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« Reading and Wealth | Main | FMF March Money Madness, Round 3, Posts 9-12 »

April 10, 2013


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The app has to really be worth it for me to spend even $.99. If I were you, I'd would establish an app budget for the month and have your kids plan out what they want to do with it. It'd be a learning experience for all!

I try to adhere to the old rule that investments ("pay yourself first") should be on autopilot, and as mindless and as painless as possible. I still do credit card payments and most other bills via snail mail, because I want to "feel the pain" and then work to reduce it.
I think several studies show people spend 20-30% more via plastic than cash due to this issue.
One caveat- in this time of identity theft place the letter in a secure mailbox.
Like most financial issues the challenge is analyzing your particular personal/life circumstances then maximizing the pros and cons.

It is plain and simple in my house. You want an Ipad, Iphone, smartphone or Ipod or anything you pay for it. I will pay for a dumb cell phone but that is it. You don’t need to be that connected and it costs money that is unnecessary. There are plenty of free wifi available. I have a nook tablet and if they want to buy an app they need to pay me first. If it is for school then I will pay for it.

I don’t have a smartphone because I don’t need to be that connected. I have my desk top at work and laptop at home. That is enough for me. If work felt it was necessary for me to be that connected then they would have to pay for it.

As for bill paying, since I have done it with the check method for quite a while I am trained to look a the bills but now that I do the vast majority online I feel freer with less paperwork and talk about less of a money drain. A stamp each month for each bill( heat, elect, mortgage(now gone), cell phone, cable, internet, cerdit cards times 5) that is 10 bills right there at 46 cents a bill is $4.60 a month while online it is free for me.

It may take a different kind of disipline for online bill paying but it sure beats a money drain of stamps.

I use an online Billpay program, free through my bank. But it is not automatic--I still receive a paper bill for everything t=so I can look it over. I just go online to pay each bill, and I love how I don't have to mail anything and there is a nice record kept.

For my family, the things I am especially cautious about are the "autorenewing" subscriptions. Because they often "autorenew" at a much higher price before you realize that you don't even want them, taking advantage of having your credit card number. Thus, I subscribe to zero digital magazines/newspapers, and our few magazines are paper and paid for only by one handwritten check. I do have one autorenew that I think is worth it--icloud backup of our itunes library for $25/year.

The WORST culprits are anti-virus programs for our 4 household computers--they all DEMAND autorenew and this is built into the software, but the prices for autorenew are all double or higher the original price! It is clearly a scam. Unfortunately, all the major vendors do this--Norton, Trend Antivirus, etc. The only way I have found to try to defend from this is to keep a detailed written record of passwords and when each program will autorenew for each computer, then I make a note to go online or call their tech help to cancel just before it autorenews. Most of the time they put a big fight and pretend they can't do it, and I have to threaten them and pretend I am recording their phone call in order to get the autorenew canceled. After all that I still have to go to a lot of trouble to remove all of their autorenew software from my computers.

I am thinking of trying to get a temporary credit card number in the future, just so I can buy these antivirus programs when I need them without the danger of them autorenewing--does anyone have any experience with getting these temp credit card numbers? do they actually work?

I can certainly understand the concerns. We use online bill pay because we like the convenience and know we'll not forget the bill. We also get all our bills either via paper or in an email so we see what's going on each month. For something like these apps, a good way around it is to maybe set an app budget each moth and once they hit it they get nothing until the next month. However, I'd be more likely to say that if they want one that they have to use their own money to buy it.

I think the only way we can remain vigilant is to go out of our way to stay disciplined. That means reviewing the bills every month even though we don't have to. It means deciding how much we're going to spend on things like apps beforehand, and then sticking to it even when the kids throw a fit. It's extremely difficult to stay disciplined for any long period of time, and that's why so few people do it. However, I think the benefits speak for themselves.

You have to learn to deal with it differently. It still pains me to pull out the credit card to pay for something because I know we have to pay for it soon anyways.

mc - please do not pay for antivirus software. Download and use Avast (it's free for antivirus, but you have to pay for any extras, which are IMO unnecessary), it protects better than some of the pay ones and doesn't infest your computer like a few of them do (Norton is especially notorious in this regard).

As for the antivirus question, try AVGFree. As its name suggests, it is free including updates.

My kids are teens with divorced parents. They each have their own PC computers that I got them, and their Dad recently got them each a smart phone on his account (previously, I paid for them to have basic phones but they prefer the smart phones!). Obviously their Dad pays for any apps they want for their phones. They don't have either ipad or xbox. For PC software, they have to ask me if they want to buy anything, and sometimes I'll pay for it or make it a Christmas present, and sometimes they will buy it from their allowance. I haven't had to buy much PC software apart from microsoft office which they need for school. I bought them a video editing software suite that was pretty expensive, but actually they haven't used it much. Access to three different Steam online games/mods is cheap at $9.99 each, one-time payments, and both kids can play using the same account.

When my kids were younger, I spent much more money buying all those webkins stuffed toys and paying for them to play with their webkins online! It was fun, but really expensive. I'm glad my kids grew out of that..!

People overspend regardless of technology in my mind. I think a large part of what we are comfortable with is what we grew up with and first began "handling" when we were out on our own. Any acceptance of new technology tends to fit most easily into our accepted comfort pattern. So our kids, IMHO, will learn their balance and their "triggers" on what looks bad as they move out and handle their own accounts.

With respect to the last question on spending I agree it seems it's become easier and easier to spend but in the end you have to be conscious of your decision. You have to hit the button, swipe the card, click the mouse. What I see is impulse buying at the computer, and I still feel the best cure is to give it a day, a week, etc. to see if it's something you really want. My biggest problem lately has been with Groupon and similar "internet deals" that my wife looks up. There is always some great offer, be it a restaurant, a weekend getaway, etc. that she'll get all excited about and ready to drop money on, and I always ask do we have to make a decision now, and 9 out of 10 times we have a few days. So we postpone. If she doesn't bring it up again, I know she thought about it and doesn't want to spend the money. If she brings it up again we talk and make a decision. But I really think having a calming period helps to look at things more rationally regardless of they way you purchase.

@MC For Citibank credit cards, you can generate temporary "virtual account numbers" on Citi's website whenever you want them. It's hard to find, and the user interface is terrible, but the numbers themselves work great. I use them now and again when I have qualms about particular merchants. (Other banks probably have this feature too, but I haven't gone looking for it.)

Since I bought a Kindle, my spending on books has gone way up. I now spend $20-$25/month in the Kindle store, buying any book I want at the drop of a hat, where previously I had to go to Borders or request it from the library. Of course, this also means I'm reading more books, so I consider it money well spent.

I've also been buying music online for years, running $10/month for one or two albums. Again I think I'm getting extremely good value, since it goes into my collection and I listen to each track dozens of times over the years.

I buy apps very rarely. My smartphone's built-in apps do 90% of what I want from a smartphone. I'm usually unwilling to grant third-party apps the security permissions they demand. The few I have are mostly free: Amazon, banks, airlines, etc.

In any case, I don't think I've experienced a "mindless spending" problem with virtual payments. I buy the stuff I want, and then I enjoy it.

I have a different take on the article and this is whether you should sweat the small things. For many years we heard about how that latte in the morning is killing your ability to retire. I am not a coffee drinker but think that it totally wrong.

I'd rather get 100 small decisions wrong and one big decision right. I can buy 100 $2 apps and be out $200. One bad decision to lease a car, buy a boat, buy the wrong house, keep retirement money in cash, don't invest in a 401k.....

Unless you are just starting out or in extreme financial distress from past mistakes, if you get the big things right, I doubt the $2 apps are going to make much of a difference either way.

To me, it's very easy to avoid making all these little purchases that can add up, for two reasons: For one, I don't visit places where I could be tempted to make small purchases unless I have a good reason, and for another, I just don't desire little things like that. Sure, I have a few apps I've paid for on my phone...perhaps 5 or 6 that I've purchased for specific reasons, none costing more than a couple bucks. I buy stuff on Amazon, but only when there's something I specifically need or want badly enough to be willing to pay for it.

I probably make a total of about 10 discretionary purchases - of any size - per month, most of which are lunches out on weekends. If I want something badly enough, I'll buy it, but there's very little I want enough that I feel it's worth it to buy.

Try Microsoft Security Essentials, it's a free download and work just fine.

That's why we don't have an iPad. Maybe when our kid is older, we can look into it. He likes playing with it at the library and that's enough for now. I'd rather have him running around and play with real toys for now.

Since I started tracking our spending last year (preparatory to retirement plans, got to know where our money goes and how much before we know how much to plan to need) I write down every 99 cent Kindle download, etc. The only exception I make to the accurate tracking is that we both get about $20 a month in cash that we carry around for the occasional small purchase and that's just noted as "$20 pocket money". When you are noting (and adding up) those Kindle downloads, etc. you have to face the fact that it really is spending...not much, but still some. There just isn't the kind of "autopilot" mindless spending the reader mentioned if you are keeping track of spending. I wish we'd started this years ago.

I think the key to small purchases is to budget for them and stop when you've reached your budgeted amount. Yes, it's easy to swipe a card or tap a button. It's also just as easy for some people to hand over cash and not remember at the end of the week where it all went. At least with cash you can't spend more than you have. Sticking to a strict list while at the big box stores is key for me. I also think keeping a list of things you want to buy and waiting a few days before a new purchase is a good way to curb the impulse.

On a personal level, I'm not about to lease a car or buy a boat or buy a house for that matter, but as you showed the little stuff can add up and I'm still out that money. If I've budgeted for and decided that I can afford a small amount of "small stuff" charges, great. But often these small things can add up to greater amount than I would have chosen to purchase had I seen the full amount at one time. For that reason, it's smart to be aware (but not obsessive) about the small stuff. A 4 dollar coffee Mon-Fri with a week off for Christmas and Thanksgiving approximately equals 1000 dollars a year. Some people when faced with the 1000 figure will choose to drink something/where else.

I am sure glad that I'm of the generation where my kids had left home before the age of computers and social media. Even in the old days I kept tabs on any call that they made they involved message units and gave each of them a bill at the end of the month. Thank God I didn't have to buy each of them a computer and a smartphone.

What it is about young people today that they go through life staring at their smartphone most of the time (some even when they're driving).

I only allow my children to download paid apps IF AND ONLY IF the app is educational; otherwise, the answer is a big NO. If they insist, they need to look for a free version. That is, if they can find one.

How do we remain vigilant with our spending? We have a list of expenses. Whether the spending was made in cash, credit, or virtual, it will be listed down.

The number one problem I have with my budget is making numerous small purchases. Items at the checkout line get me every time. :(

I can see how 99¢ or $1.99 here and there can seem like nothing. But then at the end of the month somehow you've got $78 total in charges. I'd suggest one way to get around that with the Apple stuff is to use gift cards. Give the kids a $10 apple gift card at the start of the month as part of their allowance and let that limit the spending. Then when their $10 is gone in 3 days they've learned a lesson for the rest of the month.

It can be harder to control spending if spending is easier. But I do not believe that electronic payments or credit cards automatically suck money out of your wallet. We all make a conscious choice to hit the 'buy' button or swipe a card at the store. But then I'm sure some people feel differently about money when using plastic than cash.

I have to agree with the comments about not sweating the small stuff. Unless it's a chronic problem where you're racking up a regular monthly total then it's probably not worth the effort to police it down to the dollar.

That said, I find the other point about electronic transactions to have the opposite result for me. With all my transactions (I'm talking even my $3 - $4 lunch at work) charged to a credit card I can much better track our spending because I download everything into Quicken. I'm more proactive; I know more about our spending, plus, I once found fraudulent charges and notified a credit card company before they identified the problem which I might have missed in a paper statement.

You can set your prefs so that you have to click through an additional "are you sure" dialog box to make a purchase. It's a little thing, but I think every bit of friction you can introduce into the process slows spending.

In the floppy disk days, I spent enough money on my computers and software that would have bought a few new autos. Of course all the machines and software are totally obsolete now. I feel like I was foolish and burned myself, so today I will only use free apps. I do not mind ads and find them often interesting.

This brings me to think of ‘a penny saved is a penny earned’. The very act of being conscious and controlling those $2.99 here and $5 there can stop one from getting into free-wheeling spending and ultimately hitting financial crisis.

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