that all depends on price.

After all said and done, we were able to get a 100,000 mile service contract for $1,500 with a $50 deductible. Sound expensive? Yep. But, that’s where you have to decide whether or not you think you’ll need $1,500 or more in repairs over the course of 77,000 miles, or in my case, a little over four years. If you’ve ever had to pay for car repairs out of your own pocket, you know just how fast things can add up. So, I felt it was a pretty safe bet given the situation.

Sure enough, after about 8 months, we had a problem with the transmission. Total bill? Around $1,200. A year later, a few more problems developed. The radio wasn’t working right, the seat didn’t recline properly, and just a few other little misc. problems. Another $500. And just a few weeks ago, took it in for a terrible clicking problem with the master relay, a rapidly deteriorating wheel bearing, a leaking axle seal, and a leaking exhaust manifold, for another $1,800.

Now, that $1,500 + $150 in deductibles doesn’t look so bad considering the $3,500 in repairs, and the loaner car for about the 10 total days it’s been in the shop. Could the work have been done cheaper than that by taking it somewhere other than a dealer? Probably. But I also would have been in a situation where I would have had to rent a car, and a small shop may have required more time to get the repairs done. Of course, we could have been “lucky” and the car could have never had any problems, and it would have felt like throwing money away. You just never know.

The Verdict?

You have to be very careful. Any dealer is going to try and sell you one of these. They will make it sound like a great deal, but it’s up to you to do the research to determine whether or not it’s really worth it. I’d say that for most people, given the cost, these warranties or service contracts aren’t going to be worth it. But, if you do the math and find out that it could be beneficial, then it might be worth considering. But don’t let the salesman bully you into a contract.

A better option for most people would be to set aside a “vehicle fund” to work as your own extended warranty. If you put $1,000 or $2,000 into a high-yield savings and sort of earmark that for unexpected vehicle repairs, your money can actually earn interest while it’s there and ready in the event you need it. While you might miss out on some of the added benefits of buying coverage, you’re in better shape if you’re fortunate enough to have a car that doesn’t need any, or only minor repairs.

The bottom line? Generally, these are unnecessary and costly. In some cases, if your situation warrants it and the price is right, it can be worthwhile. Just make sure you know what you need, how much it will cost, and what you’ll actually get out of it before rushing into a decision. And most of all, read all of the fine print! Make sure you know what’s covered, what isn’t covered, and what all of the limitations are. This is where a lot of inexpensive contracts snag you. They offer a good price, but you find that a lot of stuff isn’t really covered and you really are just throwing money away.

Is an Extended Warranty on a Used Car Worth It? The Good, Bad, and Ugly of These Service Contracts

I’m really excited for my wife.  She showed some of her quilt patterns to the owner of a local quilt store, and the owner has decided to give a trial run to ten of her patterns!  She loves designing quilts so this is a big deal.  She’s also gearing up for a craft show.  A few of her patterns are here, and she blogs about quilting as well.

Here are some posts I pieced together from the great blogs in my reader:

• Mrs. Micah talks about anchoring as it applies to credit card minimum payments.
• Get Rich Slowly shares almost three dozen make-it-yourself gift ideas from his readers and other sources.
• Paid Twice gives five concrete tips for paying yourself first.
• Money Ning combines financial and physical well-being with this post.
• Green Panda Treehouse saved money with her own cable-phone-internet bundle.
• Smart Spending lists a number of Black Friday deal sites.
• Wisdom Journal offers some sound advice for weathering the dark economic cloud.
• Think Your Way to Wealth considers whether $2 gas is good or bad.
• Five Cent Nickel reports on the 2009 tax brackets.
• Don’t Mess with Taxes celebrates three years of tax blogging.
• All Financial Matters picked up on the guaranteed retirement account movement.  (Also known as Social Security 2.0.)
• Free Money Finance has a guest post on giving generously during hard times.
• The Simple Dollar posts on investing in skills for the slippery slope down.
• Chief Family Officer is very thankful for her family’s emergency fund.

Mighty Bargain Hunter’s Carnival participation:

• The Digerati Life included my income streams post in last week’s Carnival of Personal Finance.
• Money Ning included my forget the lolcats post in this week’s Carnival of Personal Finance.
• Simply Forties chose my basics of debt reduction post as an Editor’s Pick for this week’s Carnival of Debt Reduction.  Thank you!

Have a great week!

Investing for retirement is one of the staples of financial planning. Almost everyone will either choose to, or be forced to stop working at some point, and having money set aside to fund these non-working years is important. In addition to retirement, there is an increasing trend in saving and investing for college expenses. College tuition is increasing rapidly, and many parents are looking to provide some relief so their children aren’t burdened with tens of thousands of dollars of student loan debt after graduation. With the creation of Section 529 plans, more people are aggressively saving money for college, and now have the opportunity to not only receive tax breaks for doing so, but they can put this money to work with various investments. But with these options and benefits come some drawbacks and things to watch out for.

Understanding Time Frame

One of the greatest factors that determine how you should be invested has to do with time frame, or time horizon. Knowing how long your money has to grow will largely dictate what type of investments you choose. But when it comes to investing for retirement versus college, while it appears simple, there is more to consider than looking at how many years you have left.

With retirement, most people have a lot more flexibility. For one, retirement age comes at different times for different people. Some retire in their 50s, while others work into their 70s. So, just because you’re 30 years old and expect to retire at 65, that means you have roughly 35 years, but it also means there is flexibility. Who knows what will happen over this time, you may retire early, you may be forced to work longer, or you may change careers. Whatever the case, you have the flexibility to take on some risk with your investments.

Looking at college savings, there is much less flexibility and the time frame is more rigid. If you have a child, you know that from birth, you have roughly 18 years until college. On top of that, you know that once they enter college, they probably have around 4 years in which they need to withdraw funds from the account. Sure, some children might get scholarships and not need the money, others might wait a year or two before attending college, or some might go on to earn a graduate degree. But for the most part, there is a fairly specific time frame at work which can limit the amount of risk you’re willing to take.

Why This Affects Investment Decisions

With 18 years of growth, and about four years of withdrawals, most people would see no problem with investing fairly aggressively, especially in the early years. This is to be expected, because stocks generally do produce high returns, and with that much time for the money to grow, you can weather the ups and downs. Even so, when you go back to the flexibility of extending your time horizon or putting off withdrawals, you really don’t have that as a luxury when it comes to college savings. What happens when your child is ready to head off to college and your account is down, are you going to tell them they have to wait a few years before they can start college so your investments can recover? Of course not. And if you wait too long, your window for using that money without taxes and penalties may be gone. You’ll likely have to settle for selling at a loss and maybe even foot more of the tuition bill yourself.

As you can see, even though there is more certainty in regards to how much money you’ll need, what tuition will cost, and knowing exactly how long you have to invest, it doesn’t remove any of the risk. While retirement may yield many unknowns, you at least have options in which you can plan for, and structure your retirement to make everything work.

You also have to consider the withdrawal phase. Like I mentioned above, for most people, withdrawing funds from a college savings plan will take place over a relatively short amount of time. But when you look at retirement, the withdrawal phase can span 20 or 30 years. This allows you to remain invested, at least in part, in stocks even while in retirement because you have another few decades in which you are slowly withdrawing the funds. With college, again, you need to depend on that money over just four or five years on average, so the need to safeguard those funds leading up to, and once the child is in college is very important.

How to Invest Your College Savings

When it comes to investing for college, many of the same rules apply as investing for retirement. But what really changes is the amount of time you spend in each investment phase, and ramping up to a more conservative portfolio earlier. To see why, just take a look at what the past 10 years has shown us. Over the past 10 years, the S&P has a negative annualized return. 10 years may account for half, or even more of your entire time to save for college. That could have a significant impact on how much money you are able to accumulate. So, here are some guidelines:

Birth to Age 5: Just like someone that’s just starting to save for retirement, it’s a good time to be investing in stocks. At this point, a diversified portfolio in stocks would be fine. You’d probably focus on primarily holding domestic large-cap stocks while rounding it out with some international and small or mid-cap offerings.

Age 5 to 10: At this point, you’ll already want to start getting a little more conservative. You’d probably want to think about a 70% mix of stocks and and 30% in bonds. You’ll want to stay diversified across the spectrum of stocks, and probably focus on something like intermediate term bonds.

Age 10 to 15: By now, you’ve crossed the halfway point if you’ve been investing since birth, so it’s time to ratchet things down a bit further. A 50/50 mix of stocks and bonds is going to be the name of the game for the next few years. You’d want to still keep a broad diversification of stocks, but you’ll also want to add some higher quality bond holdings. Of the bond portion, you’ll probably want to keep half of it in low-risk areas like a money market or fixed account.

Age 15 to 18: As you approach the home stretch, you want to make sure that any sudden market declines won’t completely drain your account since your child will be starting college in just a couple years. Three years isn’t enough time to rely too heavily on market conditions, so you will probably want to rely on a 75% allocation of bonds, and 25% in stocks. Now, you should begin to focus a little more on safer, income producing stocks, and shift towards more high-quality bonds. Remember, since you need the money in just a few years, you’d rather have a meager 5% gain than a 5% loss each year heading into college.

Age 18+: Your child is probably ready to start college, and that means the first tuition bills are due. Now is not a time for surprises, so you should be focused on generating predictable income from your investments. At this point, your investments are more or less a savings account that will regularly be tapped into. So, most, if not all of your investments will be in very safe things like money markets or fixed accounts. It’s still fine to keep a little money in the stock market to try and keep up with or beat inflation, but you probably don’t want more than 10% at risk.

Keep in mind that these are just guidelines, and by no means absolute terms. Economic conditions, interest rates, and the number of children you have and what their goals are will largely dictate exactly how you invest. But, this is a good starting point. If you’re able to begin saving and investing right from birth, that’s great. But keep in mind that if you don’t start until your child is older, it can be like playing with fire if you try to accelerate your returns by being more aggressive. Remember, just one or two bad years of returns could wipe out a year’s worth of tuition, and you have a limited amount of time to recover.

I’ve been meeting with a lot of people lately who started saving for their child’s college in just the past few years, and they have 15 year olds while they are invested entirely in stocks. It’s certainly not very fun to see your college fund cut in half in just a year when your child has just a few years to go until needing the money. So, it pays to be a little more conservative, especially in the remaining five or so years leading up to college so there aren’t any surprises.

Investing for College Requires a Slightly Different Approach Compared to Investing for Retirement

If you’re covered by a health plan, you’ve probably encountered the words deductible, co-pay, and co-insurance a number of times when examining your bills, paying your doctor for a visit, or simply looking at the benefits package from your employer. These terms can be a bit confusing, and with all of the limits, maximums, and different coverage options, it is important to understand what they mean so you can obtain the best coverage for the right price.

When looking at your health insurance options, it’s important to go beyond the premium. The premium is the amount you pay each paycheck or month just to have the coverage. Obviously, you want the lowest premium you can get for the coverage you want, but you really need to look beyond that. Saving $20 a month on your insurance premium may end up costing you hundreds of dollars in co-pays or out-of-pocket expenses. So, let’s take a look at how you can make sense of all these terms.

Defining the Terms

Deductible

This is probably the most straightforward, and easiest ways to change the premium on your policy. The deductible is the amount that you need to pay for a claim before the insurance kicks in. If you have a $50 deductible and you are billed for $500 in services, you’d need to pay $50 out of pocket before the remainder is sent off to the insurance company.

Obviously, the higher the deductible you choose, the lower your premium will be since you’ll be covering more of the expenses out of pocket. So, you have to be careful. If you choose a high deductible in an effort to keep premium costs down, a period of poor health or unexpected medical treatments could add up quickly.

Don’t forget the maximums. Deductibles usually have an annual maximum, for both individuals and families. When comparing plans or options within your plan, determine how likely it would be that you’d reach those maximums, and if two plans have different maximums, think about which one provides the best cost-to-benefit ratio.

Co-pay and Co-insurance

The co-pay is probably another common term you’ve heard, and have probably paid a number of times without thinking much of it. Co-pay and co-insurance are basically the same thing, but cover different items. In either case, this is the amount of money you have to pay for a claim or service rendered. The difference is that a co-pay is typically a flat dollar amount for a specific item such as an office visit, exam, or prescription. Co-insurance is typically based on a percentage. This means that you’re responsible for a certain percentage of a claim, and the insurance provider is responsible for the rest.

Again, when comparing plans, the co-pay amount or co-insurance percentage can play a big role in how much your premium is. A plan with an 80/20 co-insurance (insurance company pays 80%, you pay 20%) will have a higher premium than a 50/50 plan, and so on.

Compare All the Numbers

So, when you’re exploring your health insurance options, it pays to look at more than the premium. While the premium directly affects your bottom line, saving a few dollars on the premium could cost you much more in the long run, and paying a higher premium for coverage you might not need may also cost an unnecessary bundle.

This is especially important if you have a certain condition that requires specific tests or drugs, or if you are planning on having a baby, as the amount of coverage provided for these items may require digging a little deeper than glancing at your premium. So, take the time to completely understand your health benefits, and you can be sure that you’re getting as much coverage as you need, and paying no more than you have to.

Comparing Deductible, Co-Pay, and Co-insurance When Looking at Your Health Insurance Benefit Options

It’s one of those “deep-thought” days when I switch myself into a philosophical mode. Sometimes, this results in some extreme contemplation about the things I have been generally doing in my life. This time it was all about financial contemplation. The choice of the title is obviously inspired by the book “Zen and The Art of Motorcycle Maintenance” by Robert Pirsig.

Before I start my rant, let me give you a very brief summary of what is the concept of Zen. It essentially means going back to the basic fundamentals, starting from zero, and building your way up (Robert Pirsig’s Zen, not the original Zen). This much knowledge is sufficient for the purpose of this article. If you want to read more about this concept click here and here.

Your financial life is a big machine with a lot of odds and ends thrown into it. To maintain this beast, you require some kind of financial prudence. Now, if there is a problem with this machine, the *Zen* way is to start looking at some fundamental issues. To do that, you have to take it apart and try to put it back together. In doing so, you will realize the significance of each component. This is exactly what I will attempt to do in the following.

I have listed some potential fundamental roadblocks that defeat financial prudence. Along each factor, there is a short line of description that sort of adds financial relevance (it’s deep…you could apply this to many other issues in life). Please note that these are from my personal experiences. I will encourage readers to find some peaceful time and do this exercise for themselves at least once.

1. Greed: This is foremost cause of most financial troubles. We want more, and we just don’t want to stop. Our greed not only puts us in the holes but also makes other people’s life miserable.
2. Lack of self-control: Sometimes we acknowledge our greed, but we just can’t stop spending any how. Credit cards don’t swipe themselves, we swipe them.
3. Lack of foresight: Greed also blinds our foresight. We buy stuff, but we simply fail to estimate how much it is going to cost us in the long run. Don’t buy an elephant just because it’s being offered for zero down and no payments for 12 months.
4. Underestimation of consequences: Sometimes, we have all of the above, but we grossly underestimate the financial repercussions of our decisions. You can also term this as too much optimism or lack of proper judgement.
5. Ignorance: Ok, people don’t like to acknowledge this, but this is true. How many of us really know how credit card payments are calculated? Whether your card is a charge card or a credit card? Whether not paying telephone bills affect your credit score? What is the grace period on your credit cards?
6. Inability to recognize a problem: Sometimes we don’t realize that we have a problem. At times we don’t recognize the *right* problem. If you earn $120K a year and still live paycheck-to-paycheck, low income is not your problem, it is something else.
7. Inability to learn from previous mistakes: Ok we made that late payment once and paid for it with heavy fines and increased APR. What did we do about it? did we make changes to the way we do things to avoid making the same mistake again?
8. Lack of organization: Oh ! I forgot to make the minimum payment. Oh ! forgot to mail in the rebate. Oh! I thought this due date was for the other card that I have. Oh ! I thought I had more money in my bank when I wrote that huge check for that expensive television.
9. Sheer laziness/carelessness: Ah!..what’s the hurry, I will do it later. I have seen countless people not willing to check out more than one store for some of their large purchases…the reason: “I am bored already”. Here is another one I have heard recently, “I don’t know anything about what kind of 401K plan our company offers. I have been planning to talk to HR about it, but I find it very boring to discuss this financial stuff”. What?!
10. Overconfidence: This is really dangerous when coupled with ignorance. Leads to situations like “I can make this mess and then I will easily bluff my way out of it”
11. Circumstances: This one is tricky. There are two types of circumstances. Type 1: self-inflicted; these are due to some or all of the above reasons. Type 2: sheer bad luck; these are just out of your control: medical expenses, car trouble, job loss, failure to garner enough votes for the economic bail-out package, etc.,

Except “Type 2″ circumstances, there is a scope for improvement in all of the above. We just need to look into ourselves before point fingers for our financial mess. Once you do that, you will be an expert in the art of financial prudence, and hopefully stay out of trouble for a long time to come. This is more philosophy than practicality, but you can give it a try..it may work for some of you.

In all humility, I am guilty of some (almost all) of them at some point or other, but I am learning.

Since reading some comments on my last post, I had been thinking about what this whole deal with “personal finance” is about; is it about making the most amount of money? or is it about saving the most amount of money? or is it about spending the least amount of money? or is it about reducing stress due to money matters? or is it about this obscure concept called “financial freedom”?

The more I think about it, the less specific I get about possible “correct” answers to that question. In fact, looking back at my life, it seems that at different times, a different answer suited me depending on my financial and personal situation at that time.

What came out of this thought process was the realization that personal finance is not just about “maximizing money” - as I used to think earlier - and like most people probably think about it.

It’s not about maximizing. It’s about optimizing.

Given a financial situation, personal finance is about making the best of that situation. Sometimes it means trying to make as much money as you can, and at other times it means trying to make your money work to make you more efficient by reducing your stress, and at some other times it means that you save every penny to make sure that your children don’t inherit your burden of debt.

There is nothing wrong in trying to “maximize money”, but it is important to realize that, depending on your personal situation, there are costs (in terms of stress and time) associated with trying to do that.

Examples are numerous (but vague and difficult to explain) in this area, but a simple one would be to think of a job in which you are paid overtime. Every extra hour you work might mean that you will become richer than the previous hour, but it does not mean that you would be stress-free - or that you would be able to devote enough time to your family. If you overdo it, it wouldn’t be too hard to make yourself and your family feel miserable even with the extra money you earn.

Working your ass off for a few extra bucks might be a good idea when you are a bachelor with hardly any cares in the world, but if you are a family man, then you might be better off by working a little less in lieu of spending a little more time with your family. Now, just because you gave up that little extra money to spend time with your family or to reduce your stress, it does not mean that you are careless or frivolous with your personal finances. In other words, just because you chase every penny, it does not mean that you are an epitome of financially astute people.

In general, for the sake of the betterment of the whole universe and your own self, try optimizing your money instead of maximizing it. It also helps to reevaluate our understanding of “personal finance” in perspective of our changing personal situation and revise our money-chasing efforts accordingly.

Duh!

The August 2008 issue of Consumer Reports — one of my favorite personal finance magazines — features two articles that may be of interest to readers of Get Rich Slowly. The first offers tips for cutting expenses. The second gives a brief overview of budgeting.

Cut your spending by $500 per month
The Consumer Reports Money Lab looked for easy ways for the average American to save money. They came up with six suggestions and estimated potential savings for the average consumer. Here are their suggestions (with links to relevant articles at GRS).

1. Find cheaper auto insurance. By shopping around, the average person can save $65 per month. Need help? Here are 10 expert tips for saving on car insurance.
2. Optimize your life insurance. Premiums have dropped in the past ten years, the article notes. It may be worth replacing an existing policy. Also, by adopting a healthier lifestyle, you can cut costs. Average savings? $110.
3. Shop smart for food. CR cites U.S. Department of Agriculture data indicating the average family of four can drop its grocery bill by nearly $200 per month though smarter shopping. We just discussed grocery shopping tips on Monday.
4. Stop paying bank fees. The average U.S. household pays more than $25 per month in bank fees. There’s no reason to do so. Learn how to avoid overdraft fees and get yourself a high-interest bank account.
5. Call up cell phone savings. According to the U.S. Bureau of Labor Statistics, the average family spends $90 on phone-related expenses. Consumer Reports suggests checking to be sure you’re not paying for too many minutes.
6. Pay off your credit card. If you can get out of debt, you’ll not only save on finance charges, but you’ll also free up the cash that was going to pay the principal. Estimated monthly savings: $65.

Consumer Reports also encourages readers to increase contributions to their 401(k) plans. This helps prepare for the future and reduces that tax bite today. You can read the entire article at the Consumer Reports web site.

Create a spending strategy
Last autumn, I shared my notion of a spending plan, which I called a “budget for non-budgeters”. Consumer Reports likes spending plans too:

That’s what a household budget really is — a plan to track your spending and keep it within boundaries. Done right, a budget lets you spend without guilt. Here we offer ways to make your budget — oops, spending plan — simple and painless.

Their advice will be familiar to long-time GRS readers:

• Set goals. I believe that the road to wealth is paved with goals. Consumer Reports believes that long-term goals help you achieve big things, while short-term goals keep you motivated.
• Track expenses. It doesn’t matter how you do it, but track your spending. You can use a notebook, computer software, or even online tools.
• Plan for surprises. If you haven’t already, start an emergency fund. Most experts advise saving three to six months of living expenses, but CR suggests a “personal escrow” approach instead.
• Set priorities. Know which bills get paid first. For most people, this means the big things like food and home. (If you pay yourself first, it may be your retirement.) Whatever’s left after your expenses is your discretionary money.

The full article includes tips on how to create a web-based spending plan. The rest of this month’s issue includes ratings of large kitchen appliances, tips on buying tickets to shows and ballgames, and a tests of two dozen running shoes. (They didn’t test the pair I bought last month, though.)

---
Related Articles at Get Rich Slowly:

• The Consumer Reports Mother’s Day Gift Guide
• Credit Card Advice from Consumer Reports
• How to Drive a Great End-of-Summer New Car Deal
• 20 Free Ways to Save Energy
• Consumer Reports Auto Issue Round-Up: Top Picks for 2007

This is a guest post from Amanda, a Colorado tech writer and an activist for children with congenital heart disease. This article is about Amanda’s personal experience with insurance. It’s not a prescription for other people, but insights into the value of insurance in her own life. It’s her hope that it will get you thinking.

There was a time in my life when the thought of insurance made my eyes glaze over. I’ve never been one to want to read details in insurance contracts, license agreements, etc. I also don’t always enjoy thinking through potential unpleasant situations. So, when it comes to buying and using insurance, I’ve learned some lessons the hard way.

I’ve made some mistakes with my car insurance, for instance. When I bought a second car to drive to grad school several years ago, I thought, “No, I don’t want to pay $3 extra a month for rental car coverage because we have two cars.” A few months later, I rear-ended a woman on the highway going 45mph. It took a while to get my car back, and my insurance went up a lot. But it also made it difficult for my husband Jim to get back and forth to work while I used the other car for work and school.

I had thought I didn’t need rental car coverage, because I figured, “Oh, I won’t be the one to cause an accident.” Ha! There is a reason it’s called an “accident.” So, lesson learned — I needed rental car coverage. I learned was to understand what I was buying.

Insurance details can be a pain:

• How high of a deductible can I actually afford?
• What kind of impact will that have on my emergency savings if I have to pay it?
• How much will I save by trimming features?

Recently I got a notice that wet- and dry-rot are no longer covered in my homeowners policy — do they know something I don’t? I’m still trying to figure out what this means to me, but I did notice that the price didn’t go down. Also, it took me five months to update the beneficiary information with the insurance company; I finally got it done right before Christmas. So, I’m not an insurance expert by any means, but I am a consumer and I have to make choices.

You’ve got my back — right?
In the early 1980s, my dad had his left foot crushed in a construction accident, and he nearly had it amputated. He couldn’t work for two years, during which our family of six lived on workers’ compensation wages of less than $1000/month. My sister was still a toddler and my dad couldn’t walk, much less care for her or pick us up from school, so my mom couldn’t get a job that paid enough to cover daycare.

When I was 19, working at McDonald’s I spent two months on workers’ comp after a pot of McHot McCoffee broke open and burned the skin right off my left foot. I was paid 75% of my wages, but did not have to pay taxes. Still, it was really hard to live on what amounted to less than minimum wage that summer.

When I was 21, my dad was diagnosed with esophageal cancer. For nine months, he lived off of his paid disability insurance through work. For his last nine months, he lived off of Social Security. There was a substantial difference in coverage. I have never been confused by an AFLAC commercial — I know exactly what that duck is quacking about. I don’t buy their product, but I appreciate what they’re selling.

When they offer disability insurance at work, I buy the maximum allowed. It’s a few bucks out of my pay check, but I ate enough government cheese in my childhood to know the value of this coverage.

At least I’ve still got my health
I could write a book on health insurance. (Maybe someday I will.) When my dad fought cancer in the mid-nineties, he had over one million dollars in medical bills. At the time, all but $4,500 were covered by his insurance. From 2003-2007, my own nuclear family paid out about $58,000 for insurance deductibles, copays and prescriptions; yet our insurance company has come closer to $3 million dollars (before their contractual discounts with hospitals and doctors). There are a lot of open-heart surgeries and a couple of c-sections, and an ambulance ride and a lap-coli in that tally, but as much as I might complain about my part:

• It’s not $3 million, and
• At least much of it was tax-deductible.

Once when I was sitting in the waiting room with my son at the cardiologist, a woman asked the receptionist how much an echocardiogram costs. The receptionist didn’t know; the nurses didn’t know; the doctor certainly didn’t know. It was early in my cardiology adventures, but now I could tell her it’s roughly $900-$1200, with another $200 for the cardiologist visit and $300 facility fee; so at least $1500 to tell her where her son’s murmur was on the spectrum of “let’s watch this” to “he needs a transplant or he’ll die.”

This woman, who ran a small business with her husband, had no insurance on her eight-year-old son. She had to talk to the finance department before she could decide whether she could afford to have this ultrasound to learn the secrets in her son’s heart. I don’t know what happened to her after that, but from what I know about congenital heart disease, she could easily be owing the hospital and doctors over a million dollars today. If their business was remotely successful they would not have qualified for Medicaid until a year after they went completely bankrupt. Today’s bankruptcy laws make it even harder for families to recover from these setbacks.

Your money or your life
Growing up, my father always emphasized the value of insurance. I knew our family’s insurance agent personally — he came to our house twice a year. When my dad was ten, his own father dropped dead of a heart-attack. My grandma lost the house, and they were forced to stay with relatives until she remarried. Like his father before him, my dad died young. He was only 48 when his battle with cancer ended — clearly cancer won.

My parents never had a lot of money, but my dad always made room in the budget for life insurance. My mother, who had been a stay-at-home mom since she was 17, had no work experience or job skills, but when my dad died, she was able to pay off their modest home and create retirement accounts for herself. Eventually, she used the care-giving skills she acquired as a parent, and taking care of my dying father, to start a career caring for the elderly. If my dad hadn’t obtained solid life insurance, my mother would have struggled to keep her house, and wouldn’t have had the luxury to try out a few different jobs before she found the right fit for her.

Those were my early life- and disability-insurance lessons. So, when we were 21 and 22, Jim and I bought our first life insurance policies. It’s no coincidence that my dad was going through chemo at the time. We started with $100,000 each. For a 21-year-old non-smoking woman, that was pretty cheap! Now I have a little over $1,000,000 and Jim has about half that (work doesn’t offer as much for the spouse as the employee). We pay about $80 a month for all of that life insurance.

I’ve worked it out, and with my son’s heart condition and the cost of our mortgage, we may be slightly over-insured for me, but not for Jim.  If he died and I took a leave of absence (or worse if I were in an accident with him and incapacitated) that money could handle our mortgage until I was able to get back to work and childcare after it, but that’s all. Also, if we both died, a trust would be created for our kids that would not be eaten up by our son’s medical expenses, so at least our kids could still go to college and have essentials during the rest of their childhoods.

I think I’ll always carry enough life insurance to pay for my funeral and settle immediate, because insurance usually pays out faster than investment funds. I learned this when both of my grandparents died last year. The insurance check came six weeks before the investment money. They had actually pre-paid for their funerals, but they were both in their late-70s and did that as a favor to their grandchildren (my dad was their only child) so we wouldn’t have to deal with those details or expenses. This I wouldn’t do at age 33, but I’d start thinking about it when I get north of 70.

We finally had our wills done last year, and it feels good to take care of that too. It cost $500, but that buys a lot of peace-of-mind knowing my kids will never end up in foster care while a court takes several months in probate to settle our estate.

Pick your poison
Everyone has unique insurance needs. These are my own family’s experiences. If I had two cars again, I’d buy a used one and carry liability based on it. If I were a single woman with no kids, I would probably rent or own a small condo, and have only enough life insurance to pay for my funeral and settle my estate so my mom wouldn’t have to do it for me. If we didn’t have dependent children, I wouldn’t have as much life or health insurance coverage as I do. When we’re older and have more money in retirement, we’ll carry less insurance.

None of this stuff is fun to think about. But it’s a simple and unavoidable fact that we all die.

You may die from a car accident, a work accident, cancer, heart attack, infectious disease, or just old age. Most of the time, you don’t get to chose when or how you check out. You also don’t get to choose whether or not you or your children will get seriously ill. I’ve known lots of healthy people who’ve lived well and still gotten cancer, and I know great parents whose children have died from brain tumors, leukemia, and heart disease. You can control what you eat and whether you exercise, and that will mitigate your risk, but it doesn’t eliminate it.

I think the trick is to choose all of your insurance coverage options carefully based on where you are in life today, and who would be impacted if you were hurt, fell ill, or died. But do not forget to update your coverage based on your own needs and circumstances as you move forward and experience changes. Sometimes you will need more; sometimes you will need less.

I didn’t share all this to scare people into wasting money on insurance, but to encourage them to think seriously and realistically about what would happen if the roof caved in, the car got wrecked, a foot got lost, you find a lump somewhere it should not be, or you just never make it home one night. The most expensive mistake we can make is believing it won’t ever happen to us or someone we love.

Amanda’s previous articles at Get Rich Slowly include:

Look for more from her in the future.

Auto accident image by Incase Designs.

---
Related Articles at Get Rich Slowly:

• Drama in Real Life: Cancer Scare
• Steve Pavlina: The Power of Now
• A Brief Introduction to Insurance
• Ten Ways to Drive Down Your Car Insurance
• Daily Links: Out Too Late Edition

My sister-in-law has cancer.

Last week, a biopsy revealed that Stephanie has a cancerous lump on her thyroid. She’ll likely have her thyroid removed, meaning she’ll need to take medication for the rest of her life. (She’s 37 years old.) She’ll also probably need a handful of radioactive iodine chemotherapy treatments.

Prognosis positive
Jeff and Stephanie have both settled down a bit after the initial scare. They’ve heard from many sources, including Steph’s grandmother, that this form (and location) of cancer is easy to eliminate, and has a low chance of spreading or recurring. Steph’s grandmother had her thyroid removed years ago (due to a growth on it), and she is now 77 years old.

Still, this is cancer, which no member of my family takes lightly. My father died from cancer ten days before his fiftieth birthday. Last summer, cancer killed a cousin at age 47. Other family members have died from the disease as well.

A lucky mistake
A situation like this has enormous personal finance implications. Steph’s case is especially interesting because it demonstrates that sometimes the “right choice” isn’t.

Before the birth of their daughter in February 2006, Stephanie obtained a supplemental hospital/short-term disability insurance policy because she knew she would need a C-section. After Emily was born, Steph tried to cancel the policy, but the agent talked her into switching to a cheaper cancer/accident policy instead.

Inspired in part by Get Rich Slowly, Jeff and Steph have been taking control of their personal finances. This past May, when it came time for her office to renew policies, Stephanie asked to have her cancer/accident policy canceled because she wanted to save the $70 recurring monthly expense.

After the cancer diagnosis came through, Jeff and Stephanie were kicking themselves for having canceled the policy — it would have offset some of their upcoming costs. Then Steph remembered that both of her June paycheck stubs still had the deductions listed. She called her agent to see if her policies were still in force. Sure enough, the official cancel date was July 1st, so the agent was able to revoke the cancelation.

“I don’t know if it will pay out enough to compensate for all the premiums we’ve paid in the last two years,” Jeff writes, “but at this point I don’t care. If it helps with the medical bills that are bound to accrue, that’s all that matters.”

A calculated risk
Stephanie’s situation highlights just how difficult it can be to know how much (and what kind of) insurance to carry. It seemed unlikely that she’d need the cancer policy, so she canceled it. From a Big Picture perspective, this was probably the right decision. But in her individual circumstance, it turned out to be the wrong move.

Last fall, in his brief introduction to insurance, Aaron Pinkston wrote that “insurance is the cheapest and most immediate way for a person to displace risks that are too great to assume individually”. That is, insurance allows groups to pool their money to offset unexpected large individual costs.

But how can you decide how much insurance you need? And what types? Later today, I’ll share a guest post about making informed insurance choices.

Meanwhile, friends and family are ready to help Jeff and Stephanie through this crisis. And although they have bigger things to worry about, it gives them a degree of comfort to know they have a little insurance to help with the financial challenges that loom ahead.

---
Related Articles at Get Rich Slowly:

• Ask the Readers: Personal Finance During a Health Crisis?
• Daily Roundup: Bringing Home the Bacon Edition
• Daily Links: My Favorite Stories from the Past Two Years
• Drama in Real Life: “You’re Fired!”
• Get Rich Slowly’s Greatest Hits (2007 Edition)

Kris and I went grocery shopping this weekend. We stopped at Bob’s Red Mill — a local health-food store — to use some “buy one, get one free” coupons. “You can get anything you want,” Kris told me, “except hot cereal.”

“Why can’t I get hot cereal?” I asked. “I love hot cereal.”

“I know,” Kris said. “But you buy it all the time. You buy it faster than you eat it. Just last week, you bought another box of that blueberry oatmeal from Trader Joe’s. You never remember what we have at home. You need to shop with a list.”

She has a point.

A shopping list is a useful way to remind yourself what you do and do not need to purchase. But most frugality experts emphasize shopping with a list because it prevents impulse purchases. Impulse purchases wreck grocery budgets. In Why We Buy: The Science of Shopping, Paco Underhill writes:

Supermarkets are places of high impulse buying for both sexes — fully 60 to 70 percent of purchases there were unplanned, grocery industry studies have shown us.

More than half of all grocery purchases are unplanned! No wonder creating and sticking to a list can bring down grocery costs.

But that’s not the only way to save money at the supermarket. Over the past two years, I’ve published a lot of tips for saving money on your grocery bill. Some of these have been obvious — others less so. All of them can help you save at the supermarket. Here are some of the best:

Make a list — and stick to it.

This is the cardinal rule of shopping. The list represents your grocery needs: the staples you?re out of, and the food you need for upcoming meals. When you stray from the list, you?re buying on impulse, and that?s how shopping trips get out of control. Sure, a magazine only costs $5, but if you spend an extra $5 every time you make a trip to the supermarket, you waste a lot of money.

Compare unit pricing.

The biggest package isn?t always the most cost-effective. Stores know that consumers want to buy in bulk, and so they mix it up: sometimes the bulk item is cheaper, sometimes it?s more expensive. The only way you can be sure is to take a calculator. Our grocery store posts unit pricing for most items, which makes comparisons easy.

Ditch the basket or cart.

If you’re dashing into the supermarket to pick up milk and bread, don’t use a basket. Baskets induce people to buy more. If you’re limited to what you can carry, you’re more likely to avoid impulse purchases. Only use a basket (or shopping cart) if it’s absolutely necessary.

Don’t examine things you don’t need.

The more you interact with something, the more likely you are to buy it, says Paco Underhill in Why We Buy: “Virtually all unplanned purchases…come as a result of the shopper seeing, touching, smelling, or tasting something that promises pleasure, if not total fulfillment.” Do you know why grocery stores place those displays in the aisles? To intentionally block traffic. They want to force you to stop, if only for a moment. It only takes a few seconds of idly staring at the Chips Ahoy! to convince you to buy them. Stay focused.

Live on the edge.

Health-conscious shoppers know that the perimeter of the store is where the good stuff is. The baked goods, dairy products, fresh meats, and fruits and vegetables are generally placed along the outside edge of the supermarket, while the processed stuff can be found up and down the aisles. But shopping the edges isn’t just healthier — it’s cheaper too. Stock up on the fresh food first, then venture to the middle of the store.

Discard brand loyalties.

Be willing to experiment. You may have a favorite brand of diced tomatoes, for example, but does it really matter? Go with what’s on sale for the lowest unit price. You may find you like the less expensive product just as well. If you try a cheaper brand and are disappointed, it’s okay to return to your regular brand.

Choose generic.

Better yet, try the store brand. Generic and store brand products are cheaper than their name-brand equivalents and are usually of similar quality. But do you know why you’re reluctant to try generics? The power of marketing. Most generics have unappealing packaging. If they cost less and taste the same, who cares?

Use coupons wisely.

Coupons really can save you money. But you have to know how to use them. Clip coupons only the things you need — staple foods and ingredients — not for processed junk food. Learn to use special coupons. Once each month, one local store sends us a “$10 off a $50 purchase coupon”. We know it’s coming, so we plan our trips around it.

Make one large trip instead of several small ones.

Each time you enter the grocery store is another chance to spend. By reducing the frequency of your trips, you’re not only avoiding temptation, but you’re also saving money on overhead (time and fuel).

Buy from the bulk bins.

Some stores offer bulk bins filled with baking ingredients, cereal, and spices. When you buy in bulk, you get just the amount you need, and you pay less. Much less. (One GRS reader recently shared how he saved over $150 by buying spices in bulk.)

Check your receipt.

Make sure your prices are scanned correctly. Make sure your coupons are scanned correctly. Sale items, especially, have a tendency to be in the computer wrong, and yet few people ever challenge the price at the register. You don?t need to hold up the line: simply watch the price of each item as it?s scanned. If you suspect an error, step to the side and check the receipt as the clerk begins the next order. If there?s a problem, politely point it out. It?s your money. Ask for it.

Shop alone.

In Why We Buy, the author notes that people tend to buy more when shopping in groups than when shopping alone. “But men are especially suggestible to the entreaties of children as well as eye-catching displays.” Kris complains that we always spend more on food when we shop together. She’s right. If possible, shop alone.

Use a grocery price book.

A grocery price book is an ongoing list of the items you most commonly purchase and how much you paid for them. This list allows you to detect price cycles, spot bargains, and plan your shopping trips for maximum savings. A price book allows you to practice strike-point shopping.

Shop on a full stomach.

Studies show that folks who shop when they?re hungry buy more. This is certainly true for me: If I go to the store for milk on a Sunday morning without eating breakfast, I?m likely to come home with donuts and orange juice and Lucky Charms, too.

Walk or bike.

In our recent discussion about how to pay yourself first, Ross Williams suggested another way to reduce impulse purchases. By walking or biking to the store, you can automatically limit your spending. “It’s amazing how focused you can be when you are limited to one shopping bag full of groceries,” he writes. “Once you are very conscious of each purchase, it seems to carry over even to the small items where space isn’t really an issue.”

Any of these tips can help a savvy shopper save money at the supermarket. But when combined to create a cohesive shopping philosophy, they have the power to slash your grocery budget significantly. I’m not promising that you’ll be able to feed yourself for $15 a week, but you might be able to save enough money pay down your debt or to jump-start your savings!

Here are some related articles:

• How to save hundreds by playing the drugstore game
• The lazy man’s guide to groceries on a budget
• Grocery store vs. farmers market: Which has the cheapest produce?

Kris requested I offer some final pointers for the gentlemen. “Check with your wife before you go shopping,” she says. “Check with your wife before you put anything into the cart. And remember: Just because you like a food doesn’t mean you need to buy it every time you go shopping.”

Bulk food photo by mattieb.

---
Related Articles at Get Rich Slowly:

• Use a Grocery Price Book to Slash Your Food Spending
• The Grocery Game
• How to Spend Less - Lessons From ‘Why We Buy’
• Daily Links: Money Saving Tips Edition
• Price vs. Ethics: Is the Best Price the Best Choice?

The Motley Fool is a web site devoted to helping average people make better investment and financial decisions. Recently, GRS forum administrator (and resident economist) Jericho Hill got a chance to visit The Motley Fool headquarters. This is part two of a report on his experience. (Here’s part one.)

When I was in high school, I participated in my state?s stock market game. It was designed to introduce our economics class to the world of investing. That?s where I first heard of The Motley Fool, an upstart website for financial investors that went against the grain of having advisors manage your money. Their newsletter analyzed the advantages of managing your investments yourself, and advocated indexed mutual funds over managed funds.

So, when I received an invitation recently to visit the Fool Headquarters in Alexandria, VA for a focus group, I jumped at the chance. The purpose of the focus group was two-fold.

• One part of the meeting focused on The Motley Fool?s free CAPS service, a community stock-picking tool. I discussed this experience last week.
• The second part of the focus group dealt with how the participants used financial information, where they got it from, and what our views on investing were.

It was the second part of the meeting that I felt was the most valuable. Along with various Motley Fool staffers, the group members spoke about their personal investing habits, beliefs, thoughts, and attitudes. We heard from people ranging from first-time investors saving for retirement, to a professional financial planner, to well, myself. The breadth and depth of perspective was illuminating.

Prior to the focus group, I had walked around the office floor and noticed quite a few quotes on the walls. One by Peter Lynch read ?Never invest in any idea you can?t illustrate with a crayon.? Another said ?Though it?s easy to forget sometimes, a share is not a lottery ticket, its part ownership in a business.?

Later, during the group discussion, another quote came up by Warren Buffett: ?If you have one or two great ideas a year, you?re doing great.? The two new investors in the room stated that they felt pressure to succeed and succeed often as they started to invest for retirement. Knowing there were resources that played on the psychology of investing rather than mathematics of investing was important to those attendees. They also didn?t know where the best sources of information were, or who to follow.

Many of those in the room felt that it was not prudent to follow one particular author or person. Rather, it was the subject matter that as important, and as Burton Malkiel said ?Investors should act like intelligence agencies, gathering information no matter how seemingly insignificant.?

Somewhere during the conversation, I brought up the problem of risk. Individuals have different risk profiles, just as some people can ride very scary roller coasters while I?m stuck on the Dahlonega Mine Train ride at Six Flags. Further, not only do we handle risk differently, but another attendee pointed out that we even define risk differently. Our group took five minutes to write individual definitions of risk. They were all different when we reconvened.

We had a long discussion about risk, and about how our differing views on risk can make conversations on financial topics difficult. Different risk tolerances create difficulties in determining just what one?s best financial plan is. How does one define risk? More importantly, how do you define risk? All agreed that becoming more comfortable with one element of risk (volatility) was exceptionally important to being a successful long-term investor.

When the focus group ended, there was no general consensus on what information we should consume, to whom we should listen, where we should invest, or even how we should invest. That seems like a profound thought to me: that your best personal finance advisor is yourself, regardless of whether you?re just starting out or finishing up.

Jericho Hill also recently had a chance to speak with David Gardner, one of the founders of The Motley Fool. Look for excerpts from that interview at Get Rich Slowly in the future.

---
Related Articles at Get Rich Slowly:

• Picking Stocks with The Motley Fool’s CAPS
• How to Get Out of Debt
• links for 2007-05-16
• How to Obtain Your Free Credit Report
• Daily Roundup: Money Myths, Going Organic, and DIY Halloween Calendar

As I mentioned on Monday, May brought the highest numbers of visitors this site has seen so far.  I decided to take a look at what people were most interested in over the course of the month.

Tracking your stimulus check was the most popular article, there must be a lot of people waiting to get their rebate money.

Gas prices are obviously on everyone’s mind, the topics of riding the bus to save gas money, different ways to save gas money commuting to work, and the best gas credit cards were popular with readers as well.

The series on personal finance issues for college graduates has garnered alot of interest from former college students entering the working world for the first time this summer.

People are getting ready for their summer trips and have found the saving money on vacation series useful in making their preparations.  This one is only partially complete with several more articles on the topic coming up soon.

With high gas prices, people must be looking for more in home entertainment. Saving money on online movie rentals with a free trial of Blockbuster Total Access was another popular one for the month.

Here are some of the more popular articles from The Money Writers during the month of May:

• Investing in the Stock Market Over the Past 10 Years: How Did Dollar-Cost Averaging Fare?
• how to make money without a job and why you should
• Frugal Tips I Can’t (or Won’t) Do
• Save Money on Gas Tips from Consumer Reports
• The Future of Personal Finance Tools
• Is Investing In Rental Property A Good Move?
• Why your Retirement Account is NOT an Emergency Fund

What gift should you get for a college graduate?  Cash is always the easiest and probably the most coveted present for recent graduates.  The problem, as I remember it, is that cash is a hard thing to hold onto once you’re out of school and thrust int the job hunt or working world.

Here are a few ideas for graduation gifts that can help them save money or get a leg up on their future finances:

Financial Filing System
The deluge of bills, paystubs, receipts, and tax forms can turn into an ugly mess stuffed into a drawer in a graduate’s tiny new apartment.  A simple system such as the Homefile Financial Planning Organizer Kit should cover all their financial paperwork filing needs.

Free Entertainment
Going to a full time job all week every week can be a real drag after the flexible college lifestyle.  It can be tempting (and also expensive) to blow off a little steam at the end of the workday by meeting up with friends for dinner, drinks, or a movie.  A cheaper alternative for a graduate is bringing friends back to their place to eat and hang out. 

Help them out with a subscription to Blockbuster online video rentals and gift certificates to a cook it yourself pizza place like Papa Murphy’s.  Popping in a DVD and eating an oven cooked pizza on weeknights is much cheaper than heading out on the town after work.

Investment Matching Program
Offer to match all or a portion of money that they invest for the future.  My parents did this for me and I invested the maximum amount that they’d match.  They can invest whatever they can afford each month with automatic investments of small amount if they open a ShareBuilder Account. 

Another option is to open a Roth IRA that has no no minimum balance and no account fees. For example, open an Etrade IRA, they waive minimums and fees if they sign up for online delivery of statements and confirms.

Emergency Fund
Most college grads already have some level of debt when they graduate, they don’t want to add anything else onto their credit cards if the car breaks down or some other emergency arises. Help them setup an emergency fund. Signup for an ING Direct savings account, then send them an invite from within your account.  Both the graduate and you get a signup bonus using this method and you can choose to send your bonus to the graduate as well.

Financial Education
Sign them up for a magazine subscription to Kiplingers or Smart Money magazine.  Sure, they can get it for free online but when they’re on the computer they’re probably catching up with college buddies. Give them them a copy for the coffee table, bus, or bathroom reading : )

Keep them Healthy
If you know where the graduate will be living, get them a gym membership nearby.  Staying healthy will save them countless dollars over the course of their life. Plus, the gym is a great place to socialize, maybe they’ll meet their future spouse there. Two people paying rent makes housing much more affordable : )

Buy Health Insurance
There’s sometimes a gap in health insurance coverage between graduation and finding a first job with benefits.  Especially if they’re avid atheletes with a higher risk of getting injured, make sure they have some type of short term health insurance.  A huge health care bill is the last thing a new graduate wants to worry about.

Financial Advice
Let the graduate know you’re always there if they have any questions on investing, taxes, bills, etc.  You’ve already traveled the financial maze and have many of the answers they’ll be looking for.  Setup an “unofficial meeting”, set some time aside where you just talk finances.  Let them voice their concerns, ask their questions, and tap into your knowlege. 

This post was my take on Gifts to Give Grads a Headstart.

The month of May brought the largest number of visitors to date for Money Smart Life!  Many of those visitors came from sites in the the Money Writers and Money Blog networks whom you are familiar with via my weekly mentions.

I also wanted to say thanks to 10 other personal finance sites that sent over the most visitors by recommending an article on Money Smart Life.  I’ve listed each site and a recent article you might find interesting:

US News World Report (Kimberly Palmer) – Six Ways to Save Money on Vacation

MSN Money Blog (Donna Freedman) – Why is it so Easy to Throw Things Away?

The Simple Dollar – Financial Independence as a Goal

Frugal Dad – Used Car Buying for Teenagers

My Two Dollars – 29 Free or Low Cost Ways To Save Energy & Money

Frugal for Life – Slowing Down Takes Time

Not Made of Money – Four Tips to Saving Money on Home Improvement

Money Under 30 – How I Organize My Financial Records

Moolamy – Carnival of Personal Finance – Family Edition

Frugal Law Student – Save Time & Money by Working Out

When you get engaged, you’re not just promising to marry a person; you’re also marrying their money habits, their debt, and credit history.  If you’re not careful, unknown money issues can not only ruin a marriage but sink you deep into debt.

Hiding Credit Card Debt
Here’s a sad story of a former co-worker whose life was turned upside down by his spouse’s debt.  I met up with him for lunch yesterday to catch up and couldn’t believe the story he had to tell.

His wife had 50K of credit card debt coming into their marriage that she didn’t tell him about until several years after they were married.  She was only making minimum payments so over the years the interest mounted and the debt continued to grow.

He had owned a home prior to the marriage and they finally they decided to tap into it’s equity and take out a loan to pay off most of her debt. A few days later he comes home to find her packing her bags and on her way out the door.  Of course he didn’t share this story with anyone for quite a while since it was so painful and embarrassing but now happily he’s met someone new and is moving on. 

What’s the morale of the story?  Find out about your future spouse’s finances before you get married.  To help you do that, here are some questions to ask, courtesy of Real Simple:

Ten Romantic Debt Questions for Your Fiancé

• Do you use credit cards for everyday expenses?
• Do you pay your credit-card balance in full each month?
• Have you ever maxed out your credit cards?
• How many credit cards do you have?
• What are your debts?
• Have you looked at your credit reports in the last year?
• Did you ever require a cosigner for a loan?
• Have you ever been put into collection by a creditor?
• Are you a cosigner on anyone else’s loan?
• Do you have any tax or other liens pending?

These questions are obviously not very romantic but they’re definitely necessary things to ask.  Depending on your fiancé’s personality you might handle them in different ways.  It might be easiest to just sit down and go through them all straight up or you might have to slip in a carefully worded question here and there during the course of conversation. 

Here are some other finance questions the article suggests asking:

• Do you have a savings or checking account?
• Do you balance your checking account each month?
• Do you do research before making major purchases?
• Do you have a budget or a spending plan?
• Do you track your finances? How often?
• Are you aware of all your benefits at work?
• Do you have life insurance?
• Do you have health insurance?

Of course some of these things you might find out over the course of time as you get to know someone. However you do it, make sure you get these questions answered, I know my friend sure wishes he had.

Checking Their Credit History
If you’re worried that your fiancé is holding back information you could dig a little deeper. Not telling you everything is probably a bad sign for future marital communications but if you’re determined they might be the one you could always do some more research.

If you know their full name, social security number, date of birth, current address, and previous address you can probably pull your future spouse’s credit report to do some double checking.  Be aware checking their credit report without their permission can potentially get you into some trouble:

“Anyone who obtains a copy of someone else’s credit report under false pretenses can be fined substantially and jailed for up to a year.

Only businesses or individuals with a “permissible purpose” can access your credit report. “Permissible purpose” is defined in Section 604 of the Fair Credit Reporting Act (FCRA).“

Then again, if your fiancé is willing to throw you into jail for checking their credit history, probably a sign you don’t want to marry them.

How to Build Credit History
What if your future husband or wife doesn’t have any debt but they don’t have any credit history at all?  This happened to us, when we went to get a loan for our home my wife’s lack of credit history affected the interest rates we were eligible for. 

We ended up putting both our names on the title but only mine on the loan so that we could get a better interest rate but we wanted a way to help build her credit profile.

Our financial planner showed us a pretty slick way that worked wonders for my wife’s credit.  She put $1000 into a 12 month certificate of deposit at our local bank and then used the CD to get a secured loan from the same bank.

We setup our checking account to make automatic payments on the loan so she had a year’s worth of on time loan payments on her credit report. Then after 12 months we took the money out of the CD and paid off the loan.  The interest we had earned on the CD helped pay for most of the interest we had paid on the money we borrowed.

Marriage Money Summary
Get to know your fiancé’s money baggage and habits or they may come back to make you miserable, divorced, and in debt in the future.

Do you ever sit down and think about how your life is progressing and where you’re headed?  Laying out a roadmap for yourself can be a valuable experience.

As the post title alludes to, if you haven’t defined your goals, how will you measure your progress towards them?  Having a plan not only makes your efforts more measurable it can give the things you do more meaning and help filter out time wasters.

You may have noticed I was silent on this site over the weekend, I was using the time for some strategic planning in my own life.  My planning process is iterative in nature.  I come up with some goals and plans to meet those goals.  Then I sleep on it and re-evaluate those the next day.  Looking at it with a fresh perspective, I may change around the milestones and tasks a bit.  Needless to say, my planning isn’t complete but it was nice to get a start on it.

Typically I would have provided a list of articles I enjoyed for the week but due to my planning I didn’t publish those.  Instead, I’ll point out a few articles everyday this week, here’s the first few.

– The Digerati Life lists 8 simple ways you can save a lot of money, try $1000.

– The Mighty Bargain Hunter and All Financial Matters take a look at whether it’s worth your time to wait for free stuff.

– Summer is here and My Dollar Plan offers some tips for saving money on weddings.

– Million Dollar Journey gives us a strategy for asking for discounts.

– Brip Blap loves working so much that he’s started the carnival of careers.

– CNN covers how people aren’t canceling their vacation plans this summer, just changing them to be cheaper, reminds me of my series on saving money on vacations.

– eHow article on how to earn extra money seems appropriate for tough economic times:

• Get a part-time job
• Turn a hobby into money
• Get paid for focus groups
• Sell your stuff on eBay

I also took a look at ways to make extra money during a recession.

Thanks to Money & Values and Canadian Dream for hosting the last two personal finance carnivals and including the articles Best Credit Cards for New College Graduates and Three Ways Your Boss Can Save You Money on Gas.

Finance Findings is Binary Dollar’s periodic link dump.

• Does Achieving Wealth Make You ?Upper Class?? Facts About Class [Digerati Life]
• All the Free Shavers [Sun’s Financial Diary]
• Car Hunt And Enterprise Rent-A-Headache [Tao]
• The 100,000 Wedding Gift? [Lazy Man and Money]
• Mutual Fund Distributions Explained [Generation X Finance]
• Money Mistakes To Avoid - Misunderstanding Risk [Money Smart Life]
• Identity Theft Tips from Frank Abagnale [Blueprint]
• Amazon Deal on the New Harry Potter Book [Five Cent Nickel]
• Mind Over Money — My House is Worth More if I Think It’s Worth More [Free Money Finance]
• IQ and richness [Mighty Bargain Hunter]
• 2007 State Sales Tax Holidays for Back-to-School Shopping [Raising 4 Boys]

Send your submissions for Finance Findings to henry@binarydollar.com.

Sponsor: Parlayer - Henry and Matt blog about sports and stuff.

ShareThis

Essentially, Leasing is just an alternative way to finance a new vehicle. We know that when purchasing a new vehicle the down payment, sales tax and license fees are required to be paid up front. However when leasing a new vehicle you are required to pay only the first monthly payment, a security deposit (usually same as monthly payment), and the license fees. The sales tax (which is based on the capitalized value of the vehicle) is actually amortized over the term of the lease in most states. In other words, the taxes are included in the monthly payments.

Capitalized Cost

Essentially the capitalized cost of a new vehicle is the actual price you have agreed to pay for the vehicle.

Gross Capitalized Cost

The gross capitalized cost of a new vehicle includes the selling price of the vehicle (which is the capitalized cost plus acquisition fees, extended warranty, accident & health insurance, dealer title fee, payoff on your trade-in, credit life insurance, gap insurance and any other fees the dealer decides to charge you). Buyer beware; that most people really don't ever know what their capitalized cost is because it is buried within the gross capitalized cost and the dealer doesn't actually reveal this number unless he has to. Most car deals made at auto dealerships are negotiated on the basis of payment rather than price. This applies to both leasing and purchasing. Don't get caught in this trap! Make the dealer reveal the selling price for every payment offer he makes you!

Adjusted Capitalized Cost

The adjusted capitalized cost of a new vehicle is the gross capitalized cost minus (-) your down payment, net trade-in amount, rebates, license fees and taxes along with any other deductions given.

Depreciation/Residual

When purchasing a new vehicle your payments are based on the full value or selling price, plus extended warranty, tax & license, minus (-) rebate, down payment and net trade-in value. However, when you lease a vehicle your payments are based only on the "depreciation or your use" of the vehicle during the entire term of the lease. The depreciation is actually only a portion of the capitalized cost of the vehicle and is determined by the term of the lease, number of miles driven and condition of the vehicle at the end of the lease. The payments on a lease are based on the deprecation money factor (which is a form of interest rate) and the amortized taxes. Therefore, you can actually drive a more expensive vehicle with a lower payment if you lease. Please note that the depreciation is actually estimated and set at the inception of the lease.

The residual is the portion or balance of the adjusted capitalized cost after the deprecation has been deducted. The residual is just put aside in limbo until the end of the lease. The higher the residual - the lower your monthly payment. At the end of the lease you have two options. You can either turn the vehicle back into the bank or leasing company, or you can buy the vehicle outright for the residual balance. You can even refinance the residual. But keep in mind if you turn in the vehicle with more mileage than allowed on your contract, you will be charged any where from .12¢ to .25¢ for each extra mile. In an auto lease you are limited to a specific number of miles in your lease contact. The average would be from 12,000 to 15,000 miles per year. You may drive any number of miles in any given year but you cannot exceed the number of allotted miles or you will be penalized. If you purchase the vehicle the charge for the extra mileage will normally be waved. Most banks and finance companies will allow you to add an extra 15,000 to 20,000 miles to your lease contract depending on the term of the lease. However, the cost of the extra miles will be added to your gross capitalization cost and your monthly payment will be increased accordingly.

Ownership

When you have entered into a lease contract you cannot terminate the lease or turn-in your vehicle prior to the ending date of the contract. If you do this the bank will report this as a voluntary repossession on your credit record. On an auto lease the vehicle is actually registered and titled to the bank or leasing company. Therefore you do not own the vehicle, the bank does. You get to use the vehicle and are legally responsible for the upkeep and maintenance. Please note, if you don't maintain the vehicle during the lease you will be penalized for all excessive wear-and-tear when you turn it in. Also, if you really needed to get out of your lease you can buy out of the lease if you can get the financing or you can get someone to take over your lease. Of course, they will have to qualify.

Vehicle Warranties

The average new car warranty is 36 months or 36000 miles, which ever comes first. It is not recommended that you enter into a 4, 5 or 6 year lease contract because they are not economical. Even with a four-year lease it is common for the residual to be higher than the actual value of the vehicle at the end of the lease which makes it very hard to refinance. If you are like a lot of people you can lease a new vehicle every 2 to 3 years and never have to buy an extended warranty. The only time it would be beneficial to buy an extended warranty is if you knew you were going to buy the vehicle outright at the end of the lease.

Gap Insurance

Gap Insurance is basically insurance coverage on the difference between the actual value of your vehicle and the balance you owe on the lease including the residual. This kind of protection is needed in case your vehicle is involved in an accident and is declared a total loss. Gap Insurance is important especially for people who lease vehicles. The lease on a vehicle is actually designed for the balance owed to be upside-down in relation to the actual value of the vehicle until approximately the end date of the lease term. At this time the residual should fall in line or be equal to the vehicle's actual value. Gap Insurance is good for purchase financing as well. The gap is not as large as in leasing, but you still stand the chance of having to put out a great deal of money.

Final Advice

Remember, there are two main factors you must consider when you are thinking about leasing an automobile. The first is how long you intend to keep the vehicle and the second is how many miles you travel annually. If you intend to keep the vehicle a maximum of three years and you only average 15,000 miles a year, then you should definitely consider leasing. If you want to keep the new vehicle for more than three years, you should consider purchasing.

When you lease a vehicle, you very rarely have to put any money down, so lease a new vehicle every two to three years and you won't owe any money on the old vehicle, plus you'll never have to buy an extended warranty. Also, you will have spent a ton of money less for each vehicle than if you had purchased them. If you want to keep a vehicle longer just buy it at the end of the lease.

Remember, don't let the dealer try to sell you on the basis of payments. Negotiate on the price only and when you have agreed on the price then tell them you have a trade-in. When you have agreed to your trade-in value then tell them you want to lease the new vehicle. Now you know what to do from here. Also, dealerships have a tendency to quote lease payments without the monthly tax. This makes a big difference in the monthly payments. If you don't control this you will be sadly surprised when you go into the finance manager to sign the paperwork. One more thing - when you are signing the lease contract, be sure to verify that the trade-in value you have agreed upon is actually deducted from the capitalized cost. Otherwise the dealer could wind up purchasing your trade for pennies and you would never know.

Visit My site http://www.autopurchasesecrets.com for more free information on the secrets the dealerships don't want you to know.

About the Author

Brad spent thirteen years in the Automobile business, specifically auto sales and worked for several Dealerships. He held positions from Retail Salesman up through New Car Manager and Fleet Manager. During this period Brad received an excellent education on what goes on inside the Automobile Dealerships. You can visit and communicate with Brad at his website http://www.autopurchasese

When it comes to getting the best car loan deals then a lot of it will depend on your credit history. If you have a good credit past then this will go in your favour when it comes to getting the best rate of interest. However, all is not lost if you have had problems with credit in the past, although you still can get credit when it comes to getting a loan for a car you wont get the best interest rates, but by shopping around you can get a good car loan deal.

If you have an excellent credit rating then it might be in your best interest to go for a personal loan, by going for a personal loan you are able to shop around online and secure the cheapest loan and rate of interest. It also works another way in your best interests because as you already have the cash in your pocket by going for a personal loan you can go along to the dealer and offer cash.

The majority of time if you pay cash for your car then you can get extras; the dealer could knock something off the price you pay if you pay cash there and then or offer you bonuses such as money off your insurance. Another benefit is that you will drive away from the showroom knowing that the dealer isn't in a position to repossess the car should you miss a repayment.

One possibility when it comes to financing your car is to take the finance through the dealer where you choose to buy your car from. However the majority of times the rate of interest will be a lot higher than if you had shopped around for a personal loan, one of the biggest benefits of taking this type of finance is that it is easier to get but you of course will pay for this privilege.

If you do have bad credit history and have been turned down time and time again for credit, then it still might be possible for you to get a loan to buy a car. If you look online then there many places which now offer loans to those with bad credit ratings, however by doing so you can expect of course to have to pay a high rate of interest on the loan.

Whichever way you decide to go for your car loan deal the best place to start is to go online, the internet holds a vast amount of information about the different types of car loan deals that are available and also the best rates of interest or best offers at car dealerships.

About the Author

Louis Rix is a Director of NetCars, one of the UK's leading motoring websites. First established in January 2000, its mission is to become the number one site for used car searches and motoring information. NetCars also provide Used Cars, loans and insurance.

With a divorce rate of around 50% and many people not marrying until they are in their thirties, it is surprising to find that there are still many women who aren't financially educated. Most of this can be traced back to two factors: upbringing at home and society. In both cases, boys have often been given much more training and many more resources than girls have and the effects are damaging women financially today as they face a world in which they have to take care of monetary issues on their own but have never developed the skills to do so.

The Safe, Secure 1950's

In the 1950's most women quickly married and settled down to raise families. Very few of them worked outside the home, and finances were handled by the men. It was a financially prosperous time and women were expected to focus on the home and child-rearing. This focus on home-making was passed on to daughters while sons were groomed to the "breadwinners" of the family.

The obvious separation between girls and boys activities also managed to keep girls "sheltered" from financial concerns. They weren't expected to pay for anything on a date and parents didn't often expect them to hold down jobs. Boys, on the other hand, were expected to get a job at a young age, even if it was merely a paper route. The expectation was that a young man needed to "take on some responsibility" and "contribute."

As the generation raised in the 1950's grew up and raised families of their own, they passed on the financial biases that had been instilled in them to their own children. Many of today's parents have made the same mistakes their own mothers and fathers did, ignoring the obvious need for women to understand and learn to handle their own finances in favor of hoping that their daughters wouldn't have to face the harsh financial facts of life.

The belief that men would take care of women's financial needs was so ingrained that many of the "big picture" financial lessons were overlooked. Women tended to learn how to shop for bargains at the grocery store, stretch the budget at the holidays and that was about it. More complex lessons such as long-term investments, retirement planning and stock portfolio development were not a part of the picture.

Boys learned how to manage their money, save for a rainy day, and make smart investments and a host of other financial strategies.

Play and School Contribute to Gender Gap

Interestingly, boys more than girls tend to develop habits that are more geared toward understanding numbers and how they relate to finances from a very young age. While girls tend to be "collectors," says Joline Godfrey, founder of Independent Means, "boys develop informal economies based on relative value from the age of six on while trading cards and other items. By the time boys start trading stocks and bonds, it's just another form of the game." Independent Means is a company which promotes economic independence and growth for girls and women aged 14 to 24.

Even in school settings, boys are rewarded more consistently for being risk-takers, and investing is often perceived as a risky venture. Girls aren't encouraged to take risks and aren't rewarded for these types of behaviors and instead are likely to be cautioned to be careful. When faced with the prospect of learning about investing in the stock market or learning about retirement options, these same girls - now women - are more fearful of making decisions and less sure of themselves in making choices for themselves.

Statistics Show Gender Bias

A recent survey showed some startling discrepancies even today between teenage boys and girls and how much education they have received in the very basics of finance. Some of the findings include:

* Many more teenage boys than girls report understanding of how to write a check and how a credit card works, including accrued interest. * Teenage girls are much more likely to be in debt than boys, with almost 50% reporting credit card debt as opposed to less than a quarter of teen boys having any debt. * Girls are more likely to report that learning about investing is boring, while boys report a real interest in learning about it. When asked to elaborate, girls often pointed out that this wasn't something they would be doing in the future, while boys indicated that it was important to learn so that they could be successful.

The perception that girls shouldn't have to worry about their financial future in the long term (based upon the faulty premise that a man will take care of her or that she can hire a financial consultant to handle all of the boring stuff) is still present in many homes. Fortunately, the balance is beginning to shift as more parents realize that women who are successful in their careers must also be able to guide their own financial futures, not rely on others to do it for them.

Programs Aim at Closing the Gap

Today's girls are more likely to learn how to handle money at a young age. Cautionary tales in the news and on talk shows about women left destitute and the fear that social security can no longer support an individual in their golden years has, perhaps, contributed to this. After all, with most women outliving their spouses and more than half of women divorced, it's likely that today's girls will be supporting themselves in their retirement years - understanding Roth IRAs suddenly becomes very important.

Companies and organizations are also stepping to the forefront with programs designed to educate teens in general and girls in particular. Boys and Girls Clubs of America, in collaboration with Charles Schwab, offer Money Matters: Make It Count programs in cities across the country.

Visa works with Girl Scouts of the USA to provide two resources, the Cashin' In workbook and the Makin' Cents web game, to teach girls aged 13-17 financial responsibility. The web game specifically challenges players to find real-world solutions for characters' financial challenges.

With such programs increasingly popular and the need for women to understand finances now a hot topic, it's to be hoped that this generation of fathers will teach their daughters as much about finance as they teach their sons.

Carrie Carter: Author of: Think Your Way to Riches Kids' Style

For more information or to arrange an interview with Carrie Carter at 810.252.2281 e-mail: carrie114cr@aol.com or visit: www.ThinkYourWayToRichesKidsStyle.com

Carrie's passion is to help people on their inner journey to discover their personal road map for abundance, peace, and happiness. Her main passion is to give children worldwide the "Tools" which are lacking in the normal educational system and understanding to create the abundant lifestyle they are all worthy of. Experience Carrie's educational seminars, workshops, and private life coaching.

About the Author

Carrie's passion is to help people on their inner journey to discover their personal road map for abundance, peace, and happiness. Her main passion is to give children worldwide the "Tools" which are lacking in the normal educational system and understanding to create the abundant lifestyle they are all worthy of. Experience Carrie's educational seminars, workshops, and private life coaching.

German Volkswagen Group expects to sell more than 800,000 vehicles in China this year, encouraged by its strong sales in the first half.

The projection, made by Volkswagen's China chief Winfried Vahland, is up from 711,298 units it moved in the world's fastest-growing major auto market in 2006. Its January-to-June sales on the mainland and Hong Kong rose 24.6 percent year-on-year to record 431,369 units, including 379,705 Volkswagen-brand cars, 49,267 Audi vehicles and Skoda 2,274 units.

The German company's record sales figure is likely to help it remain the top seller in China's passenger car segment though its rivals, such as the General Motors Corp. and the Toyota Motor Corp., have yet to disclose their first-half results in the territory. "This (record sales) indicates that our 'Olympic Program' has been yielding good results in China," Vahland said in a recent interview in Beijing.

Volkswagen, the sole automotive partner of the Beijing 2008 Olympics, flagged off the program in 2005 to launch 12 to 14 new models by 2009 in China. The automaker also intends to cut costs by 40 percent by 2008 and to improve sales and service networks.

Vahland predicted that China's entire passenger car market would reach five million units this year, up from the company's previous forecast of 4.6 million units. In 2006, 4.2 million passenger cars were sold in the country. "However, we will not slacken our efforts to cut costs and improve customer satisfaction, although we performed well in the first half," he said. He warned that interest rate rises and soaring oil prices in China are likely to have a negative impact on the car market.

The VW turn signal alerts the automaker to a greener pasture. The German automaker now runs a joint venture with First Automotive Works Corp in the northeastern city of Changchun. The venture is responsible for the production of Bora, Caddy, Jetta, Golf and Sagitar, as well as the Audi A6 and A4. Additionally, the venture will launch a 1.8-liter turbo Magotan sedan next week.

The Mangotan also features Fuel Stratified Injection in nearly every petrol version. It ranges from 1.6 to 3.2 L, but the multivalve 2.0 L TDI is the most sought out version in Europe. In the United States, it features a 200 horsepower 2.0 L turbocharged I4 as the base engine, or a 280 horsepower 3.6 L VR6 engine as the upgrade and six-speed manual and automatic transmissions.

An Tiecheng, the venture's general manager, said that it plans to roll out at least two new models under the Volkswagen and Audi marques annually in the next five years to lure increasingly sophisticated auto purchasers.

The VW Mangotan, also called the Passat, follows the latest design philosophy first introduced on the VW Phaeton luxury car. The new styling is a dramatic departure from the styling of the B5.5 Passat. Although the new design using improved VW parts is somewhat controversial, sales have improved over the old model.

For the full year, VW, which operates car manufacturing ventures with leading Chinese auto maker SAIC Motor Corp. and FAW Group, aims to increase its sales by roughly one-fifth and maintain its 17 percent share of the world's second-largest auto market, a senior company executive said.

The venture will have a "minimum" profit growth of 25 percent this year from 2006, said Joachim Wedler, its vice-president in charge of finance. But Wedler did not reveal how much the firm, in which FAW holds a 60 percent stake and Volkswagen 40 percent, will earn this year.

The Wolfsburg-based company is one of the world's biggest producers of passenger cars and Europe's largest automaker.

About the Author

Anthony Fontanelle is a 35-year-old automotive.buff who grew up in the Windy City. He does freelance work for an automotive magazine when he is not busy customizing cars in his shop.

Although many small businesses begin with only one or two members of staff - the founders - most growing businesses quickly recognise the need to create a larger team. Not only can this spread the workload but a well-selected team can bring in more energy, creativity, drive and knowledge than the founder alone might possess. A small, closely-knit, highly motivated team can be an unstoppable driving force.

The authors of The Beermat Entrepreneur call the members of this core team 'cornerstones'. They suggest that the ideal mix is one entrepreneur providing strong leadership, surrounded by four 'cornerstones' - one for sale, one for finance, one for product development and one for project delivery and customer service. In real terms, most small businesses cannot afford such a big team, and don't really need it to begin with. However, even bringing one other person in to the business can make a huge difference to its success during the first year or so.

In many cases, the original team will be composed of the founder, or founders, and one or two relatives or friends who have been roped in along the way. This works well if everyone is committed to the success of the business and prepared to work hard. As we've seen the early days of a business are defined by long hours and a painfully demanding workload - there is no room for the half-hearted or unenthusiastic. Not only will they not pull their weight, but they will sap everyone else's enthusiasm too.

I've heard it said 'never work with friends or relatives' and it's true that in some cases this leads to disaster. However, a team who like each other - and have a friendship beyond the business - can also be extremely efficient and powerful.

Jude, Business adviser

Remember that just because you enjoy spending time with someone socially it doesn't mean you will like working with them. Ask yourself what they would be like to work with. Are they hardworking? Enthusiastic? What do they have to offer your business? Try to find people whose skills compliment yours, who can bring something to the business that fills 'gaps'. For instance, if you are fantastic on the finances but weak on marketing, you need to find someone who can bring something extra to the marketing side of the business.

A recent London Business School survey of CEOs found that they considered the major factor that had contributed to the success of their businesses was 'selecting the right people with good attitudes who are loyal to the company and who want to excel in their careers'.

Defining Roles

Whether you decide to go into business with others as equals or you employ them as part of your original team, it is very important to define roles carefully. Everyone needs to know what is expected of them and where the boundaries of their 'area' lie. In businesses with two or more equal partners a lack of clarity about roles can be a major source of conflict, taking up valuable time that might be better spent focused on other aspects of the business. If you have a management team, you need to give them space to fulfil their roles and feel that their contribution is valued. This doesn't mean handing over control, final decisions will still rest with you (or if they don't you need to be clear about exactly who is the boss - only one person should take this position or squabbling and infighting can result).

Consider the following key roles and divide them between your core team. You should all be clear on who is going to take each role.

Business leader - who takes the final decisions? In other words, the boss.

Sales person - who sells to your customers? Identifies customers and carries out your customer research?

Finance person - who manages the money and the associated administrative work?

Supply management - who locates suppliers, negotiates with them and maintains adequate supply levels.

Core business - who does the core tasks of your business, by which we mean the things that your business is actually about? This might mean making a product, providing a service or something else.

Marketing and PR person - who promotes your business to potential customers and raises the profile of your business?

Some of these roles overlap, so good communication is also of key importance to your business.

Importance of Role Clarification

People do either one of two things in a business - they either add value or they add cost. There are no grey areas.

One of the most important ways to ensure that your core team members are all adding value is to help them clarify their roles.

There are a number of different aspects to role clarification:

Prescribed role - This is what the business uses to set down the individual's overall goals and objectives. It is usually called a 'job description' or something similar and it sets out the person's responsibilities, authority, and key tasks, as well as their position in the business hierarchy.

While this is a useful starting point, it does not take account of personal differences and changes in circumstances such as growth of the business or the need to cover weak performances by others.

Personalised role - the prescribed role is only part of the picture. These are factors internal to the individual which will affect the way he or she performs in the role.

This includes their abilities, skills and strengths, as well as their expectations of the role, their assumptions (about the role, the business, the sector. etc.), their values and ambitions.

Perceived role - the perceptions and expectations of others in the business will have an impact on the individual. For example, they will have their own views on what the priorities of the role should be as well as the boundaries: 'I don't think Sales Managers should...'; 'I expect you to...' These can limit or restrict the way a person performs, but if expectations are high and positive they can raise the person's game, enabling them to perform to their full potential within their current role.

From the Business Team at Learning Curve; offering a range of unique development programmes for small businesses.

About the Author

Director of Studies at Learning Curve Home Study, one of the UK's leading distance learning providers. Learning Curve offers home study courses in a range of subjects, including Business development courses.

Buy a car anytime you want, but I would tell anybody today that applying for a car offline is one of the worst and tiresome things I have done in my whole entire life. There was a man trying to explain the rates to me in a rushing manner. He even tried to force a particular car on me that I didnt even want, and the finance company that they deal with tried to push my rates close as 13 percent which is outrageous. I felt like I was being suckered into a deal so I turned towards the internet to get some information which is the best way to be successful in buying a car in todays world in my opinion.

I searched for days online looking for some great resources. There were many websites that showed you how to buy a car, but I needed to know the important points when I buy a car. Finally, I came upon some great websites that shows you everything that you need to know in order for you to apply yourself to buy a car successfully. I learned a ton of things, such as, the great loan company that I talk about on my website that you can easily apply for to buy a car anytime you want. What I liked about that loan is the rates and the time it takes for you to get a loan. It takes up to 24 hours for you to get a loan from them and the rates is the best on the net. The rates are very low. You would pay 7 percent at the most. Take out a loan because if you financed through a car dealership you probably would have to pay 9 or 10 percent interest rates to buy a car through a dealer.

When I was searching for a car, I also tried the car quote websites that, and they are great. I simply filled out the form and got quotes back to back in no time. There is four different websites for you to choose from or compare together. First I used edmunds, which is a pretty coo carl quote website, but personally, I like the other free car quote websites because it's easier to operate and quickerto obtain. You will get back some car quotes back in the same day. I used this for myself because you can make an educated decision of what price you can afford, and make or model of the cars. You can have local dealerships calling you to buy a car that fits your budget.

You can buy a car cash if you want. After I bought my car, I discovered some great auction services that allows me to buy a car from my own state and area. This is my main source when I buy a car now. The great news about buying auctioned cars is that you can get some really nice updated, running cars really cheap in your own local are. The bad news is that you have to react on these deals quickly in the process. I have posted some great car auction websites for people who want to buy a car cash instead of paying monthly rent. These are my jewels that I use here on out. I no longer have car bills to pay. I use most of my time buying 3 cars a month and selling them for a little more. Alot of the cars that are offered on the sites are in tip top shape. Many of the cars are under $1000. It's really easy to navigate your area. All you do is type in your area code and it shows you all the auctions going on in your area, contact info, etc.

***Remember before you buy a car to check and make sure mileages and price matches correctly. Check out my website and see how I calculated this for myself and do it for yourself too.***

About the Author

My name is Jay Pleas. I'm an auto mechanic and interior designer that spends most of my time buying autos and detailing them for many customers. At this time I make $100,000 a year maintaining my own car interior buisness. I live in Florida. I'm 28 years of age

www.squidoo.com/buy_a_car

referral

Finance Findings is Binary Dollar’s periodic link dump.

• How We?re Rebalancing Our Investment Portfolio: Modifying Our Asset Allocation [Digerati Life]
• 10 Tips For Dealing With Car Salesmen to Make Sure You Don?t Get Hosed [Generation X Finance]
• Inflating Your Ebay Rating [Lazy Man and Money]
• Lifestyle Inflation - When Does It Become A Problem? [Tao]
• Colleges Sell Alumni Data for Extra Cash [Money Smart Life]
• Credit Inquiries: Hard Pull and Soft Pull [Sun’s Financial Diary]
• State and Federal Income Tax Arbitrage [Five Cent Nickel]
• Free Checking Isn?t Really Free [Blueprint]
• The Cost of Being Overweight [Free Money Finance]
• A Mortgage Is Still Debt That Needs To Be Reduced [Mighty Bargain Hunter]

Send your submissions for Finance Findings to henry@binarydollar.com.

Sponsor: Parlayer - Henry and Matt blog about sports and stuff.

ShareThis

Finance Findings is Binary Dollar’s periodic link dump.

• My Personal Saving and Investing System [Sun’s Financial Diary]
• What Have You Got Against Credit Cards? [Tao]
• Curb Appeal: One Of My Best Investments Yet Or How I Turned $80 Into $5,000 With Minimal Risk [Digerati Life]
• Understanding the Fine Print of a Loan Can Save You Money and Grief [Generation X Finance]
• Alternative Income Streams Progress - June 2007 [Lazy Man and Money]
• Are Real Estate Agents Worth the Money? [Money Smart Life]
• The Best Online Brokers [Free Money Finance]
• Eight Things To Consider When Buying Someone Out [Mighty Bargain Hunter]
• Four Reasons You Should Get A Payday Loan [Blueprint]
• Eco-Friendly Energy Savings [Five Cent Nickel]

Send your submissions for Finance Findings to henry@binarydollar.com.

Sponsor: Parlayer - Henry and Matt blog about sports and stuff.

ShareThis

Finance Findings is Binary Dollar’s periodic link dump.

• Zecco IS Cheap [Sun’s Financial Diary]
• Traditional Jobs For Men And Women And The Gender Divide [Digerati Life]
• Practicing Basic Tax Diversification [Tao]
• How to Talk Your Way into Debt [Money Smart Life]
• Lazyman’s Prosper Update [Lazy Man and Money]
• Don?t Be Fooled Into Thinking an Oil Change Every 3,000 Miles Is Necessary [Generation X Finance]
• Are Inflated Shipping Charges On eBay Bad? [Mighty Bargain Hunter]
• Why You Need a Budget [Free Money Finance]
• Are You a 0% Credit Card Daredevil? [Five Cent Nickel]
• GEICO Paid Out A Fraudulent Claim [Blueprint]

Send your submissions for Finance Findings to henry@binarydollar.com.

Sponsor: Parlayer - Henry and Matt blog about sports and stuff.

ShareThis