Grad Money Matters

Wiping out Emergency Savings to Pay off Debt

2008-06-22T09:02:00.001-07:00

In the personal finance blogging world, when you bring up the question of whether your primary focus should be on building an emergency fund or paying off your debt first, you will likely get a very strong passionate response supporting one or the other. Those belonging to the emergency fund first camp argue that without an emergency fund, it is easy to slip into the murky world of more debt when unexpected circumstances strike. On the other hand, those belonging to the pay debt first camp argue that to get the best mileage out of your money, use it to pay off high interest debt, instead of letting it sit around in a low interest savings account (and compared to the hay days, even the best online savings accounts look like low interest savings accounts these days!). We definitely belong to the latter camp. For us, debt feels like a constantly nagging thorn on our side and during the past couple of months we pretty much wiped out our emergency funds to pay off our debt. While there were heavy psychological and emotional overtones to this decision, it was not made lightly. I would like to lay out our reasoning here, in case someone else is in a similar boat and finds it interesting.

The psychological and emotional reasons

Before going into the logical reasoning, let me first provide an overview of our situation so it may help you understand why we were so itching to pay off the debt. During our years in grad school, which were our first few years in the US, we had amassed a whopping $42,500 in debt! Coming to the realization of how deep a hole we were in and pulling ourselves out of it bit by bit was a experience that left a permanent distaste for debt. For around 4-5 years after that we were clean. During those years we have been saving and investing aggressively. Last year however, when our trusted 14 year old 150K mile car died, we gave in to our whims and ended up buying our dream car. It was a pre-owned vehicle but way too expensive and not having the liquid cash in hand we ended up financing it. (If interested, you can read my confessions and justifications regrading that decision). While we have no regrets about the car, the decision to finance it has been sticking out like a sore thumb to us.

What makes matters worse is that during the past few months there have been rumors, which are turning to be less of rumors and more of a certainty as the months pass, that our company could soon be bought over, and I will likely lose my job. Being pregnant, it is not going to be easy for me to go find another job immediately. While I think we can handle the dramatic change from double-income-no-kids to single-income-new-baby without going financially downhill again, I would feel a lot more comfortable if we can do it without the added stress of carrying debt. So a couple of months back, when I received the stocks for the past 6 months of investment into the employee stock purchase plan, I sold them for an immediate 15% profit, withdrew almost all the money from our emergency savings and plonked all that money on the cashiers desk to payoff our car loan. Even though depleting the cash reserves was scary, the thrill of being debt-free again (apart from mortgage, which we are continuing to pay off aggressively) is exhilarating!

The plan for surviving emergencies

We did not take the decision to wipe out our emergency savings lightly (nor do I think anyone should, no matter how much of a staunch supporter of the pay debt first ideology they are). Here is our reasoning which is very specific to our situation.

Daily expenses on job loss

Fortunately, since both of us work, this case is not as severe a threat to us as it is to single income families. Even though there is a possibility that both of us could lose our jobs within a span of few weeks from each other, I doubt that it is likely to happen (in the inadvertent case that it does happen, one of the cases listed below should cover us at least for a few weeks, and hopefully one of us can find a job by then?). Currently, we pay twice the amount to the mortgage, max out both our 401Ks, invest in one employee stock purchase plan and could pay our car loan. In case of one job lost, we can cut down the aggressive mortgage payments and possibly reduce the contribution to the 401K just enough to get the employer match. Also, with the car loan gone, that is some more money freed up. With a slightly more frugal lifestyle, I think we can get on by fine for our daily expenses and possibly manage to save a little each month to rebuild our emergency account.

Additional unexpected expenses up to $1000

While we were students, both of us used credit unions. When we started working we started using a regular bank. But since our credit union was our oldest standing account, in the interest of maintaining a better credit history, we decided to leave our credit union accounts open. And in order to keep it in good standing we each have a direct deposit of $50 or so into that account each paycheck. Since we have been doing this siphoning right from our first paycheck, we do not really miss that $50 each paycheck. And since this account grows oh-so-slowly, we do not consider it a part of any of our accounting. Over a period of time we have each had a few hundred to sometimes a cushy $1000 accumulated in that account unnoticed. And it has been a good source to tap into when we have small emergencies but do not want to dip into our real emergency savings. Currently, we probably have low hundreds in each of our accounts, but with monies from both our accounts pooled, we should be able to handle small unexpected expenses up to $1000 or so.

Additional unexpected expenses up to $6000

We are not really into stock market investing (other than our 401Ks). But last year when I had an additional $5K, I had opened a Vangaurd account and had setup an auto deduction of $100 per month to go to this account. With the stock market slump, this account barely stands at $6000+, in spite of a year passing by with money being pumped into it on a regular monthly basis! While I would love to keep this around for a long time and see where it goes, I will not be terribly upset if I have to sell the index funds to pay for an emergency. Sure, I will incur some taxes and possibly lose some money, but frankly I have not been making any money on that account since I got it and the rate of returns is probably at 0% or slightly negative. So, using it up for paying for an emergency will not bother me at all!

Additional unexpected expenses up to $15,000

When the interest rates on savings accounts were high, I used to play the 0% APR balance transfer game quite heavily. With the slump in interest rates the credit cards charging fees for balance transfers, I don't play this game any longer. But between the two of us, we have access to around $80K - $100K in credit and I am assuming that with the car loan paid off and no outstanding debt, we should be able to have access to at least $15K at low interest rates. For instance, currently, I have an outstanding offer from one of my cards for a 0% balance transfer for one year, with 3% fees capped at $199. I have a $17K credit limit on that card (if necessary, by transferring credit lines, I should be able to increase that to $42K). I know this is not something I can rely on, since the offers change from time to time, but it makes it easier to justify against letting money sit in an emergency account earning next to nothing in interest.

Additional unexpected expenses up to $30,000

As listed early in the history of this blog, our financial goals and the approach to realizing them is to rely primarily on our 401K contributions, and owning our house outright as soon as possible. In addition to that, our outside investments (as and when we can) have been mostly into the real estate back in home country. During the past few months, with the car loan, medical expenses etc, we have not been able to do much towards the overseas investments. But during the golden 4-5 years in the middle when we were debt-free and saving like squirrels, we did manage to stash away a little in these investments. In the worst case, for largish emergencies we should be able to liquidate some of our holdings and pay for it. This will likely cause a lot of stress and heart ache and may even cause us to lose some money, but if it an emergency that large, I doubt we will really care! What's money good for if you cant use it when you need it? Besides, we will never stash away $30K in a liquid emergency fund, so this would probably be inevitable in case of large emergencies anyway!

Additional unexpected expenses > $30,000

Finally, for those super large blows (which I hope we will not have to face in this lifetime!!!) I think we can dip into our last resort - a 401K loan, or a home equity loan etc. This one will likely impact our ability to retire on our own terms, but if we are faced with super large emergencies, and live to tell the tale, then that will likely be a small price to pay. Besides, we are still young and we should be able to rebuild from scratch....

Since this analysis was specific to our situation, I don't know if it will help anyone make their own decisions. But it sure was helpful to me in ensuring my peace of mind that in spite of depleting our emergency fund, an emergency in the near future (until we plump up our emergency funds again) will not throw us over the edge into the debt hole again. Irrespective of whether you have a blog or not, I encourage you to do this analysis with your own situation. If you are in the same boat as us (early stages of financial life) or much ahead, it will help offer the peace of mind that you can possibly survive many of life's curve balls. If you are where we were 5 years back (just paid off all debt, but don't have much in savings yet), I am sure an analysis like this will motivate you to stay frugal and save as much as you can. And if you are where we were 7-8 years back (with a pile of debt in front of us, and no savings whatsoever to speak of), then I am sure an analysis like this will push you into digging out of that debt hole much faster. Either ways, feel free to share your thoughts!

*Image Credit: Photograph by 24thcentury (via Flickr Creative Commons)

5 Ways to Save Money in College

2008-06-03T12:56:00.000-07:00

(This is a guest article by Heather Johnson*)

When you’re in college you never have enough money. It’s just the way it is, unless you’re a trust fund brat. If you don’t have mommy and daddy’s big pockets, you have to find alternative ways to get by. Chances are most of your purchases will revolve around beer and books. With this in mind you have to figure your budget for each semester to have a goal of saving enough during the summer and winter breaks. But when you’re actually at school, there are many ways you can make sure you always have a little dough to spare. Here are five tips for saving money when you have no real income while in college:

Have a financial record. This can be as easy as having a sheet of paper in your desk where you can keep track of your income streams and expenses. Write down how much you’ll have coming in during the month and what you have going out. This will keep you prepared and aware of what you have at your disposal. Once you have this knowledge you’ll know what you can afford when it comes to the weekend. Too bad the weekends start on Wednesdays. Good luck.

Keep your receipts. This sounds tedious but it’s important in case you’re ever overcharged. You can’t afford a company’s mistakes. If you’re overcharged you’ll have the receipt to recoup your lost money.

Spend money only on what you need. If you went to the store for a twelve-pack then don’t come out with a case and a bottle of wine. Only buy what you absolutely intended on buying. You never know when a parking ticket will appear on your windshield or when you’ll need a new set of tires. Always be prepared for a hidden expense.

Consider your options. Go to a local bank near your school and speak with a financial services representative about the different programs they have specifically geared to college students. Most banks will have some system in place for college students and are great ways to get introduced to the real world.

Pay your bills on time. The last thing you need are late fees and other expenses associated with not paying your bills on time. Stay current with your credit card bill as the interest alone can clean you out later on down the road. If you stay up to date with your bills there will be no out-of-the-blue fees.

*About the author: This article was contributed by Heather Johnson, who is a regular writer on the subject of instant credit card approval. She welcomes your questions, comments and writing job opportunities at heatherjohnson2323 at gmail dot com.

How Much Should You Borrow for Your Education?

2008-05-28T13:22:00.001-07:00

(This is a guest article by Miranda Marquit*)

One of the items that seems to continually go up in cost is education. It's up there with food, health care and gas. Only you don't usually have to take loans out to buy those other things. The rising cost of higher education pretty much guarantees that you will need to take out student loans in order to help fund your degree.

The good news is that there are many sources for student loans, both from the government and from private sources. And even in the current climate, there are still plenty of loans available. Indeed, the danger becomes borrowing too much, and then having to pay it all back. While student loans can help you offset living expenses so you can focus on school (in addition to paying the cost of tuition), few people really need the maximum amount they are approved for.

My mother's voice echoes in my head "Just because you can, doesn't mean you should." This is just as true for figuring out how much to borrow in student loans.

Create a budget

Take a realistic look at your expenses and your education costs. Find out how much you will pay in rent, and get an estimate of the cost of utilities. If you live in housing provided by your school, most utilities are included in the cost of your rent. Even if you don't, many apartment managers can give you a good idea of how much utilities will cost. Estimate a food budget, transportation costs and even a little fun money. Are you planning on getting a job? Figure any income into your calculations. A part time job will reduce the amount you will need to borrow. Also, if you have scholarships and grants, that will reduce your student loan amounts.

Multiply your estimated monthly expenses by the number of months that you will be in school. Then add that number to the cost of your tuition, student fees and estimated cost of books. Take the amount of scholarships, grants and estimated income and subtract that from your total expenses. The difference is how much you will need to borrow. In order to allow for leeway, take 125% of that difference, and round it up to the nearest $1,000. Example:

You estimate that your total cost for attending school is $30,000. Between scholarships, grants and a part-time job, plus your savings, you have $20,000. The difference is $10,000. Multiply 10,000 by 1.25 to get 12,500. Round it up, and you would borrow about $13,000. Each year (if you are getting a four year degree), you would borrow $3,250.

Other considerations

You also need to consider how much you can afford to borrow. With the job you get when you finish, will you be able to handle the loan payments? If you won't be able to afford the loan on your salary, you might want to reconsider your major, or the amount that you are planning to borrow.

Perhaps you should consider a less expensive school as well. Private schools can cost as much in one year as many state school cost in the entire four years. Consider that most private schools do not offer a big enough edge to make paying (and having to borrow) the extra worth it.

Consider your loan type

Another thing to consider is the loan type. If possible, avoid private student loans, since the interest rate is usually higher, and this will result in paying more money back. A federal student loan will result in a lower interest rate, and if you get a subsidized loan, you will not accrue any interest until after you are done with school. This can allow you further savings.

Carefully consider your options before taking out student loans. They can be very helpful, but like any other debt you can find yourself in over your head.

*About the author: Miranda Marquit edits information on debt consolidation for DestroyDebt.com.

Pregnancy, Blogging and the Real Possibility of Job Loss

2008-02-23T08:38:00.000-08:00

Yep... I am pregnant. Still a long way to go to get to the stage of the lady in the picture, but getting there, sure enough. And, now you know why I have been absent from the blog for so long :) I tend to sleep a lot these days... and all those of you who are bloggers know that the need to sleep a lot and the addiction to blogging just cannot coexist. So, I had to prioritize and decided to walk away from the blog. Cold turkey. Believe me, that isn't an easy thing to do when you have spent pretty much every free minute during the past year obsessing over your blog. And the blog is finally grown to a point that it is getting some recognition and earning some side income. But hey, you've got to do what you've got to do, right?

Frankly, I have no regrets. Over the year, I have complained on and off that the blog was beginning to feel more and more like work. Some of the articles were written more out of obligation than the real interest to write. I was actually starting to get stressed out that I had a deadline to post and the article was not ready yet or that the quality of the article was poor compared to some really great articles put out by so many great personal finance bloggers! As if that wasn't enough, my mood was being controlled by what and how Google chose to tweak their algorithms - one day I was flying high because my predicted PR was 5, and the next day I was down in the dumps since the real PR had crashed to 0! As though all that was not enough, the blog was beginning to make some real money, and when money is involved, perspectives have a tendency to get very skewed. But now, with all that out of the way, I am free to write when I really want to and blabber on like I am doing right now :)

All kidding aside (pun intended), just around this time two other events occurred at work which made the decision necessary. First, I have been wanting to get on a high visibility, high profile project for the past few months and an opportunity presented itself for me to take a jab at it. This project is a great chance for me to prove my mettle to my current employer and to chart the course for my future career. It is in line with the reason why I chose to work for this company in the first place. And I just had to take it. It wasn't easy dealing with the prospect that I could be pregnant soon, and take on more responsibility at work at the same time. But I was beginning to get stuck in a rut with my current project which is fairly dead-end career-wise. What's worse, this project could go on forever and I would have no chance to get out of it until I pulled myself out of it by the ends of my shoelace! It seemed like a "now or never" moment and I decided to go for it. Even though it is hard to admit, blogging would be a huge distraction if I really have to give to this project what it requires.

The second event was far worse. Our CEO announced that he had put our division on the market for sale, and it came as a complete surprise to many of us! Of course we had heard some rumors before, but none of us paid any attention to it, since it was just too inconceivable. Now, with fresh rumors floating that one of the suitors is a Chinese company whose sole motivation to buy is to obtain the market share, and that most employees would be let go, it seems like the job loss is imminent. I now had to get on that other project and earn as much experience as possible on the new project before looking for new jobs, if I want my career to go in the direction that I hope for. My only hope and prayer is that, because of size of our company, the whole split/buy out/merger will drag on for a while, and I will have the time to have the baby and the experience on the new project before having to look for a new job. Keeping my fingers tightly crossed.

As I mentioned briefly before, the blog was starting to make some real money just before I decided to call it quits. In the month before I quit, the income from this blog was a little over $400. And that is no chump change! I was really tempted at one point to let the opportunity to get on the high profile project at work slip by, and focus on taking this blog to the next level. That way, if I lose the job, I will have another outlet to continue bringing in some income. But frankly, I don't see myself as a professional blogger. And realistically, the odd name of this blog will limit the scope of how big it can be. And finally, I just am not cut out to quit the conventional thinking ("poor dad" school of thought?) of preferring a steady paying job in favor of a risky dream/fantasy option. Ideally, I would have wanted to hang on to both - the opportunities at work as well as explore the opportunities with the blog, and see how things go. But with the baby on the way, and my body demanding rest, I just had to make a decision and stick with it. And I choose to go with the conventional, prudent thing to do. If I have to take on some stress, I might as well take it to further my career. Maybe blogs (and other Internet based hobbies) make thousands of dollars to some of their owners, but I just have to wait for the time to be right for me to indulge in such hobbies. Like I said, you've got to do what you've got to do, right?

Someday, I will come back and revive this blog. Or may be start a whole new blog. Or heck, maybe do something else entirely different and turn myself into a millionaire :) But for now, I will just stick to posting random ramblings here and hope someone will stop by from time to time to read them :)

*Image Credit: ABC News Article [via Google Image Search]

Paid $258 for a Pair of Eye Glasses Inspite of Having Insurance...

2008-02-15T17:48:00.001-08:00

... And the lesson learnt: "Never let your guard down".

Here's what happened. I have been using my current pair of eye glasses for close to two years, and it was time for a change. So I went to my doctor, had an examination and as I always do, I told the lady I wanted to go over my insurance first to get an idea of the coverage before starting to look for the glasses. I did NOT want expensive glasses.

As we were going over the insurance, I indulged myself by inquiring about the frame-less "silhouette" glasses. I have always wanted to have those, but due to my weird astigmatism prescription, making the lenses of the quality that can be directly bored into was an expensive prospect. Every time I got new glasses, I would get an estimate for the frame-less lenses, find out that my insurance did not cover it sufficiently, and choose some old boring frames. And here she was telling me that my current insurance covered 100% of the expenses for whatever-the-process-is for making the frame-less lenses. I was exhilarated.

Now, generally, when I finish discussing the insurance details with the lady, my husband and I go off on our own to look through the frames and choose one that not only fits me, but fits our budget as well. But with frame-less lenses, how much could the thin temple bars cost after all, right? So, we let the lady show us some of the "frame-less frames" that they carry. And both my husband and I liked one, so we decided to go with it. Since all it is, is a pair of metal sticks that hinges on my ears to make sure that the lenses are held correctly over my nose and there is no "frame" as such, we did not even bother to ask her how much it costs. Or for that matter how much my insurance coverage was for frames.

Happy with our purchase, we went to the register to pay. Lo and behold, the bill was for $258! Surely there must be a mistake somewhere! As I carefully went over the bill, my heart sank to find out that the frame-less "frames" cost $330 while my insurance only covered $180. So my out-of-pocket expenses was $150 for two thin 4 inch metal sticks! Add to that the co-pay, my portion of the anti-reflective coating, blah, blah and more blah, there it was - a $258 bill :( I was too embarrassed to tell her I wanted to change my mind and go for the regular frames. Or to say that I just needed the prescription, so I could go online and order the same "frame-less" frames with the anti-reflection coating and the other bells and whistles for around $50. So I quietly signed on the dotted line.

Today, my glasses arrived. I love the way they look and feel. Nevertheless, every time I put them on or take them off, I can't help but feel a slight sense of shame for having been a sucker and so grossly overpaying for them...

Sigh!

*Image Credit: Photograph by Daniel Y. Go [via Flickr Creative Commons]

10 Ways for College Students to Cut Costs where it Counts

2008-02-03T20:18:00.000-08:00

(This is a guest post by Heather Johnson*)

There are three essential liquids that every college student needs to survive and prosper. These vital beverages are (in no particular order):

Water — The original clear stuff quenches your thirst like nothing else and helps you sustain that fit young body.

Coffee — Nothing else stimulates and sharpens a mind dulled by too little sleep or too much of everything else like a hot, strong cup of mud.

Alcohol — Whether you prefer the stuff that comes in a stein, a snifter, or a shot glass, the only way to make the whole college experience worthwhile is to enjoy an adult beverage every now and again.

During the four or five or nine years that you spend as an undergrad, you could easily spend several thousand dollars on just these three indispensables. Follow these ten simple strategies and you will never go thirsty again (and you might even have enough money left over to pay your tuition).

Water: This topic will be addressed in just a couple of points because it is so damn easy to save a ton of money by making simple changes.

Drink Tap Water: That’s it—done and done. Get a Nalgene or steal your friend’s empty nine-dollar bottle of volcanic spring water and then just fill it from the faucet. Tap water really doesn’t taste all that bad and is usually better for you than pricey bottled water because of the various minerals that are added by your friendly local government. Best of all, it’s virtually free. Carry your new best friend everywhere you go and you won’t be tempted to spend your change on soft drinks that not only cost money but are bad for you as well.

Fake Filter: If you just can’t bring yourself to drink water that’s not filtered in some way, then buy a Brita and never bother to change the filter; you’ll never notice the difference. Keep this glorified pitcher in the fridge and every sip will be cold and delicious. Make this simple adjustment from bottled water and you won’t believe all of the extra cash suddenly stuffing your pockets.

Coffee: Drastically reducing the amount of money that you spend on your daily caffeine fix is a simple task as well. Follow these couple of rules a smaller portion of your cash will end up in the Pacific Northwest.

Caffeinate Like a Towny — Track down a native and follow him to a local java house rather than following the herd of your classmates to the big chain in the student union. Find the right place and you’ll still get a great cup of joe at a significant discount.

Brew Your Own — Better yet, cut out all of the middle men and their outrageous mark-ups. Invest in your own coffee machine, buy some cheap beans, and start your day with a cup of the good stuff before you even open your front door.

Alcohol: You’re likely to spend more on beer and its brethren than water and coffee combined and this list has been constructed with that reality in mind. Here are six methods to saving money without sacrificing any fun.

Be Cheap — Once you’ve sacrificed a few decades to the workaday world and have earned that corner office, you’re welcome to all the Johnny Blue you can drink. Until then, drink your can of Natty Light and smile; the cost fits your budget and in the long run it does the job just fine.

Pre-Game — Bars and restaurants make money on their huge mark-ups. Hit up Discount Liquors on the way home from your last class and spend an hour or two on the couch before heading out.

Let Them Woo You — Local establishments will do almost anything to draw a college crowd and that is good news for you. Become a walking calendar of drink specials and hit the right spots on the right nights.

Be Flexible — Speaking of specials, don’t just seek out discounts on pitchers of Bud Light. Expand your horizons and hit up the tapas joint for half price sangria, the burrito dive for two-for-one margaritas, and the sushi bar for sake bomb Sunday. Never discriminate when it comes to cheap booze.

Brew Your Own — Just like #4 above, this will cut out all sorts of costs and inexpensive starter kits make it simple to start your own mini brewery under your bed. Plus, there are worse things than being known across campus as Mr. Beer.

Be a Hot Girl — Sorry if this last one is not a feasible option for you, but it is the one truly fail-safe way to ensure that you will never ever have to buy your own drinks. (Other than not drinking, of course, but that is not even worth mentioning).

*About the author: Heather Johnson is a freelance business, finance and credit writer, as well as a regular contributor for BusinessCreditCards.com site for comparing small business credit cards. She welcomes questions, comments, and freelancing job inquiries at her email address heatherjohnson2323@gmail.com

*Image Credit: Photograph by mre770 [via Flickr Creative Commons]

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401K Lessons (Learning it the Hard Way)

2008-01-09T16:16:00.001-08:00

Last year was my first full year at work. I managed to max out my 401K contribution with one paycheck left to go. So for the last paycheck I set the contribution rate to 0%. This week I had to go in to reset it back to the original rate. Boy, was I in for a painfully rude shock - my 401K returns were negative. When I was younger I used to wonder why people who have money still worry about money. But in that one moment when I was staring at the numbers in red indicating negative returns on my hard earned money (that I had scrimped and scrounged to save, I must add) it was suddenly very obvious. The knot at the pit of my stomach did not feel good.

To cut a long story short, things have gone further south since then, and as of today, I am down 5% for the year. And my all-time returns have shrunk so badly that the returns on my 401K statement are beginning to resemble that of my bank statement. I have had 401K on my mind for the past few days, and here are some lessons I am learning.

Do not track the returns of the 401K on a daily basis
This is advice I need to learn to live by, since I value my sleep too much. Until this week, I hardly paid attention to how my 401K was doing, except for an occasional look out of curiosity, and I was doing fine. But now that I know it is not doing well, I have an obsessive urge to check it the first thing every morning. And with the losses going higher each day, it is turning out to be a heck of a lousy way to start the day.

Pay attention to asset allocation
When I started my contributions, since it was still very early in my career, I presumed I should be able to take a lot of risk. So I did. I put 100% in stocks - 20% large cap, 40% in mid cap and 40% in International. And now it is clear to me that this risk level is way too high for me to handle. It is very important to look realistically at what risk you can stomach, and balance it against how much returns you hope to make. So, I finally took some time out to go through all the funds, their volatility levels, their performance history, the expense ratios etc. and reallocated my future contributions. My asset allocation choices are - 50% domestic stock, 32% international stock and 18% bonds. And the funds I have selected offer performance close (though not quite there) to what my earlier allocation did but have much lower volatility. I still have a few questions about some of the funds, and have mailed the fund managers for details. Once I get the information, I hope to finalise my selection and freeze the allocation and only visit it once every 5 years or so to see if the risk tolerance is still OK.

Don't lose perspective
I have at least 30 more years to go before I can retire (assuming I do not retire early). The amount I have in my account is a small drop in the pond when compared to the final balance that my 401K account will have. The 5% loss on that small figure is but a ripple in the pond. In the long run, this experience is just a small blip that might not even register on the radar. It is important to have this long-term perspective to avoid losing sleep and to control the temptation to mess with the allocation every now and then.

Nobody else can determine what is best for you
Our company's 401K plan provides us access to some financial software and I went through it to obtain some advice on what my model allocation should be. I also had several discussions with the better half and some older colleagues. I used all this advice, but in the end, what I chose was uniquely suited for my particular situation. It is easier to let someone else handle the decisions (e.g., financial advisers, spouse, parents etc.) but to really be peaceful, it helped for me to go through the details of the funds and determine what was best for me.

In a way, I am glad that I chanced upon looking at my 401K when it was doing particularly bad. I had not paid much attention before and had randomly picked funds with seemingly good performance in an effort to maximize my returns without really paying much attention to the associated risk level. Now I have put in a lot more reading of the funds offered and have picked the ones that I believe are more suitable for me for the long run. I don't know if this is the allocation I will stick with forever, but for now at least, I feel a lot at peace with my choice.

*Image credit: Photograph by jay d [via Flickr Creative Commons]

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Getting a good math lesson in 401K's is a great way to jumpstart your financial future. There are even several degree programs online which may help you become more fiscally responsible by using educational grants and loans.

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Quick Update

2008-01-06T09:18:00.000-08:00

I have been gone for so long that I don't know if anyone ever reads this blog anymore. But if there is someone out there, here is some quick update.

During the last couple of months we spent a boat load of money on medical bills. The total came up to a little more than $15,000. About $4,000 was covered by insurance and so a little over $11,000 was out of pocket. The lady in the business office of our provider was very helpful and sat with us to review the financial costs and possible ways to get reimbursement from the insurance company for some more money. So I have filed claims for another $6,000 or so. Hopefully, at least a part of it will be reimbursed.

So far the experience with the insurance company is mixed. On the "good" side, two of my initial claims (for $163 and $192) were approved. On the "bad" side, the claims adjusters are a bunch of jokers!!!! While the first check (for $163) was sent to me correctly, they sent the second check (for $192) to the provider! After a very long phone call with the customer service we found out why the claim showed as approved/paid on the website but I did not see the money even after a month! The agent gave me two options - (a) I file a case, they will investigate, then they will send a letter to the provider requesting that the money sent by mistake be returned and after they reclaim the wrongly addressed check, they will cut a new check for me, or (b) I contact the provider directly, explain to them that I have paid twice for the services - once out of pocket and once via insurance - and then request a refund. Since option (a) will likely drag on for months, I chose option (b) and spoke to the same lady at the business office of my provider. She was very understanding and has agreed to cut the refund check to me.

Out of the remaining claims, I think we have a good chance of the claims being approved for about $4,000. The rest of it, I just filed since the bills were lying around and the worst that could happen is that the claims will be denied. I hope the claims falls in the hands of the same moron adjuster who goofed up my earlier claims and sent the check to the provider. Who knows... he might just approve all those other claims too that are at a high risk for being denied :)

So our out of pocket tally will finally be in the range of $7,000 to $11,000.

For the first time in a long while though, we went through the expenses without worrying or fretting about it too much. With everything else going on around us, that was such a boon! I did get a bit anxious for a couple of days when I found out just how much the bills could be, but I think that was more out of habit than actual financial reasons. And we have paid off all the credit card bills and are not carrying over any debt. That feels real nice too.

As for the money spent, every single penny spent was well worth it! Like I mentioned before, it was an elective procedure and a bit of a gamble at that. Statistically, the chances that the procedure would work for us was under 50%. We could have probably saved ourselves a lot of money if we had waited some more time to see if the situation could be resolved with other less expensive, but less effective procedures. Or we could have seeked medical attention in our home country where the costs are about 1/5th of the costs here in the US. But in the end we chose to take the gamble. If we do not use money for the things we really want, and are not willing to pay the premium for the peace of mind of doing things the way we like it and on our schedule, then what good is the money for? Luckily, for us, things worked out! I am still a little anxious, but it is getting more and more real with each passing week, and each follow up visit to my doctor. If any of you readers are in the same unfortunate situation as us, you have likely figured out what this is all about. Keep your chin up, and in the end it will all work out. For the rest of you who have no clue of what I am talking about, count your blessings, say your prayers and kiss your kids once more tonight! You have no idea how fortunate you are for being so normal :)

*Image Credit: Photograph by joyrex [via Flickr Creative Commons]

10 Best Gift Cards for the College Student on Your List

2007-11-30T19:17:00.000-08:00

I am a huge fan of gift cards, and think that they make much better gifts than arbitrary stuff that I don't really need. They do lack the charm and personality of a hand picked gift, but that usually flies out the window when I have in my hands this tiny piece of plastic that I can use to buy what I want, when I want. And this year, if you are looking for a gift for that college student on your list, here are some great ideas for what gift cards will be a hit!

Amazon.com: This is undeniably going to be the most popular choice. Amazon offers such a range of options that it can satisfy the needs of most people, not just college students. But for college students in particular the choice of books, CDs, DVDs, games, cell phones and a lot of the items that they will use on a daily basis is incredible. Add to that Amazon’s free shipping policies for purchases over $25, and you have on your hands the making of an ideal gift.

Ikea: If your college grad is just starting out or moving out of the dorm into an off-campus housing, then this is certainly the way to go. Ikea has a lot of low priced inexpensive furniture with a modern take that many college students like. One thing to note though is that if there is no physical Ikea location close by then the shipping policies by Ikea are not all that great and may eat away into the gift budget.

Best Buy, Circuit City or Fry’s: Many college students love cool electronic gadgets. And there are tons of new toys coming out every year that you may not even be aware of. So giving a gift card to an electronics store and letting them take their pick is surely going to be a great gift, if your college grad loves tech toys.

iTunes: If your college grad has an iPod, this is sure to please them to no end. On the other hand, if they don’t have an iPod and you have a big enough budget, then throw in an iPod with the iTunes gift card and you will be their hero for a long time to come!

Gift card to favorite restaurants: Most college students are perpetually broke. Eating out is usually a luxury that is much looked forward to. So if you know the favorite restaurant that the gift receiver likes, then buying a gift card to that restaurant is bound to be a sure fire hit.

Gift card to a travel site: This may be a gift they may not appreciate right away, especially if they have traveled a lot to meet you. But come spring break time, which is not that far from Christmas, you are bound to receive a huge “Thank You” note :)

Mall: The local malls in my area allow me to buy a gift card that is good in all the stores within that mall. If your college grad was a big spender before she/he went to college and got all sobered up due to the high cost of tuition and text books, they are bound to enjoy an evening of splurging at your expense.

Gas Cards: With the gas prices starting to climb up again, and the prices of crude oil showing no signs that this will slow down in the near future, this is a great gift. It does not have the wow effect like many of the other gift cards on this list, but if you are a family with a history of practical gift-giving, then this is bound to be better appreciated than a pack of socks or ill-fitting clothes.

Local grocery store (Walmart, Target, HEB etc.): While we are on the topic of practical gifts, we may as well cover the gift cards to local grocery store. Personally, I would hate to receive a gift card to a grocery store, since I already have a budget for grocery shopping and can get it done even without the help. Any other gift card in the list so far, let’s me “indulge” but the grocery store gift card is just too practical to be any fun. But like I said, if your family has a history of giving practical gifts, then this is something you might want to consider.

The good old Visa Cash Card: Finally, if you just can’t decide, go for the good old Visa debit card. They are as good as cash and can be used anywhere credit cards are accepted. Depending on who you are giving it to, this could be treated as the king of all gifts, or the most impersonal cop-out ever! Your call :)

Do you like receiving gift cards? What are some of the “best” gift cards that you have received?

Single Parenting and Finance

2007-11-28T07:06:00.000-08:00

(This article is part of a weekly guest column by Claire Moylan*)

When you are a single parent, it becomes even more important to have a good handle on your finances. You may have one or many children that are relying on your ability to generate sufficient income and reduce expenses enough to keep a roof over their heads. While the responsibility of single parenting is enormous, it can become even harder when faced with additional financial burdens. Here are some tips to help you provide for your future and that of your little ones.

Get Help Sooner Than Later – If you are divorcing, make sure that you get enough child support to help you bring up the kids. If you need help and have a low income, you may qualify for some assistance, either through food banks or daycare or financial assistance programs.

Have A Job With Benefits – For a working parent, benefits are essential to providing good healthcare and other additional perks. Some of the benefits that can work well for single parents besides healthcare are flexible spending accounts and company-matched retirement accounts. Using flexible spending accounts a parent can budget daycare and out-of-pocket health care costs in a pre-tax format. Company matching retirement accounts help make the little you do manage to put aside grow a whole lot faster.

Locate Reliable Daycare – Daycare is expensive, but it can cost you your job if it is unreliable. Unlike a dual parent home that has an emergency backup in case your regular daycare is closed, a single parent doesn’t have another adult in the home. You will want to make sure that your daycare is reliable or have some emergency backup daycare providers (family, neighbors, friends) so that you can continue to work.

Take Advantage of Low-Income or Parent Programs – There are low-income programs for school lunches. Some day care provides a discount on multiple children. After school programs sometimes offer single parents a discount too. If you’re not sure, ask. It may surprise you to learn that there are discount programs out there targeted specifically towards helping single parents survive.

Understand Your Tax Situation – If you are single head of household, you will be in a different tax bracket than a married householder. This can also lower your withholdings and make you eligible for a child tax credit at the end of the year. Be sure to check out your tax obligations early so that you have the money in your pocket during the year when you need it.

Be Creative With Your Situation – Maybe you can trade instead of pay for some of your services. Is there another single parent around who can do daycare in exchange for a room in your house? Why not pool your resources? Do you have a hobby you can turn into a side business after hours?

Reduce Your Expenses – Most single parents know all about consignment shops, discount grocery stores, and how to make do with very little. The three main expenses of food, clothing, and shelter all need to be budgeted to make sure that you always have what you need to make do.

Locate Sources of Credit – You will have debt as a single parent. The point is to not get in over your head. You do need to locate sources of credit for those emergency situations. If family can’t help, then using a credit card can be one way to extend your ability to pay. Just keep a tight reign on this as it can easily balloon out of control.

Get Free Emotional and Physical Support – If there is no single parents group in your area, think about starting a network or hopping online. You will need to access to resources and programs out there that can help you overcome some of the financial hurdles that single parents face. It’s also important to have someone to share your troubles with so that you don’t feel alone. This can help you to keep a positive attitude.

Being a single parent is tough and there are multiple ways to cope financially. However, all children grow up and these financial hurdles will eventually pass as they fly the nest to make their own way in life.

About the author: Claire Moylan is a freelance writer specializing in ebooks and custom-tailored articles for niche websites. You can view her portfolio online or check out her constant content page for more information about her writing assignments.

*Image Credit: Photograph by WhatDaveSees [via Flickr]

Frugality and Hardship

2007-11-26T06:00:00.000-08:00

I have written quite a bit on this blog about frugality. My general philosophy for these posts has been to find ways to live frugally without compromising the lifestyle significantly. In other words, try to adopt a frugal lifestyle without feeling deprived. But the problem seems to be that I have started to begin believing in this principle of “frugality without hardship” so much so that, I cannot convince myself to give up some things that I am used to, even if I want to! In other words, while I have been relatively successful in making sure I don’t give in to the desire to live a life of excess, I find I am extremely unsuccessful in giving up the little luxuries I am used to!

With the huge medical bills rolling in this month and possibly the next few months, I wanted to trim a little more fat out our fairly lean life style – at least temporarily. But as I look at the different expenses that we have, I find that we cannot bring ourselves to cut down on any of them. We have made sure not to fall for some of the indulgences most of our friends have given in to, but now that we have gotten used to our existing lifestyle, we have a lot of resistance against changing anything. We had a much more leaner lifestyle for a while when we got out of school and started attacking debt – but somehow we just can’t bring ourselves to go back to that.

Frugality without hardship is a luxury of those that want to live frugally out of choice and not out of need.
I remember reading a comment on some one’s blog (sorry I don’t remember whose) that all the talk about living frugally without hardship is a luxury of those that want to live frugally out of choice. For those have to live frugally out of need, whether to do it with or without hardship is not a choice. And that is so true. In some cases, it is just not possible to take the hardship out of the equation. But is the reverse also true – ie, if you are frugal out of choice, you cannot accept any hardships at all?

We have an inherent entitlement attitude that we deserve a decent life.
When you live a frugal life out of need, it is important to try and get out of that situation as soon as possible and a few sacrifices seem acceptable. The situation may be that you are in too much debt or have had a sudden job loss, etc. But somehow, when the frugality is no longer a need, we give in to the inherent entitlement attitude that we deserve a particular lifestyle and having to make sacrifices that compromise that lifestyle seem very difficult.

Short bursts of having to go through hardships can offer stretches of a life without hardships over a long time.
Now, in our particular case, it is not required to make those sacrifices just yet. We could go on having our cable television and eating out 1-2 times a week etc. But, if we don’t want our medical bills to turn into huge debt, we need to give up something some where. And without sacrifices in lifestyle, usually the savings goals fall victims. Instead of compromising our savings goals, it seems logical that short bursts of voluntary hardships now are better and could ensure that we stay hardship free for longer stretches.

If you are willing to go through hardships on choice, you are much better prepared to handle life’s ups and downs.
Moreover, if we can bring ourselves to give up some of our little indulgences voluntarily now, in the future if life throws bigger curve balls at us, we can survive them more easily. We can face whatever life has to offer without feeling like it is imposed on us and we don’t have a choice.

I understand that logically, we should be able to give up some of the little luxuries we are used to. It was not long back that we could not afford these little luxuries and got on by fine without them. Then why is it that I find it so hard to give them up now? Why do even small sacrifices feel like huge deprivations?

*Image credit: Photograph by davebluedevil [via Flickr]

The Ten Commandments of Black Friday Shopping

2007-11-21T06:00:00.000-08:00

This year, thanks to all the medical bills that are piling up, I have decided to sit out the Black Friday (day after Thanksgiving) sale :( But I impart unto you the knowledge and experience gained from years of surviving the stampede and gaining some sweet deals :) Here we go, the ten commandments of Black Friday shopping.

Commandment 1: Thou shalt be prepared.
There are many, many websites that allow you to do your research ahead of time and find out which deals are really worth it, and which are not. You don’t need to worry about not receiving the fliers any more since adscans to most popular stores are available online. Add to that the deal discussions on forums and blogs, and there really is no excuse for not being prepared. Here is a list of few good sites to get you started.

Excel spreadsheet of all the deals (via Fatwallet. You’ve got to see it to believe it!!!)
bfads.net
fatwallet forums
blackfriday.gottadeal.com
blackfriday.info

Commandment 2: Thou shalt make a prioritized list.
Not all deals are created equal. As you look through the different sites, note down the items that you like best (and really need), the store where it is available and price at which it is available. After you are done looking through all the deals (if ever), then organize your notes so that they are prioritized by the stores which have the most number of items that you would really want to buy.

Commandment 3: Thou shalt know the store layout.
There is no point in going to a store and trying to find out where the item might be. So stick to stores that you most often go to, so you are familiar with the layout. I read on one of the websites that many stores have a “store map” which they hand out during Black Friday sales. I personally have never found it, but it is definitely won’t hurt to ask a sales person for one (if you can find a sales person in that crowd, that is).

Commandment 4: Thou shalt know the sale hours.
More and more stores have the midnight madness and all-night marathon sales these days. And almost all have exclusive “early bird” and “door buster” deals. Make sure you know the timings for the items on your list and that you are there as early as possible if you really want to lay your hands on that item.

Commandment 5: Thou shalt know the store policies.
The stores do not have unlimited supplies of items on sale, and the hot items in particular are very limited. It is not uncommon for the stores to have only 15 – 50 items of big ticket products like TV, laptops, game consoles etc on door buster sales. So, if you are not planning to camp out the store all night and elbow your way in when the doors open, don’t bank on such items. Also, many stores have per-person limits on the number of items. For instance, you may find a 2GB USB flash drive for $7.99, but more than likely you will not be able to walk out with a handful of these. Don’t waste your time on lost causes.

Commandment 6: Thou shalt shop in tag teams.
Always, always go to a store in twos or threes. The first person goes directly and stands in the check out line, while the others go scour for the deals on their list. The person in the checkout line acts as the central coordinator. In addition, if you have a big group of friends share your lists with each other and split up into different groups and hit different stores. Remember commandment 5 though – you may be limited by how many items a person can buy. So use this strategy wisely.

Commandment 7: Thou shalt make sure that your cell phones are fully charged.
If you are tag teaming or better still coordinating with friends in different stores, you should be able to communicate efficiently and fast. So it is vital that everyone has cell phones that are charged to the hilt. In addition, treat cell phones with Internet access as premium commodity since they will come in very handy for looking up the reviews, price comparison and staying up to date on the latest deals. Make sure you carry your car charger with you, so you can charge the cell phones back up while going from one store to the other.

Commandment 8: Thou shalt wear comfortable clothes and preferably running shoes.
The Black Friday sale is not about being fashionable – its all about being efficient and agile. You have the rest of the year to fashionably show off your spoils. But for this one day, make sure you dress in sensible comfortable clothes and shoes. Also, you might want to go with the layers approach – even though it is freezing outside, it may be pretty warm inside the stores because of the crowds of people milling about.

Commandment 9: Thou shalt keep some water and snacks in the car.
If you have just a few items on your list and after hitting a store or two, you plan to retire, then you can skip this one. But if you are a hard core veteran and plan to hit many different stores and come home with the best of the deals that can be had, you better make sure you have enough nutrition supply in the car to keep you fed and hydrated between stores.

Commandment 10: Thou shalt not buy junk just because it is on sale.
Finally, pay particular attention to this one. Just because it is on sale does not make it a deal. If you don’t want it, or if it is just poor quality junk that will likely break down after two uses, you are much better off without it. Buying junk will undermine all the hard work, melt away the benefits of all the deal that you scrambled so much to grab. So only buy those items that you really need and are really worth buying.

Well, have fun y’all. I will be rooting for you from the warm comfort of my home :) Happy Thanksgiving and seeya back on Monday.

Other similar articles from around the web:

Black Friday Stories, Thoughts and Strategies @ Wise Bread.

How to Shop Like an Expert @ Alpha Consumer column on usnews.com.

Black Friday Thoughts and Strategies @ Not Made of Money

2007 Black Friday Buying Guide for Electronics and Gadgets @ Finance Is Personal.

*Image Credit: Photograph by Johnia! [via Flickr]

Is Your 401K Tempting You To Borrow?

2007-11-20T06:00:00.000-08:00

(This article is part of a weekly guest column by Claire Moylan*)

It’s certainly nasty out there in the lending world right now. As banks tighten their credit requirements, some people are wondering how to pay back large credit card debt or fund a down payment for a home. While many Americans haven’t been model savers in the short-term, many have retirement accounts that are a tempting source of money when times get tough. The amount of people borrowing from their 401K plans is increasing. It’s estimated that at least 20% of Fidelity’s clients are borrowing against their 401Ks. However, is this really a good option when money is tight?

Some Things To Consider

The reason people borrow from their 401K plans is because it’s easy to do. You just go to your employer and fill out some paperwork. In about a week, you have a loan to you from your own 401K account. The loan repayment can range from 1 to 5 years, sometimes 10 years, and is usually with a lower interest rate. Whatever interest you do pay when you repay the loan is returned to your account. So, the idea of borrowing from your 401K to reduce your debt burden elsewhere is very tempting. Even though there are limits to how much you can borrow (typically 50% of your vested interest up to $50,000), if you have a large retirement account and you aren’t anywhere near retirement, you may think putting the money towards paying down debt is a good strategy.

This might be the case, if it weren’t for one thing: You don’t know how secure your job is in this economy. If you are laid off, terminated, or even quit to get a better job before you pay off the loan, the entire balance is due in full – and, within 60 days of your leaving! If you do not pay the loan back within that amount of time, then you are subject to the same penalties and taxes as an early withdrawal. These are quite hefty and can result in a tax bill of up to 20 to 50% of the value of the loan; depending on what tax bracket you are in. So, taking a loan from your 401K is a risk if you leave your present job (for whatever reason) and can result in a large tax bill.

The Alternatives

Other forms of loans that can help you in the event you need to get funds for a major purchase, like a home, or to repay a large amount of debt are: home equity loans, loans from credit unions or banks, or even a personal loan.

Home equity loans – A home equity loan uses the equity in your home to help you consolidate your debt and pay it off. You can get some good rates on home equity loans and is a way of putting your equity to work for you, even while you still live in the home. Although this type of loan won’t come due if you lose your job, you do have to continue to make the monthly payments on time in order to keep your home. Since this is a risk with any home equity loan, you want to check to make sure that the terms of your agreement can be met and that you can afford the loan.

Loans from banks and credit unions – If you belong to a credit union, they are very good for helping people lower the rates on their existing loans. Banks will have more market-competitive rates but are also a good source for lending, if you have good credit and some assets.

Personal loans – Don’t overlook friends and families. You can even go to Prosper.com and get a personal loan from total strangers. If you want a loan to start a business or consolidate high interest debt and are having trouble with a bank, try to find someone who might know you who is willing to take on the risk based on your character. If you are paying 10% to someone else and they are willing to give you the loan at 7%, you are not only making a friend richer, but saving yourself some money too.

There are a number of creative ways to find financing, besides your 401K. Unless you are sure you intend to be at your job for the duration of the loan, or have funds to pay it back quickly, then it’s best not to tap this source.

About the author: Claire Moylan is a freelance writer specializing in ebooks and custom-tailored articles for niche websites. You can view her portfolio online or check out her constant content page for more information about her writing assignments.

~~~oOo~~~

If you feel tempted to take money from your 401K, look into getting a small grant from the government. If you need the money for school, there are many educational grants that can assist you, not to mention pell grants.

~~~oOo~~~

Credit card 0% balance transfer is the best choice for those who want to save!

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How to Maximize the Bang for the Buck When You Buy Organic Food

2007-11-19T06:00:00.000-08:00

At the grocery store, I have noticed that organic food in general costs about 25 – 50% more than regular items, and in some cases the mark up is more than 200%. According to the USDA certification guidelines - “Organic meat, poultry, eggs, and dairy products come from animals that are given no antibiotics or growth hormones. Organic food is produced without using most conventional pesticides; fertilizers made with synthetic ingredients or sewage sludge; bioengineering; or ionizing radiation.” For some, especially those with young children, it may seem like the benefits of using organic foods justifies the extra cost. But like everything else, it is important to look beyond the label to get the best bang for the buck. Here is some information that can help decide which organic purchases are worth the extra cost and which may not be.

Pesticide Retention
Let’s start out with the “Dirty Dozen”, a list put together by not-for-profit Environmental Working Group (EWG). This list is based on the results of nearly 43,000 tests for pesticides on produce collected by the USDA and the FDA between 2000 and 2004. This list identifies the foods and vegetables that retain the most pesticide content in them. By switching to the organic equivalents of these items you can cut down the pesticide content in your daily food intake dramatically, hence maximizing the bang for the buck of your “organics budget”.

Peaches
Apples
Sweet Bell Peppers
Celery
Nectarines
Strawberries
Cherries
Lettuce
Grapes (Imported)
Pears
Spinach
Potatoes

On the other hand, if you are buying organic Onions, Avocado, Sweet Corn (Frozen), Pineapples, Mango, Sweet Peas (Frozen), Asparagus, Kiwi, Bananas, Cabbage, Broccoli or Eggplant, you may not be getting much benefit from spending the extra dollars for going organic. The same study as above indicates that these fruits and veggies retain very few pesticides. For full information about the items that you most often buy and to determine if the additional cost for going organic is really worth it, check out this detailed article or their complete data set.

Growth Hormones
Recombinant Bovine Growth Hormone (rBGH or rBST) is a genetically engineered hormone that is injected into cows to increase milk production. Even though FDA approved the use of rBGH as safe for consumption in 1993, further studies have linked rBGH in humans to susceptibility to breast and colon cancer (Note: the results are not conclusive, though). In addition the cows treated with rBGH are more susceptible to diseases and hence likely to be treated with antibiotics, the remnants of which could be found in milk and other dairy products. Hence, spending your organic food budget on organic dairy products may be a wise decision. Here is a listing of artificial hormone-free brands listed by states.

Genetically Engineered Food
It is not quite clear if genetic/bio engineering will make the agricultural produce better or create frankenfoods. The debate rages on. If you would like to avoid the genetically engineered foods however, you might want to watch out for products containing corn, soy, canola and cotton. According to the True Food website, these four crops account for nearly 99% of the genetically engineered crop acreage in North America. As mentioned above, the USDA description of “organic” precludes the use of bioengineered ingredients, and so going organic for items that use corn, soy, canola and cotton seed can get you the best bang for the buck if you want to avoid genetically engineered food. Here is a list of brands that use/avoid genetically engineered ingredients for items ranging from baby foods to cookies to frozen dinners.

Shelf life
An informal study conducted by the authors of this MSNBC article found many organic items had much lower shelf life compared to conventional products. They used lettuce, broccoli, chicken and milk in their tests. They found that there was a significant difference, and in case of lettuce, broccoli and chicken, the organic produce went bad much sooner than the conventional produce. However, in the case of milk, they found that the organic milk had similar shelf life as regular milk. In general, when you plan your menus, make sure you use up the organic food items before you reach for the conventional groceries, to prevent wastage of those items that you have already a paid a premium for!

Understanding the labels
Finally, it is very important to understand what the labels mean when you purchase something organic. According to the USDA National Organic Program the labels can be interpreted as follows

“100% Organic”
Products labeled as “100% organic” must contain 100 percent organically produced ingredients, not counting added water and salt. Label may show the USDA organic seal and/or certifying agent seal(s).

“Organic”
Products labeled as “Organic” must contain at least 95% organic ingredients, not counting added water and salt. Also, they must not contain added sulfites. They may contain up to 5% of non-organically produced agricultural ingredients which are not commercially available in organic form. Label may show the USDA organic seal and/or certifying agent seal(s). The label may also show “X% Organic”.

“Made with organic ingredients”
For products labeled as “made with organic ingredients” the percentage of organic-only ingredients drops down to 70%. Up to 30% of the ingredients may be non-organic. The label may show the certifying agent seal(s), but NOT the USDA organic seal.

Any product with less than 70% organic ingredients may not claim to be organic and may not show the USDA or any other certifying agent seal. They can however, list individual organic ingredients used.

So to sum it up, if you have a limited budget to spend on organic items make sure you understand which items offer the best benefits by going organic. Also, to me it looks like the best bang for the buck will be to buy something with the USDA seal since it guarantees that at least 95% of the ingredients are organic and the product does not contain sulfites, which cause allergies and asthma in some people. And finally, consume organic produce soon since they are likely to have smaller shelf life.

Do you buy organic food? What are the most common items that you prefer to buy organic? What do you do to save money in your organic groceries list?

Gifts to Avoid this Holiday Season

2007-11-16T06:00:00.000-08:00

OK, it’s that time of the year again. Sale signs have started to go up as the stores begin to woo customers and their holiday shopping dollars. Whether you are an early shopper or a last-minute person, here is a handy list of what gifts you should avoid this holiday season!

Pets
Puppies and kittens are so cute and cuddly – so they make perfect gifts, right? Wrong! For one, the choice of a pet is a very personal decision. Pets come in all shapes and sizes and it must be up to the pet owner to decide whom to choose for a life-long friend. Second, the cost of owning is pet is ridiculously high and you must consider if the person really wants to spend that much money before giving them a pet. Third, pets require a lot of time and attention – can the person receiving the gift really take care of the pet? Finally, if the person does not like your gift, what do they do with it? It’s not like a toy that you can return back to the store. A lot of pets given as gifts end up in shelters and this holiday season don’t be someone responsible for another abandoned pet.

Hi-tech items, when you are hi-tech challenged.
If you are hi-tech challenged, you should in general stay away from giving hi-tech gifts. Hard-core gamers have very specific favorites and unless you know enough about gaming yourself, picking a computer game at random just because it is on sale or on the hot-item list is a bad idea. A laptop can be configured in any number of ways, and unless you know whether the person whom you are gifting a laptop wants a lot of memory or processing power or a great graphics card, you may end up with an expensive gift that no one is happy about. If you don’t know a 16MB USB Flash from a 1Gig one, it may be better to stay away from giving flash drives! Same goes for digital cameras, MP3 players etc. And oh, blank VHS tapes are so old news. Gift cards are great alternatives. But if you think they are impersonal, and want to give the real thing, at least, try dropping a few hints and check out the reaction before you blow your money away. Or see if you can recruit a spy and a consultant (usually a sibling or spouse of the person receiving the gift) to help you select the right gift.

Exercise Equipment
I don’t know why anyone would do this. Particularly, avoid giving exercise equipment to women. While nobody likes being told that they need to start working out, women are particularly sensitive to someone hinting to them that they are “fat”. Even the skinniest ones of us will secretly hate you, if you give us exercise equipment as holiday gifts! In addition, the choice of what equipment to buy is again personal. So unless someone specifically asks you for particular equipment as a gift, strike this one off your list!

Gift cards to specialty stores
I know that a cousin of mine I am meeting for the holidays loves coffee. So I can’t go wrong with buying her a starbucks gift card, right? Well, here’s the catch – she goes to school in a small town which is probably one of the few towns now in the US with just one starbucks coffee shop in the whole town. It’s a town with old world charm where people love their local coffee shops which either boast live music, or mini-libraries and or great bakeries with pastries to die for! With a starbucks gift card, I would probably end up cramping her lifestyle! Another risk with gift cards to specialty stores is that the recipient may not have the specialty store in their town at all, or it may be one very long drive to get to the store! If you do choose to go for gift cards, make sure they are to stores that exist in the town of the recipient, or can at least be used online without having to pay hefty shipping charges.

Items that kids love but parents hate.
If you are buying gifts for someone else’s kids, be careful not to alienate the parents in your eagerness to impress the kids. For instance, you might want to skip that cute-but-loud clapping singing money for your colleague’s 2-year old kid, unless your real intention is to annoy the living day lights out of your colleague. And before you buy roller blades or skate boards or other high risk items for your nieces and nephews, you might want to consult with your sister/brother first.

What are some of the worst gift you have ever received? What are some of the worst gifts you have ever given? :)

Poll: Which Donors Choose Project Should I Support?

2007-11-15T06:00:00.000-08:00

Donors Choose is a charity organization that puts donors directly in touch with teachers at public schools who are in need of resources. Last month they ran a Bloggers' Challenge and invited bloggers to help raise money. Personal Finance bloggers stepped up to the call with the Financial Literacy Challenge and were able to raise $2,225 which is 111% of the goal of $2,000! The money raised will fund several projects that will help 102 students learn about money management in the real world. I was quite impressed by the response.

And yesterday, I found out that there is a lot more to it. I received a mail from Donors Choose that the blogging community overall managed to raise $420,000 reaching 75,000 students from low-income communities! That’s awesome! Talk about little drops of water making up a mighty ocean! But it doesn’t stop at that. One of the supporters of Donors Choose has sponsored gift certificates to bloggers who participated. So I have received $100.00 that I can use to fund other projects on Donors Choose! Isn’t that neat? As I started looking to find which project to support, I started getting really confused. There are so many worthy causes out there! Since you readers are what made this possible, I decided to put the ball in your court. Here is a short list of 4 projects that I am leaning towards. Your help in picking a project is much appreciated. Each option contains a short description and a link to the project page if you are interested in finding out more details. Please let me know if any one of them stand out for you. Also, if you are passionate about some other cause, or are a teacher in need of funds, please choose the "other" option and send me an email or leave a comment with the name of the project that you would like to be considered. A request from a teacher who is also a reader of this blog will receive the highest priority :) Finally, if I don't receive any responses, I will split the money among these 4 projects.

Here is my list so far (the poll is at the top of the right sidebar) –

Financial math classroom activities kits to replace those destroyed by Hurricane Rita. Total cost: $462. Current funding: 11%. (Details)

White boards for small special education group of students with disabilities ranging from mildly mental retarded, to high functioning autistic. Total cost: $228. Current funding: 56%. (Details)

Guided reading book bundle for immigrant and first generation students from Algeria, Bosnia, China, India, Kenya, Puerto Rico, Mexico, Pakistan and Morocco. Total cost: $379. Current funding: 13%. (Details)

Guidance counselor support to provide counseling services that expand the post-secondary options available for students of all ethnic and cultural backgrounds. Total cost: $188. Current funding: 61%. (Details)

Other – please leave a comment below or send me a mail with details of the project you are interested in.

I will leave the poll on at the top of the right sidebar for a week or so. Thank you all for your help. (PS: If any of the options on the list are fully funded by the time the polling ends, then I will pick another project that is similar in spirit.)

Update (11/23/2007): Donors Choose would not allow me to split the gift certificate among multiple projects. Since the first project on the list received the highest number of votes I have applied the entire $100 to that project. Thanks everyone for voting!

Repairs And Maintenance That Save You Money In The Long Run

2007-11-14T06:00:00.000-08:00

(This article is part of a weekly guest column by Claire Moylan*)

When you own something, in a lot of ways it owns you: your time, your money, and your commitment to keeping it up. This is true whether what you own is a home, a car, or a computer. Whenever you decide to make a purchase, you have to realize that there are maintenance costs that come with almost every purchase. Maintenance can help lengthen the life of your purchase and thus end up saving you money. Repairs can help you avoid costly accidents and liability issues from leaving something broken. Finally, there comes a time when you have to realize that your purchase has exceeded it’s lifespan and then you must know when to let it go and buy a replacement to save money on repairs. Here are some quick tips to repair or maintain a variety of purchases.

Wardrobe

• Learn To Sew - Don’t throw a piece of clothing out if it is missing a button. Instead, learn some quick sew tips to lengthen the wear of your expensive goods.
• Buy Wash and Wear – The less you have use dry cleaning services, the more you save on maintaining your clothing.
• Invest In Classics – Of course, you do want some classics to dress up a wash and wear wardrobe. Leather jackets may cost a bit extra, but they also wear forever with good care.
• Locate A Shoe Repair Shop – Get your soles redone or a total shoe restoration. It’s usually far cheaper than buying new shoes.

Car

• Change The Oil – Changing the oil can keep your car running smoothly and prevent costly repairs.
• Change Your Air Filter – This can even improve your gas mileage.
• Inflate Your Tires – This is another great tip for getting good mileage out of your car and reducing wear and tear.
• Follow Your Manufacturer’s Maintenance Schedule – Each car comes with it’s own set of repairs that should be done at 20,000 to 60,000 miles. If you keep up to schedule, you can significantly extend the life of your car and avoid major repairs down the road.

House

• Cut Shrubs and Trees Away From House – If you keep the landscaping trimmed away from the house, there is less change it will damage the roof, the gutters, or attract squirrels and other pests.
• Clean The Gutters – You want to keep the gutters free of debris so when it rains or snows, moisture is taken away from your house and not allowed to cause damage around the foundation or on the roof.
• Caulking Doors And Windows – This is something that should be checked with the change of seasons to see if it needs to be re-caulked. It saves money on your utilities.
• Maintain Major Systems – You want to make sure your air conditioner is in proper shape as well as your furnace before the season starts. Maintaining these systems keeps them working and avoids costly repairs down the road.
• Install Working Smoke Detectors – This type of maintenance deals with preventing major liabilities in the future. Of course, most homes are required to have working smoke detectors.
• Remove Dead Limbs And Wood From Lawn – This is to keep termites from finding them and setting up shop.
• Repair Any Moisture Leaks Immediately – Whether the roof leaks or your toilet is dripping, moisture can cause excessive home damage and can be a huge expense if not repaired immediately.

Electronics/Appliances/Computers

This is one category where it sometimes pays to trash something you own, rather than repair it. Check out the prices of new equipment before you make significant expenditures to fix a problem with your electronic equipment. Other than that, here are some things that can lengthen the life of your electronics and computers:

• Get Virus Protection – No one should own a pc without buying virus protection anymore. It’s simply too risky.
• Do Regular Spyware Checks – You can download spyware detectors for free and run them regularly to keep this type of hack off your pc.
• Use A Surge Suppressor – This very inexpensive device has multiple outlets for all kinds of sensitive electronic equipment, including pcs. Use them to avoid a surge in electricity damaging your fine electronics.
• Replace Small Parts – Did your food processor container warp? Order a replacement for less than the cost of a new food processor. Just keep the information on all your appliances in one place.
• Check and Replace Batteries – It may seem a small thing, but people sometimes forget that a device uses batteries.
• Check The Cords – Sometimes cords can go bad but the equipment itself still works. Don’t forget to check any power cords or other types of cord that may have failed. Always throw out bad cords as they can pose a fire hazard.

About the author: Claire Moylan is a freelance writer specializing in ebooks and custom-tailored articles for niche websites. You can view her portfolio online or check out her constant content page for more information about her writing assignments.

Image Credit: http://www.u-look.com.au

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