frugal underground

A credit card and your teen may sound like a lethal combination. In fact, if you’re also a ‘recovering’ credit card user yourself trying to pay off a substantial credit card debt, you wouldn’t want your own children to touch that plastic card with a ten feet pole, lest they end up making the same mistakes. But before putting your foot down on this one, ask yourself first:

“What harm can having a credit card possibly do to my teen?“

Plenty, as it turns out — most of us who have had less-than-pleasant experiences with credit cards will probably answer. But then again, we didn’t have the privilege of hindsight and guidance before that our kids do now. If handled well enough, we can actually use this exercise to teach our kids some pretty solid lessons on handling credit wisely rather than leading them down to the path of shopping wonderland.

The first issue of course, is deciding the best time to let your child use a credit card. I believe letting your teen have a taste of dealing with credit while still in high school is most ideal. Kids in this age are old enough to understand the basics of handling money and budgeting, while still young enough to appreciate your guidance and not rebel from it. Or at least most of them would, I hope.

Fortunately for parents, the range of options for kid or teen-appropriate credit cards is varied what with the plastic-crazy world we now live in. One of your best alternatives could be getting a pre-paid credit card . This way, you have a modern way of handing out allowance every week, without giving him the ability or temptation to go off the debt deep end.

Prepaid credit cards work in much the same way as retail gift cards but are more universally accepted as your kids can use them not just in a single issuing store but anywhere Visa or Mastercard is accepted. The best thing about prepaid cards as compared to regular ones is the absence of fees and late payment charges.

Eventually, you can move on to making your child an extension of your own card, or get him his own regular credit card starting with a low credit limit. For instance, a gas card is a practical option once your teen starts to enjoy driving privileges. At this point, he is well old enough for you to see that with his needs, pocket change allowance just won’t do anymore.

If I seem to lean towards letting young people have their lessons on credit early on in life, it may be because I haven’t had the chance to do it myself and I could have avoided some painful lessons along the way knowing what I do now.

It doesn’t mean though that I’m turning a blind eye and deaf ear to the pitfalls of credit that our children could come to, the most obvious of which is:

This plan could backfire.

If left to their own devices with credit cards, kids can learn a very addictive habit. We ourselves know how easy spending beyond one’s means can be for as long as we have that Mastercard logo in our wallets.

I still say though, the risks far outweigh the benefits when it comes to giving one’s kids a preview of the travails of the adult life. As long as we keep the rules clear, help them identify which goes into what category, i.e. needs vs. wants, teach them how to track purchases (oh, and don’t forget to monitor his transactions yourself), and share with them the mistakes you’ve made yourself, you just might end up succeeding.

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We all know that watching your money is as much about increasing your income as it is about controlling your spending.  Nothing beats adding a few passive income streams to provide that extra little bit of income. One great way is by putting a few ads on your website – or possibly signing up for an ad-revenue service.

It sounds great, doesn’t it?

That’s what a friend of mine’s sister thought.  So she grabbed the credit card and happily paid the two dollars to sign up.

That’s where her troubles began.

See, even though this company had “Google” in the name it wasn’t actually associated with Google.  Instead it was a classic scam:  She signed up for a $2.00 offer – and two weeks later the first regular charge for $75.00 per month hit.  Needless to say, she was not happy.  Neither was my friend, who was the one actually responsible for the credit card.

Still, the point of the story isn’t what happened to my friend, or his sister.

The point of the story is that anything that looks too good to be true probably is, and never provide a credit card number unless you’ve read the fine print.  The unfortunate truth is that the internet is rife with people who want nothing more than to take your money.  If they can get you to pay them regularly, so much the better!  At least from the scammer’s point of view.

There is good news, though, too.  Not everyone on the internet is out to rip you off.  It’s also pretty hard for people to rip you off unless you let them.  That’s actually the key.  Most scam artists rely on their victims’ desire to get rich without doing anything.  In fact, many of these schemes appear as if you’re going to be the one ripping them off.   So simply by avoiding greed, you can often avoid the worst of the scams.

It’s all about staying on top of your money and not doing anything without thinking it through first; and that’s the real key to to frugality.  It’s your money, you need to be in control.

So next time you’re looking for a little extra money, take the time to do your research and find out what you’re really signing up for.  You’ll be glad you did.

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Admit it — decluttering the house is perhaps one of our least liked activities. There’s a kind of love-hate relationship between us and our stuff which we refuse to confront until we can no longer open our basement door because of all the “junk” that’s sitting there.

But how did we really get to accumulate so much stuff? Off the top of my head, I’d say there are two main reasons: lack of time and plain nostalgia. To those who have made it convenient to say “I just don’t have the time” I say:

You can always find the time to declutter.

I know how serious some clutter problems can be, but for the average household, I doubt if you’d need to take a sabbatical just to tackle your clutter. Here’s an easy tip that may not have crossed your mind but will definitely make your task less daunting and more manageable: unclutter one area, cabinet, or cupboard at a time.

Setting a Saturday schedule for “decluttering the kitchen” will make it sound so off-putting, and depending on how much unused stuff you have there, it’s possible no meals will be coming out of the kitchen on that day. On the other hand, if you just put in a reminder for “cleaning out the upper cabinet shelves,” this could only set you back an acceptable one hour or two.

Now, to those who hoard stuff for the sentimental value you have put in them or the potential you still see in them, I say: (I’m) guilty as charged too. If it was something I or any one of the family members received, it just didn’t seem right putting or giving it away. If it was something we paid for ourselves, I felt that we certainly should still put it to good use. But eventually the truth hits home:

If you haven’t been using things for some time already, you probably never will again.

Forget that shirt which you said you’ll just sew the button back on, or the DVD player you’ve been meaning to have repaired for the past 6 months. If you don’t put them back into usable form any time soon, then it’s time to find someone who will. Clinging on to rarely used items is just not practical and gets in the way of efficient living.

Of course, I’m not saying you should load up the whole basement into a truck right now and just haul it off. However, you do need to be tougher when it comes down to crunch time. Keeping a box or two of your most-prized keepsakes is understandable, but hoard a roomful of them and you yourself may be hard pressed to recall that particular memory associated with the item.

As for organizing things during the decluttering process, I keep my categories clear-cut: things I will still store or use (but keep it to a minimum otherwise what’s the point?), things to sell, things to donate, and things to throw away.

In case you haven’t caught my reference on things to sell, I reiterate: yes you can sell pretty much a lot of stuff from your forays into the “unused” territory. One easy way of loading off your stuff is by selling at garage sales and flea markets. Dave’s post on flea markets should serve as a reminder for us that one man’s junk may be another man’s need. For items like old books, vintage clothes, or unused sports equipment, there are specific shops that are looking for just these things. Or you could also have your unique items listed at eBay or Craiglist.

You shouldn’t expect a huge income from selling off your clutter though, unless you’re really bringing in a truckload. Still, it’s interesting to note that what has been sitting around in our storage bins for a long time in hopes that they could still be of some use, actually produced something when they were already out of the house instead of in it.

Whether you’ve decided to sell your stuff, donate most of them to charity, or just throw away what really belongs in the trash, the important thing is to act quickly. Price them right away or drive those boxes over to the Salvation Army immediately, lest they end up back to where they were unearthed from.

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I like flea markets– I like finding deals– I even like bargaining.  If you know what you want they can be great, if you don’t they’re just a massive money sink.

We’re lucky, there are a couple of flea markets not too far away, and it’s great to throw everyone in the Jeep, put the top down and head out for the afternoon.  It’s great because it’s something we can all do as a family, and so long as we watch what we’re doing it doesn’t turn out too expensive.

One display we always check out is the one with dollar bins of everything from tools to toys.  What I really like are the batteries.  The closest market sells 60-packs of AA batteries for $4.   That’s right, 60-packs. If you think these batteries don’t compete with Duracell or Energizer, you’d be right– they aren’t even alkaline.

So, what are they good for?  Remotes.

These batteries are perfect for TV remotes and anything else with a similar usage pattrn.  All they really have to do is hold a charge, they don’t really draw a lot of power.  They don’t last very long in game controllers:  the Xbox360 controllers will drain a set in a week or less (much less if the recent graduate decides to hold a marathon gaming session).

Still, so long as you pay attention to usage patterns, these batteries are a great deal.

You can get great deals on socks there too:  and yes these are new socks still in the plastic.

Having said that, there are definitely things to watch out for when you’re cruising a flea market – and not just the water.  Some vendors really don’t know the value of what they’re selling (or don’t think you do) and mark things up the moment you show any interest.

I’ve seen people ask $25 for a simple wooden box that I thought was only worth $5, so you do need to be careful.  A lot has to do with the so-called “Collector’s Mentality.”  If someone thinks you’re buying something because you have to have it to fill out a collection they’re going to try to get as much as they can.  It’s only human nature.

That’s one reason why I tend to focus on basic consumables like batteries and printer paper.  I know what it costs and can make a judgment about whether I’m getting a good deal or not.  Sure, I may not always come back with that great one-of-a-kind item that someone else found at the flea market– but I’m happy with a year’s supply of printer paper for the price of a single pack at an office-supply store.

Still, sometimes it is fun to bargain.

I remember one time I found a box of comic books– probably about forty or fifty of them– that I found at one flea market.  It was a random collection, but I figured they would be worth getting so long as they were cheap, so I offered $15 for the box.  Before they had a chance to answer, my girlfriend’s son piped up saying we could probably go a bit higher.   Luckily, the person didn’t hear him (they had gone into a tent to check with the owner) and I was able to get the collection for $15.

Even so, it was a perfect example of how not to bargain.  Never raise your offer before the seller has had a chance to respond.

Anyway, that’s all I have for this week.

As always, feel free to use the comments below.

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Human nature being what it is, I was a stickler for status quo, and would have perhaps stayed with my old bank for the rest of my life. But when I made a vow to put our finances in better shape, and started looking around for things that would help me trim off a dollar or two where I can, that’s when it dawned on me:

My old bank was seriously costing me money. A lot of it.

First, my bank was giving me a comedic 4.25% APY on my savings account at a time when some online banks were still giving interest rates in the vicinity of 5% to 6% (oh to go back to those times), and didn’t require any minimums. I had to maintain at least $200 in mine, or (surprise!) get slapped a $3 fee.

I also had my checking account in that same bank and it didn’t earn interest at all. Plus, again I was charged just about everything from checks to ATM fees. Considering that I was still uninitiated then and didn’t really think twice about using whatever ATM was convenient to me at the time I need to access one, this set me back something like $10 to $15 on ATM fees alone. While this figure didn’t send me to the poorhouse, adding up the ATM charges combined with other fees plus the money I “lost” on interest, led me to another shocking realization (gasp):

The bank was earning more from me than I from it.

But that scenario is so 2007. I’ve gotten financially smarter many times over since then. Of course, interest rates have been steadily going down lately and savers have been getting the brunt of the economic downturn, having to contend with rock-bottom rates.

That said however, there are still some banks worth making the big switch to, or at the very least having as a secondary bank. I suggest you try online banks if you aren’t doing so already. Sure you’ll miss that pleasant chat with the nice teller or the occasional cookie in the bank lobby (seriously, do banks still do that?) but with online banks, not only do you get the better rates, you can also have convenient and hassle-free banking anytime you want.

I surfed around and here are some of the best online banks today as rated by consumers based on interest rates and customer service:

ING Direct. One of the earliest internet-only banks to be established, it has grown its reputation steadily over the years as a bank with high interest rates and superb service. While ING’s rates may no longer be the best around, the bank still tops many depositors’ shortlist because of its excellent service, great website that’s easy to use, and some features in its interface that makes savings a lot more convenient.

Ally Bank. The re-branded GMAC Bank is still a relative newcomer in the online banking field but is already making waves where interest rates are concerned. Before the bank ran into some issues with the American Banker’s Association (ABA), it used to have some of the top savings and CD rates. Since then, Ally has been lowering its rates, although it remains to be among the banks with the most competitive rates. One great product Ally Bank has is its 9-month no penalty CD currently at 2.0% APY, the highest among all banks offering this.

HSBC Direct. This is another bank that combines competitive interest rates with good service and the assurance of a tried and tested bank. It’s been voted by Kiplinger’s Personal Finance as the Best Overall Online Bank in 2006 and continues to get great feedbacks from finance sites and consumers alike. One common issue I’ve come across about HSBC though, is that its interface is a bit clunky and didn’t run as smoothly as others (well, ING for instance).

These three banks I’ve listed here may not be the forerunners in the interest rate division. But then again, they were singled out not only for their friendly, no-fuss banking services but also because they do not require any minimums and maintaining balances, and charge no fees. These can be as important (even more) as having the best interest rates.

Lastly, I’m sure this is a no-brainer, but it’s still worth mentioning that whatever bank you choose, make sure it’s FDIC-insured. You don’t want to go through all the trouble of meticulously choosing your bank only to lose all your money in a snap.

If you have some banking experiences you’d like to share with us, we’d be happy to hear them.

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If you read this blog you probably budget; and there’s probably at least one person in the household who’s on a diet.

Money and weight are two of the biggest obsessions in Western culture.   Almost everyone wants more money and less weight– though they may not always get either.  Luckily, a lot of the same approaches can work for both goals.

It’s all about controlling income and expenditure to reach a desired goal:  one counts cash and the other calories but it all works the same way.  The only difference is that the key to successful dieting is a recipe for failure when it comes to budgeting.  Dieters want to make sure their expenditure exceeds their income (in calories), while budgeters want the opposite.

So, what do they have in common? Read the rest of this entry »

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10 Interesting Money Facts about the King of Pop and My Thoughts on These

In his death, Michael Jackson, the King of Pop has left legions of fans mourning over one of the greatest pop artists the world has ever known. His legacy of music is one that will live on through the years despite his early demise.

I’ve grownup on Michael Jackson songs and for a time, was obsessed about learning how to “moonwalk” – until I finally just gave up. Being a Jackson fan however has not made me oblivious to the fact that in the later years, his finances, as with his career, were quickly taking a turn for the worse. When you think of the millions that have passed through his hands from being a performer extraordinaire, it’s just bewildering how he left this world reportedly awash in millions of debt as well.

Let’s take a closer look at some of these mind-boggling money facts:

$700 million – For the entire duration of his career, it is said that Michael Jackson earned at least this much in album sales, concert tours, and other business interests.

$115 million - Thriller, his second album released in 1982 which went on to become the best-selling album of all time with over 51 million copies sold (according to the Guinness Book of World Records), was estimated to have earned a whooping $115 million for the King of Pop.

$1.5 million - Was the settlement amount Michael received from Pepsi Co. after pyrotechnics accidentally caused his head to be burned while shooting a Pepsi commercial. He donated the whole amount to the Brotman Medical Center in Culver City, California where he was treated. Brotman later renamed its burn unit to “Michael Jackson Burn Center.”

$5 million - His share of the 1984 Victory Tour headlined by The Jacksons – an amount he later gave to charity.

$47.5 million – Was the amount he paid for a music catalogue of 4,000 songs including about 200 of the Beatles’ best tunes, which he bought from ATV Songs in 1985. This venture is said to have earned him about $300 million in later years.

$17 million - Neverland Ranch was reported to have cost this much way back in 1988 when he acquired it.

$20 to $30 million – Living the life of a music superstar apparently cost a lot. At some point in his life, Michael was reported to overspend in the tens of millions every year.

$4 million - Was how much the upkeep of Neverland cost. Enclosed in the 2,800-acre property were a private zoo, a movie theater, a ferris wheel, and a roller coaster.

$30 million – The amount reportedly spent already by AEG Live, the organizer for Jackson’s series of 50 concerts set to start supposedly on July 13, 2009. An estimated 800,000 people have already bought their tickets.

$236 million – The King of Pop’s estimated net worth as of 2007.

Looking at these figures, here are perhaps some of the lessons we can pick up from them:

Give as much as you receive.

Maybe Michael did lead too lavish a lifestyle. But he was also known for his philanthropic work that span across countries around the world. Hungry children, the poor in Africa, hospitals, and the HIV/AIDS research were only a few of those who benefited from his largesse.

Invest in worthwhile ventures.

Before all the trappings of the superstar life got to him, Michael Jackson was also a savvy businessman. Proof of this is his going into the music cataloguing business, which proved to be his one lifeline when the going got tough.

Spend less than what you earn.

Whether we earn by the tens or the millions, the basic principle of not spending more than you earn applies obviously applies to all walks of life.

Have a care for the future.

It’s sad to see that for all the people surrounding him, he was really financially ill-advised. And because most of us will never have the chance to make even a tenth of what Michael Jackson earned in a year, it makes it even more important for us to keep our own goals and security in mind.

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I was cleaning out the fridge the other day when it hit me just how wasteful it can be.

Think about it for a moment, every dollar you spend on food you throw out may as well have been ripped up and thrown away for all the good it does you.  It’s an enormous waste, and depending on how long you leave it in the refrigerator it could be a health hazard.

So, how to prevent it?

Well the first thing that comes to mind is simple:

Eat everything.

It sounds easy enough, but lots of things sound easy but don’t turn out that way; especially when you have kids involved.  Kids can be notoriously picky eaters, and what’s worse is they can pick it up from the strangest places, so even if  you trained them to try anything they can suddenly decide they don’t want something they loved just the other day. There’s very little more annoying than a teenager who wants to go to McDonalds because he doesn’t want to eat leftover spaghetti; even though spaghetti sauce is often better the next day.

Follow past the cut for a few ideas: Read the rest of this entry »

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The common cold is supposed to be just as its name implies – ordinary and relatively harmless. And yet nowadays, the symptoms of the cold and its more advanced “form”, the flu, can no longer be dismissed as plain coughs and sneezes that will pass in a few days.

I was almost unable to come up with this post myself as the whole family came down with the worst bout of flu we’ve seen in years. While I’m fairly confident that none of us has contracted the much talked-about and dreaded A(H1N1) virus, the onset of this new epidemic has led me into thinking about how we should pay more attention to keeping ourselves fit and healthy.

Costs can skyrocket when it comes to the treatment of serious health problems but oftentimes all it takes is a boost to the immune system to keep the viruses away. And let’s do away with the notion that living healthy is expensive. On the contrary, it could cut down on a lot of unnecessary expenses that we currently spend for.

Check out these tips and see what I mean:

Get adequate sleep. What else is there to say? Sleep costs you nothing yet does a lot for your immune system.

Quit the soda and drink water. Water is cheaper, healthier, and doesn’t bombard our bodies with sugars and additives.

Take it a step further and use tap water. I’m sure your purified water expense is way above your regular water bill. Purified doesn’t always mean cleaner though, and sometimes all you may need is a reliable water filter. PUR pitchers for instance are priced no higher than $19 but it does the job of straining out contaminants, and the water tastes great to boot.

Soak in some sun. Healthy sun, that is. Kids especially should get enough exposure to Vitamin D to help them develop strong bones and teeth. So pry them out of their console games and keep them running outdoors for some “sunshine vitamin.” Again, it’s free but the benefits are priceless.

Apply proper hygiene. A bar of soap or a small bottle of hand sanitizer shouldn’t make a dent in our budget but these are actually our first lines of defense against catching any unwanted germs.

Discover the benefits of “free” exercise. Who needs a home treadmill or an expensive club membership when a few rounds of brisk walking or jogging around the neighborhood would do just as well?

Quit smoking. With the recent rise in tobacco taxes, kicking the habit once and for all would do both our body and wallet good.

Skip the junk food and eat healthy. A healthy immune system always goes hand in hand with a healthy diet. Sure, organic fruits, veggies, and meats can be pricey, but you haven’t explored the other cheaper options yet.

As an alternative to the more expensive meats and fresh fish, some great but inexpensive alternative sources of protein are:

Fruits are the best sources for Vitamin C. The richest fruits (and not necessarily the steepest-priced) are the kiwi fruit, guavas, and oranges. Another affordable option would be to take Vitamin C supplements. You don’t get to enjoy the fruit but at least you get your needed dose of the vitamin.

Here’s to a long, healthy and frugal life!

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I’m a big fan of Freecycle, it not only leverages the power of the internet, but also works on the local level so it helps build community.

At base it’s not much different than handing something you don’t use down to your younger brother or sister – and most of us have done that.

The way it works is that you go to the main Freecycle website and find the closest local group.  Each group has its own Yahoo! group which provides a mailinglist.  If you have something you just want to get rid of, you post it on the group and if any member has a use for it they can email you back through the group.  If you get multiple offers, you choose whichever one you like best.

The catch is that you can’t accept anything in money or trade for the item.

Everything has to be completely unencumbered and free.  You provide it, they pick it up, no money changes hands.

It’s a great way to be frugal:  you can often get fairly expensive items like couches and washing machines for nothing.  Now the best stuff does go pretty quickly, so if you’re serious about Freecycle you need to set it up so you get immediate notifications and call or email as soon as you see something you want.  The early bird really does get the worm.  (Please pardon the cliche)

I touched on this briefly at the beginning, but I really have to discuss the local aspect of Freecycle because I think it’s one of its greatest strengths.  Humans are naturally social, we’ve lived in groups and communities for as long as we’ve been on Earth.  Freecycle builds on that strength by making sure groups stay relatively small and locally focused.  It builds a community within a community and that helps cut down on “freeloaders,” who would try to game the system to get as much as possible whether they have a need for it or not.

Freecycle works because it’s in tune with human nature and doesn’t try to fight it.  Give it a try, it can save you a ton of money.

If you have anything you want to add – good stories or bad – or even competitor sites – don’t forget the comment box at the bottom.  That’s what it’s there for.

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