Free Money Finance

Help a Reader: What to do with Extra Money

Here's a question I received from a reader:

What should I do with $900 I just received from my flex spending account (from childcare expenses)?

Here is the thing..I never finished my associates degree so I finally worked up the nerve to go back to school in June.  Turns out that since I applied to late and will not be able to get financial aid until the fall.  Anyway, the class costs $600 plus $100 for the book.  I could either pay for this class..or just wait until the fall to go back to school.

Should I put money down towards my credit card debt ($3,351) with an average of 26% in interest?  Because of how tight things are financially l usually pay a little bit over the minimum. 

Or should I put the money in savings for an emergency fund?

I am very excited that I started a savings account (ING Direct).  Finally!  I am 31 years old and have never saved before. Also I make 37K a year (as an administrative assistant) and receive between 3 and 4K a year in child support.   

What do you think I should I do with this $$$??

What do you think she should do?

Where's My Stimulus Check?

If you're wondering where your stimulus check from the IRS is, here's something you might be interested in from TurboTax:

Recently, you may have received a letter from the IRS advising you when to expect your Economic Stimulus Payment (rebate). That IRS letter may have inadvertently left off some important information. Taxpayers who chose to have their tax preparation fees deducted from their federal tax refund will receive their tax rebate in the mail, not via direct deposit.

Maybe this answers some questions for a few of you out there.

Thanks, Ellen, for passing on the info!

Bad Index Funds, Worth of a Mom, Wal-mart Troubles, and Asking for a Raise

Here are some posts worth re-reading from one year ago this week:

• All Index Funds Are Not Created Equal - A word to the wise.

• How Much Is a Stay-at-Home Mom Worth? - My original thoughts on this issue.

• What's Going on with Wal-Mart? - No improvement in the year since I wrote this.

• Ask for a Raise - Always good advice in my opinion.

Free Money Finance is brought to you by Tutor.com. Check them out for a free 50-minute trial.

More Government Bashing

More government bashing -- this time not from me. It's not over waste, but about Social Security. Click the link and check it out for yourself.

I've had some people comment about my on-going issue with government waste and spending. Just in case you're interested, here's why I'm talking about it:

1. It's my money. Notice I file these posts under the "taxes" category. I pay a good amount of taxes and would like to get a decent return for them. Generally, I do get a fair return, but just like I'd scream if Vanguard wasted some of my investments or if my wife bought something I thought was useless, I'm going to take note when the government takes my money and uses it in ways I don't like.

2. It's your money too. This blog is about growing your net worth. Expenses are a hinderance to growing your net worth. What's one of your biggest expenses? Yep, taxes. The least I can do is notice when your money is wasted.

3. It's an election year. Folks, we all better start thinking now about how the next president will impact our finances, taxes, spending, and so on. Remember, "It's the economy, stupid." Unfortunately, you never know what you're getting in a politician until after they are elected. Some are better than expected and some are worse. But there seems to be something about finally holding an office that brings out people's true colors.

4. DIY. I'm a do-it-yourselfer in all other areas and I'd prefer to be one when it comes to Social Security. But I don't get that choice.

5. I hate waste. I'd be a lot happier paying my taxes (and paying even more possibly) if I thought a good percentage of them weren't being wasted or spent on bureaucracy. Just like I wouldn't give to a charity with a record of high administrative expenses, why should I have to give to a government with one?

6. Waste, part 2. I work to control financial waste in my own life and I'm holding my government to the same standard.

Really, I'm not a government-hater. But I do get irked when I see my tax dollars wasted, spent on pork-barrel projects, and allocated to mandatory programs that I'd rather manage myself.

Ok, I'll get off the subject for now and simply wish you all a great weekend.

Save Money and Improve Your Life by Turning Off (Or Getting Rid of) Your TV

I recently ran into this piece from The Juggle about how her family had gotten rid of their television. They tried turning off the TV for a week in the past and they "got to bed earlier, read and talked more, and generally felt like we had a little more time in the evenings." They're finding the same sort of results this time around -- and they kind of like it.

After seeing this post, I did a bit of searching and found out there's an organization dedicated to getting people to spend less time with their TVs. Here are some highlights on them:

Center for Screen-Time Awareness (CSTA), formerly TV-Turnoff Network and in an early incarnation TV-Free America, is an international nonprofit organization that provides tools for people to live healthier lives in functional families in vibrant communities by taking control of the electronic media in their lives and not allowing it to control them.

Founded in 1994 by Henry Labalme and Matt Pawa as an environmental organization, CSTA has grown into an agency dealing with diverse issues including obesity, illiteracy, violence and the impact electronic media has on our lives. The organization is dedicated to making information and tools available to people that put them in charge of the “electronic tools” in their lives, using them in ways that enhance the quality of life and contribute to stronger families and communities.

CSTA has helped millions of people do just that. Our primary programs, Universal Screen-Time Reduction; A lifestyle for the 21st Century and Turnoff Week (formerly TV-Turnoff Week) are keys to our organization’s success.  These programs put the power in the hands of individuals and families, helping them make the best decisions for themselves, with the best information available.

I've written that you can earn $1 million by not watching TV. Others have listed Ten Financial Reasons To Turn Off Your Television (and ten things to replace it with) and Twelve Reasons to Turn off the Television. Seems like there's a trend here.

But not only can you save a bundle of money by canceling cable and limiting the amount of "I gotta have that" commercials you watch, it seems likely that there's a better quality of life associated with not having a TV (or at least not using it much.)

We watch very little TV -- maybe a handful of hours a week during the football off-season. (and not that many more during the season, though I do like to catch at least part of a game every week.) We spend most of our TV time playing video games -- though this could be as bad as watching TV.

I'm interested in hearing for those of you who have cut down/eliminated TV or are thinking about it. What is your thinking/experience on the issue?

Really?

From the Captain Obvious file -- it appears that it's a buyer's market in housing.

Glad the Wall Street Lournal could bring us this late-breaking news. Sheesh.

Help a Reader: Immediate Help Needed

Just got this comment:

my husband passed away dec 2007 i've just gotten 500k from life insurance the insurance agent wants to invest all of it and give me an allowance a month. I'm 40 two children who have their own 85k each when they hit maturity. I owe 230k on my house I have a job and ss for the kids untill they are 18 ( 9 & 11 now) I want to pay off my mortgage invest 150k for retirement and have the balance for emergency also smaller investments. I feel like he's pushing me he also wants control of the childrens UTMA accounts once I have guardianship. What sounds right. I'm picking up the check today.

What suggestions do you have for her?

Where and How to Save on Drugs

Consumer Reports ran a piece on America's best drugstores in their June issue. As a test, they looked at the cost of four popular drugs -- Plavix, Levoxyl, Detrol, and alendronate -- and listed various retailers in order of ascending costs. The winners were:

1. Costco
2. AARP.com
3. Wal-mart
4. Walgreens.com
5. CVS.com
6. Independents
7. CVS
8. Safeway
9. Shopko
10. Publix
11. Hannaford
12. Walgreens
13. Rite Aid

The piece also offered some tips for saving on prescriptions drugs including what seemed to be the best tip to me:

Compare prices. Our national study of prices for four common drugs found average total differences of as much as $340, or 26 percent, between the cheapest source and the priciest. Even prices within a chain often differed. Prices also varied greatly from one independent pharmacy to another.

Fortunately, we don't have much need for prescription drugs, so I'm in no way an expert ion the issue. That said, I have posted several other money saving ideas that I've gathered from others including:

• Ask for Free Drugs

• Don't Pass Up Generic-Drug Savings

• Save on Prescription Drugs

• Comments: Money Saving Tip: Ask for Free Drugs; Get Coupons

• Comments: Money Saving Tip: Ask for Free Drugs; Real-Life Example

Help a Reader: What to Do with a Mortgage That's More than the Home's Value

Here's a situation a reader described as a comment on my post titled When You Owe More on Your House than It's Worth:

Okay so we bought our house with 20% down and a 30 year fixed that we can afford.

Unfortunately we bought in 2004 in Vegas when the investors, subprime, etc drove prices up 54% and drove home availability down to just a 100 homes or so and home builders created waiting lists jacking up the prices 10K per day (only to drop the same home price 100K the next year for new buyers).

So now LV has dropped so much that our 20% down has disappeared and banks and investors are selling homes for so little that it is depressing prices more. As a result we owe more than we could sell the house for. Makes it depressing to keep paying the mortgage.

What do you do when you owe more than the house is worth but can pay the mortgage? Homeowners in trouble are able to get their mortgage adjusted so they can avoid foreclosure and get their mortgage repriced. Right nice punishment for those of us that can pay our mortgage but need to move.

No wonder people who can afford their mortgages are starting to walk away.

This is a tough situation. He's played by the rules, been faithful, and is now left paying on an asset that's worth less than what he owes on it. And, to make matters worse, he needs to move (or at least I think that's what he's saying.) So he has to sell at a loss.

I'm not sure what I would do and there are a lot of unanswered questions (the main one being why does he have to move?) But I would likely try to sell as quickly as possible at the going market price and pay off the additional mortgage remaining over time. If I had to rent (or do whatever) to keep my costs low in the meantime, I'd do it. I would not take bankruptcy/foreclosure/abandon the property. I would feel like I had given my word to pay it back and that's what I'd need to do -- even if I took a beating on it.

And not to rub salt in a wound -- I'm not even addressing these comments to this reader, they're for us all -- this is why we want to:

1) establish as much room between what we make and what we spend as possible

2) buy a house we can afford with a good downpayment (prices must have REALLY dropped if he did these two things and is still underwater) and

3) make sure that our homes aren't such a large part of our net worth that if things go south with them that our whole financial house collapses. 

That's my two cents. What would you suggest he do?

More Government Waste

Continuing our conversation from yesterday on government waste: now 1,500 stimulus checks have been sent to the wrong accounts. Yes, it's a small amount of the total checks sent out, but still -- this is only one example of waste (there are many more as people noted yesterday) -- and this stuff can really add up!!!!

A New Must-Have Money Book?

I've already listed what I think are the best financial books of all time, but there may be a new one to add to the list. I'm just starting 50 Prosperity Classics: Attract It, Create It, Manage It, Share It (50 Classics), but I've skimmed the whole thing and it's fabulous!

Here's a quick summary of what the book is about:

50 Prosperity Classics: Attract It, Create It, Manage It, Share It (50 Classics) is 50 short chapters on how to attract, create, manage, and share money from 50 of the best-known financial experts/writers of all time. It includes pieces written by David Bach, John Bogle, Warren Buffett, Peter Lynch, Dave Ramsey, Suze Orman, Peter Drucker, Guy Kawasaki and more -- a real who's who in the financial world. Each chapter is 4-6 pages and includes key quotes, a summary of the article, and a list of like-minded books you can read if you want more information.

Here's what I like about it:

• Great authors.
• Each author writes about his/her strengths -- lots of wisdom here.
• The chapters are short. I don't have time to read 50 great books, but I can get wonderful nuggets of information from 50 great books in 10-minute bursts.
• The summaries. Just reading these 50 statements are worth the price of the book.

No, I'm not being paid for this review and no I don't have any sort of financial interest in it -- other than applying the principles it covers will likely help me grow my net worth. I'll be sharing more on this book over the next few weeks, so stay tuned for some great financial wisdom. I know we'll all learn something from it.

Star Money Articles and Carnivals for the Week of May 12

Here are some interesting posts this week as well as a list of the carnivals Free Money Finance was in this week and my posts that were included. But before I get to that, let me introduce a new advertiser here at Free Money Finance:

The site is Tutor.com and it offers affordable tutoring for any budget. They connect you to an expert tutor whenever you want help, and you only pay for the actual time you use. It's that simple. Stop by and say "hi" -- and be sure to tell them I sent you. ;-)

Now for the posts:

• BripBlap gave his first employer a gift.
• My Dollar Plan broke her cell phone.
• Money Smart Life covers health insurance.
• The Digerati Life favors long-term investing.
• The Sun’s Financial Diary discusses China.
• Generation X Finance looks at dollar cost averaging.
• Lazy Man and Money has some ideas for your stimulus check.
• Money Crashers covers buying a house during the housing crash.
• Carnival of Personal Finance - Save $3k Per Year or More by Throwing Away Stuff
• Carnival of Debt Reduction - I Have a Great Credit Score
• Festival of Frugality - Save Money by Stocking Up on Products
• Money Hacks Carnival - Save Money by Stocking Up on Products

Carnival Hosts: As a reminder, I post all carnivals I'm in for a given week as long as the host either emails me a link to the carnival or sends me a trackback.

Enjoy!

Help a Reader: Savings Bonds

Here's an email question I recently received from a reader:

I have ~$2000 (current value) in savings bonds that were purchased for me as a child. They did not get used for college, so now I'm trying to figure out what to do with them. They're all currently earning 4%. I'm considering either holding on to them or cashing them and putting them in my Roth IRA (invested in aggressive index funds). I feel like it would be a good time to change them into stocks due to the current market, but am a bit wary about losing my guaranteed 4% in exchange for high market volatility.

Other important info: I'm 25, I have other means for fully funding my Roth IRA if I don't use the bonds, and I don't need to add to my emergency fund.

What would you suggest she do?

Test

I'm having issues getting Typepad to post, so I'm testing an entry to see if it goes live. Your regularly scheduled programming should return shortly (hopefully.) ;-)

What's with the ID Check?

There seems to be a growing trend among restaurants, retail outlets, movie theaters -- almost any place that accepts a credit card -- to ask you for additional identification (like a driver's license) when you use your credit card. What's up with that? Isn't the fact that I'm presenting the card (signed on the back, by the way), good enough? If it was a stolen card, wouldn't the person it was stolen from already have canceled it? It just doesn't make any sense to me why merchants are doing this -- unless it's to protect themselves from fraud. But even with that explanation, I still don't want to show my driver's license to some hourly worker I don't know. Call me paranoid, call me uncooperative, or call me whatever -- I don't want to show extra ID when I use my credit card.

I recently asked a checker why she wanted to see my ID and she said, "It's for your protection." Really? Really? How exactly is it for my protection? I didn't ask her since there was a long line behind me, but I can't think of one reasonable way it would be for MY protection. Worst case, I'm a thief using a stolen card. How exactly is carding me for MY protection?

Well, it turns out that asking for additional ID is against credit card policy -- at least for Visa. Here's what the Consumerist notes from Visa:

Merchants may not refuse to honor a Visa card simply because the cardholder refuses a request for supplementary information. The only exception is when a Visa card is unsigned when presented. However, "See ID" is not considered a valid signature. In these situations, a merchant must obtain authorization, review additional identification, and require the cardholder to sign the card before completing a transaction.

To report any merchant practices that you feel are inappropriate, please notify the disputes area at the financial institution that issued your card account. Your card issuing bank has access to the appropriate Visa rules and regulations as well as to the Notification of Customer Complaint forms which should be used by your bank to document and file merchant complaints.

As an alternative, you may contact the Global Customer Care Services to report merchant practices that you feel are inappropriate. Please contact the Global Customer Care Services at 1-800-VISA-911 (1-800-847-2911). Please advise them that you were referred to file a complaint. The staff will be able to initiate a complaint form over the phone.

I already believed this was the case, but now that I know it for sure, I'm planning on being more forceful the next time I'm asked for my ID. Maybe I'll even carry this statement in my Blackberry, so I can whip it out and quote the facts when needed.

Then again, maybe I'm getting all worked up about nothing. Your take?