Grad Money Matters: Consumerism

10 Things You Should Know Before You Get an Auto Loan

(This is a guest article by Karen Schweitzer*)

Car dealers are working very hard to make sure that auto sales rebound over the winter season. And while it may seem like the ideal time to buy a new car, there are a few things you should know before you get an auto loan:

You Will be Subjected to a Credit Check

You May Need a Co-Signer

Loan Rates Will Vary

Loan Terms Affect Monthly Payments and Overall Costs

Zero-Percent Financing Isn't Always Available

Gap Insurance May Be Necessary

Extended Warranties Can Be Financed

Some Lenders Charge Prepayment Penalties

An Auto Loan Can Improve or Demolish Your Credit

You Can Refinance Later On

*About the author: This is a guest post from education writer Karen Schweitzer. Karen is the About.com Guide to Business School. She also writes about online degree programs for OnlineDegreePrograms.org

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

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

... 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]

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10 Best Gift Cards for the College Student on Your List

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?

~~~o0o~~~

Broke College Kid? Take a virtual spring break in Vegas: http://www.partycasino.com/.

~~~o0o~~~

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The Ten Commandments of Black Friday Shopping

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]

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

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?

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Gifts to Avoid this Holiday Season

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? :)

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Kicking off a Stress-Free Holiday Shopping Season

It looks like every year the holiday shopping season starts out just a little bit earlier than the previous year. I was quite surprised when I went to my grocery store the day after Halloween and in the spot where the pumpkin patch was, there stood Christmas trees! For Pete’s sake, it was Nov 1st and Christmas was still almost two months away – but that didn’t seem to daunt the store owner from trying to woo the shoppers by putting up a few fake trees and a huge banner next to it proclaiming “Get your fresh cut Christmas tree here!” So, it looks like the 2007 holiday shopping season is officially here. And you have only two choices - either get stressed out by it, or really enjoy it. What’s it gonna be?

If you chose to really enjoy it, way to go! If you can’t beat 'em, join 'em, right? Here are a few pointers to get rid of any lingering stress to make it a season of fun, joy, cheer, giving and receiving, without quite breaking the bank.

If you have a Christmas fund, take stock of it now. If not, start one ASAP.
If you learnt from your mistakes from last year, and the years before, and already have a Christmas fund, kudos to you! Whether it is a jar stashed under your bed or an online account, take stock of how much you have saved. If you have not started your Christmas fund yet, it’s still not too late. Start one NOW. There are any number of ways to save for your Christmas fund – raid your coin stash and cash it in at Coin Star, have a garage sale to get rid of all those gifts from previous years that are collecting dust in the basement, replace your lunch outings with brown bag sandwiches, cut your grocery budget by 10%, use (more) coupons, etc. Every dollar that you can stash away now, will reduce the stress and the resentment later. Think of it as paying forward for all the gifts *you* will receive :)

Make a budget of how much you are willing to spend.
Be honest and practical with your estimation. Remember that you will likely exceed that estimate, so be sure to leave some wiggle room. Do not make the estimate based on “what will people think of me” but rather “what can I/we afford”. Don’t worry about looking cheap – there are some great tips below for finding great gifts and still stay within your budget. With some advance planning (which I am sure you have got started on already as you read this post) and some hard work (don’t worry, you don’t have to leave your couch), you can make this Mission Impossible possible with as much finesse as Tom Cruise (Eww… I don’t know why I used that example, I don’t even like him anymore, but since I can’t think of anything else, the example stays. Moving on…)

Make a list of the expenses
Obviously high on that list will be gifts. In addition, there may be expenses associated with parties that you plan to throw. Or travel expenses to meet your family/friends or just getaway. Maybe you plan to attend someone’s party and need a nice outfit. Or you may be able to pull off a great attire by mixing and matching something in your wardrobe, but need a new coat to add the getup a new flare. Maybe you need a baby sitter (or a pet sitter). Think of all the things that could lead to inflated expenditure and add it to the list.

Break down your list and fill in the details
When it comes to gifts, make a list of all the people you need to give gifts to. Next to each name, jot down a few possible gift options and dollar amounts. If traveling, try and finalize the dates so you can book your airfare/hotel early and save some money. If throwing a party, sketch out some of the details like the number of people, place settings, stockable groceries etc.

***Start hunting for bargains***
This is THE most important step! At this point you probably have a good idea of what you want. Maybe there are still a few things that are hazy, but don’t worry about it. Every body’s list has that one person that is the difficult to shop for and every travel plan has a few details that just can’t be ironed out. Put them on the back burner for now, and focus on checking off as many of the other items as you can. Put technology on your side! Here is a great primer for using RSS feeds to track and save on items you are looking for. Bookmark this list of popular deal sites and check out the sites in the list to populate your RSS reader. And bookmark this list of price comparison sites to make doubly sure that you are getting the best possible deals! If you are buying books, make sure you check Addall.com to investigate the prices. Use this list of travel sites to find the best deals on travel. Add fare alerts on several different sites like orbitz, expedia, Travelocity, airfare watchdog, southwest airlines etc. so the deals come to you! And finally, when you find great deals, don’t hesitate to pull the trigger.

Stay away from temptation to indulge yourself
With all this shopping and deal hunting, it is very likely that you will find at least a few items that you would like to buy for yourself. Don’t give in to the temptation! Instead drop hints for people around you that you found a great deal on something that you would really like to have as a Christmas gift. If the request is reasonable, they will be glad you just made it easy for them to buy your gift :) Oh, yeah, when you buy gifts ahead of time, leave room for some swapping so you can accommodate a few last-minute hints that come your way :)

Use your credit card!
I know a lot of you will scoff at this, but a credit card is a great way to keep track of exactly how much you are spending! Additionally, if you are going to be doing most of your shopping online anyway, you may not have a choice in the matter. Just make sure that the credit card has some reward points or cash back for the money you spend and you pay off the balance in full as soon as the statement arrives with money from your Christmas fund. (If your Christmas fund is not fully funded yet, make sure you have a strict deadline for paying back your credit cards in full within a month or two at most! And as soon as the cards are paid off, start saving for your next year's Christmas fund so you can skip this step next year!)

With such a well-planned agenda, you will be way ahead of everybody else with your holiday shopping. When Christmas finally arrives, you can enjoy decking the tree and putting out gifts knowing full well that you got the best possible presents for the people you love while not getting yourself into debt in the process.

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"I'm Bored. I'll Go Shopping"

I can’t even remember how many times I have said that! During the last year though, thanks to blogging about money and frugality and consumerism and what not, things are a lot more under control. Here are a few things I learnt along the way about dealing with the bored-shopping syndrome.

Recognize the pattern.
Do you go shopping because you have to buy something or just because you are bored and want to kill some time? The first step to control the expenditure is to recognize the behavior!

Budget for it.
Once you admit to yourself that you sometimes shop “just because” you can be prepared for the next attack by budgeting for it ahead of time. In your weekly/monthly budget, make sure you set aside some money for “indulgence”. Remember though, just because you have an “indulgence fund” doesn’t mean you have to go shopping. If you don’t have a spontaneous shopping attack, let the money roll over to the next month’s budget.

Don’t exceed your budget.
It is OK to go indulgence shopping as long as you don’t over do it. Now that you have an indulgence fund, make sure you always stay within the limits allowed by the fund. If you think you will be enticed by the items in the store then leave the credit cards at home and only carry as much cash with you as your indulgence fund allows.

Keep a list of items you need.
During the course of the week, when you need something (eg., run out of makeup, the room freshener ran out, pillow not really comfortable, etc.) add it to a written list. When the shopping attack strikes instead of going to the mall and looking for things you can buy, start out with some of the items on the list and take it from there.

Buy gifts in advance.
I can spend hours looking for the perfect gift. So when I head out for a bored shopping trip, I try to remember if any birthday or anniversary is on the horizon. I enjoy looking for unique gifts that are customized to a person’s taste and bored-shopping trips are great times to go pick up some of these items. Recently a friend of mine got married and both she and her husband are big party throwers. So I spent a couple of trips putting together a “cocktail basket” equipped with everything from the margarita shaker to a martini mister to a cocktail recipe book to cocktail glassware etc. I doubt I could find a pre-packaged gift like that anywhere and even if I did, I doubt I would be able to fit it into the budget I had.

Hit the clearance racks.
When I have to go shopping and recognize it as an attack of the bored-shopping syndrome, and I can’t think of anything particular to buy, I tag those trips as clearance shopping trips. Any store I go to, I go directly to the clearance aisles. Only if I find a dramatic deal will I actually buy something. I enjoy deal hunting and finding a great deal that is within my budget really makes the whole trip worth it.

Finally, pick up an all-consuming hobby.
Ever since I starting blogging, I have hardly had the time to feel bored and as such my got-to-shop attacks have dramatically reduced. Every now and then, I still “need” to shop, but the damage is a much limited :)

Do you go shopping “just because”? What are your tricks to limit the damage?

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Will Consumers Warm Up To The Credit Freeze Laws?

Last week the Consumerist had an article mentioning that Transunion will let you freeze your credit report so you may protect your credit from imposters. Recent laws in this direction go a step beyond and require all the credit bureaus to let you freeze your credit report. In Texas the law went into effect on September 1st. Since then I have had it on my “TO DO” list to look up more information and consider the possibility of freezing our credit reports. During the past couple of days, triggered by the Consumerist article, I finally got around to investigating it further. And the more I read about it, the less inclined I am to take any action :(

Quoting from the Consumer Union website here is how it works –

A security freeze lets consumers stop thieves from getting credit in their names. A security freeze locks, or freezes, access to the consumer credit report and credit score. Without this information, a business will not issue new credit to a thief. When the consumer wants to get new credit, he or she uses a PIN to unlock access to the credit file.

That sounds great to me! Currently this law is in effect in all but 11 states. (States that do not have this law are Alabama, Alaska, Arizona, Georgia, Idaho, Iowa, Michigan, Missouri, Ohio, South Carolina, and Virginia).

On more detailed review however, it seems like this may be yet another law that offers lip service to the consumer but in reality makes him jump through so many hoops that probably no many will actually use it :( The exact details of the law vary from state to state. However, looking through the overview, it seems like in most states, unless you are a victim of identity theft already, you need to pay anywhere between $5 to $20 to each credit reporting company for each operation such as placing the freeze, lifting the freeze temporarily or removing it all together. In addition, the response to your requests is not immediate and there is a possibility that you will have to wait while your credit report thaws (so to speak) when you try to lift the freeze. Whats worse, it is not really frozen from everyone. It is possibly a small price to pay to protect yourself from having to go through the harrowing experience of identity theft, but over a term of several years, those fees could really add up and moreover, I am not at all thrilled about the delay in being able to access my credit or selective access to my credit!

From the Instructions for using Texas’s security freeze law fact sheet,

Can a creditor get my credit score if my file is frozen?

No. A creditor who requests your file from one of the three credit bureaus will only get a message or a code indicating that the file is frozen.

And

Can an employer do a background check on my credit file?

No. You would have to lift the freeze to allow a background check, just as you would to apply for credit. The process for lifting the freeze is described above.

I would assume for the zillion other places where we use credit checks (e.g., apartment leasing, insurance, getting a store card etc) also, these would be true.

But…

Can anyone see my credit file if it is frozen?

When you have a security freeze on your credit file, certain entities still have access to it. Your report can still be released to your existing creditors or to collection agencies acting on their own behalf. They can use it to review or collect on your account. Other creditors may also use your information to make offers of credit. Government agencies may have access for collecting child support payments or taxes or for investigating Medicaid fraud. Government agencies may also have access in response to a court or administrative order, a subpoena, or a search warrant.

What?? I have marked the part that bugged me the most in bold italics. So my credit is hidden from creditors and employers, but the credit mongers still get to access my credit information and can keep bombarding me with offers??? That just doesn’t sound right.

In addition,

Do I have to freeze my file with all three credit bureaus?

Yes. Different credit issuers may use different credit bureaus. If you want to stop your credit file from being viewed, you must freeze it with Equifax, Experian, and Trans Union.

To protect my credit, does my spouse’s credit file have to be frozen too?

If Texas is a community property state, then yes.

Based on Texas fees, that means I have to spend $60 to put both the better half’s and my credit on freeze. And every time we want to unfreeze it, its another $10 per person, per credit bureau. I can almost hear the leak in my wallet go drip, drip, drip.

But here’s the part that made me decide that this is probably not worth it. From the website,

The freeze goes into effect five (5) business days from receipt of the consumer’s letter (by certified mail) by the credit reporting agency.

How long does it take for a security freeze to be lifted?

Credit bureaus must life a freeze no later than three (3) business days from receiving your request.

To me that feels like snails pace! In a world running at the speed of light, who wants to wait for three business days to lift the credit freeze?

There is one more thing that needs to be considered. Freezing your credit prevents someone from obtaining credit in your name, but it does not prevent someone who has already got hold of your information from cleaning out your bank account and piling up a mountain of debt on your existing open credit accounts. Consumers should be aware that while freezing the credit can offer some benefits, it is not a be-all end-all solution.

So frankly, I am not sure if this law will really be helpful to me – a consumer. I would love to put a freeze on my credit and protect me and my family from being victims of identity theft. But I don’t know if the 3 days needed to lift the freeze will mean I will lose out on some good offers. Maybe its my recent experience that is making me so skeptical. I found out just before the end of last month, that my credit union was offering a very low promotional low APR till the end of the month for auto refinancing. I immediately made a phone call and switched my loan. It saves me quite a bit of money in the long run. Something like that would not be possible if I place a freeze on my credit. In this particular example, I would have to first contact my credit union to find which credit reporting service they will use, and then contact that agency to lift the freeze. After the credit reporting agency receives the notification it would take them 3 days to lift the freeze. That is too much time, and by then I would probably no longer be able to avail the low rates. In addition to the hassle, the pesky fees really bug me. Frankly, I have no idea where and how my credit gets used and not really sure if I want to agree to shelling out $10 here and $12 there every now and then, because I went and put a freeze on my credit!

So, what do you think? Will you freeze your credit (if your state offers the option) or will you wait and watch to see how things go?

You can find out about the exact details of the law for your state here.

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Auto Insurance Discounts

15 Minutes Can Save You 15% Or More On Car Insurance… (even if you are not a Geico customer)

The Geico ads may be annoying, but they do have a point – if you can convince yourself to take out a little bit of time to shop for car insurance you can save a heck of a lot of money. After our recent car purchase our insurance rates went up and it just didn’t seem right to pay the high premium that was quoted to us for the minimal coverage we had! So we shopped around and made the switch. Our premium is now about 60% of premium quoted by our previous insurance provider, and our coverage is much better. So much so that I think we have too much coverage. But with the new company (Progressive), the difference between the minimal coverage and the one with bells and whistles was very less and so we opted for the coverage with the bells and whistles.

While shopping for auto insurance, I found that most companies give out a base rate and then apply a bunch of “discounts” to reduce your bottom line premium. Technically, the sales person is supposed to check with you if you qualify for the discounts. But just in case the person you get hooked up with isn’t thorough, here is a list of discounts that you can ask your sales person for. (Note that not all of these may be available from all the insurance companies or in all the states)

Multi-Vehicle Discount
If you have more than one car in your household (or even a car and a boat or a motorcycle), buying insurance for all the vehicles from the same company will qualify you for a discounted rate.

Multi-Policy Discount
If your home owners (or renters) insurance are from the same company as your auto insurance, you can get a discount on your combined insurance premium. Even if your auto insurance does not provide home-owners insurance, check if they have a preferred company list and if you have the insurance from a company on that list, you might qualify for a small discount

Home Owner Discount
Even if your homeowners insurance is from a different company, just the fact that you are a home owner might qualify you for a discount. I was quite surprised when the salesperson offered this discount to me!

Garaged Car Discount
If your car will be parked in a closed garage that is locked (and hence is at a lower risk of being stolen) then you might qualify for the garaged car discount.

Defensive Driving Class Discount
In TX, if you have taking a Defensive Driving class (ahem, to dismiss a ticket), you can send a copy of your completion certificate to the insurance company and request for a discount.

Good Student Discount
Under-age drivers who are full-time students with good grades may qualify for a good student discount. Sure will be helpful to offset the steep cost of “under 25” insurance rates!

Safe Car Discount
Different companies have different definitions for what qualifies as a safe car – some of the things they consider are anti-lock brakes (ABS), anti-theft alarm, lojack, airbags, automatic seatbelts, etc.

Safe Driver Discount
If you have a clean driving record for several years, then of course you are the kind of customer every insurance company wants, and so they will offer you a pretty hefty discount.

Loyal Customer Discount
If you are with the same insurance company for several years, make sure you call your existing insurance company first to see if they will offer you a loyal customer discount. Also, make sure you tell the new companies that you are calling up that you were with your previous company for several years – they might offer you a good rate to tempt you to switch.

Low Mileage Driver Discount
I think the national average for the miles a person puts on his car per year is ~12,000. If the number of miles you drive is less than the national average statistic that the insurance company uses, you might qualify for a low mileage driver discount.

Green Car Discount
Some insurance companies want to make a point that they are green, and consequently offer a small percentage of discount if you drive a hybrid car.

Military Discount
If you are in active military duty, retired from military or coast guard, you will qualify for a military personnel discount.

Online Discount
Even though I spoke to a sales person on the phone to make sure that I was getting all the discounts we qualified for, the sales lady was really nice to suggest that I actually buy the policy online which qualified me for a one-time $50 online discount. She entered all the data I had provided her into the system and gave me a quote number. All I did was plug in that quote number on the website, and voila, all the discounts appeared along with the additional (one-time) $50 discount.

Pay Ahead Discount
In addition, since I chose to pre-pay for the next six-months and provided them with a credit card number to bill me at six-month interval, the premium was a little lower than what we would pay if we chose to go month-to-month.

Well, that’s about what I have for now. If you have availed any other discounts, I hope you will share with me (and the other readers) so we can check if we qualify as well. TIA.

~~~oOo~~~

Want to check if you qualify for some of these discounts? Get auto insurance quotes from a reilable provider.

~~~oOo~~~

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The Squeaky Wheel Gets a Better Cell Phone Deal

This is a guest post by Linda Bustos. Linda is the Editor of Creditorweb.com, where you can learn more about credit cards. This article shares secrets for getting a better cell phone deal.

A couple years ago, I was using what some might call a "Zack Morris Cell Phone." It was huge, black and white, heavy and all you could do on it was play crab catch. Although all my friends and co-workers had slick phones that could take pictures and video - I could barely use my calculator. So around Boxing Day 2005, I started reading those colorful newspaper flyers from every cell phone carrier in town. They were all offering some pretty sweet deals and free, funky phones, so I decided it was time to upgrade - finally.

I was in a powerful position as I was not on a contract at the time (my original airtime provider was swallowed up by a behemoth telcom but my old plan was grandfathered). So I was able to swing a sweet deal from my current provider by notifying them I had found a more attractive offer. The phone call went something like this:

"Hi, my name is Linda and my cellphone number is XXX-XXXX, I found {deal from "competition"} and I'd like to end my plan with you now." When asked what about the offer I wanted, I detailed all that was offered by the other company. My cell phone company not only matched it but they gave me free caller ID and voicemail service for a whole year - $96 savings right there. Plus they threw in a free phone with no hardware switching fee, a phone that regularly cost $99 with a 3-year contract. (Although they thought I wouldn't notice when they tried to charge me the hardware fee anyway).

So if your contract is ending or you're currently not on a contract, this tactic should work for you. But what if your stuck in a contract for another year or more? You could try sites like Cellswapper or CellTradeUSA that help you find people to take over your remaining term of your cell phone contract. Once you're free you can sign up for any deal you want and get a newer, free phone (though you lose your cell number).

You could also take over someone else's contract for as little as one month. You'll save activation fees and when your contract takeover expires, you'll be able to try this little trick with the cell phone company.

Cell phone companies are not the only service companies that this trick works on. Long distance, Internet and credit card companies are equally as desperate for your business.

For example, if you want to get a lower interest rate on your credit cards, just call up your credit card company and tell them you'd like to close your account as you've found a better rate elsewhere. Say "I'd really like to stay with you but I found ." The credit card agent will most likely offer you a lower rate card right away (with an annual fee, of course). But before you jump to the phone, consider whether you really need a lower interest rate. If you don't carry a balance on your credit card, then there's really no point in paying an annual fee for a lower interest rate -- you pay no interest anyway. You'll also want to make sure the low interest credit card doesn't waive your grace period and charge you interest from the day of purchase. But if an annual fee of $25 will save you way more than $26 on interest charges per year, it's in your best interest to make the switch. Your credit card company won't offer this to you - you've got to take the initiative!

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Three Words For New iPhone Owners: "Shame On You"

Finally, the iPhones are available in stores! Across the country in Apple and AT&T stores, people waited in line for days to be the first ones to own the must-have gadget of the year. The sleek sexy look, the enticing ads, the cool new touch pad technology, the 4 to 8 gigabytes of memory, the built in iPod -- just writing about it makes me drool! Fortunately, before my desire to own the device turned into an all consuming obsession, I came across this article which puts the cost of ownership of the phone over two years - the required contract length with AT&T, the exclusive carrier for iPhones - to as high as $3,000. Even if one were to buy the lower end model and the lowest cost service plan, they would still have to fork out close to $2,000!

We are so steeped in consumerism and advertisement induced materialism in this country that we seem to have lost sight of how big a number that is! $2,000 to $3,000 for a cell phone!!! Don’t you see how ridiculous that is? If not, maybe you should take a step away from the TV and the blogs touting the virtues of the iPhone and look at the world around you for a minute. Maybe things will start to fall in perspective...

According to this world bank map (click on it for an expanded view) other than the developed countries, most other parts of the world have at least 10% of the population living on less than $1 a day, the threshold for describing extreme poverty. In some parts of the world more than 50% of the population is below this threshold! That means $2,000 is equivalent to about seven years of subsistence for a large part of the world. And you still think nothing of blowing it away on one gadget!!!

OK, let’s leave the extremes behind and look at the averages. The June 11th edition of TIME magazine had an interesting article titled "How the World Eats" (available online as a photo essay). The article/essay shows photographs of average families from different parts of the world and their weekly food expenditures. One of these images remained with me, and I couldn’t help but think of it when I was musing about the high cost of owning the iPhone, and American consumerism in general. The Namgay family of Shingkhey Village in Bhutan, shown in the picture below, have a weekly food expenditure of $5.03. If you count carefully, there are 13 mouths to feed. The reason this photograph stood out for me was that, these people do not look "poor". Rather, they came across to me as fairly average family content with what they have. Who says (other than the marketing and media folks) that you need a $2,000 device to achieve simple joy and contentment?

If you are still not convinced, let’s try something closer to home. According to this article on MSN Money Central, the average American household carries $8,000 in credit card debt. Considering that statistic, I would assume that a lot of the people who bought the iPhone put it on the credit card, and will likely pay their monthly service fees using credit cards too. If they do not pay off the bill in full each month, the lust for one device increased their debt by over 25%. Was it really worth it?

Overall, I am quite convinced that unless a person has no debt, has made sufficient plans for a secure financial future and contributes to at least a few charitable organizations, he/she has no business buying an iPhone. Of course, if you were born with a silver spoon in your mouth go right ahead and buy that phone – an iPhone in your hand goes perfectly well with the silver spoon in your mouth :) But if you are an average Joe who now owns the over-priced over-hyped gadget and owes a tad bit more to the credit card companies than before, I have just three words for you -- shame on you!

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Ford College Student Discount

I received an offer in the mail saying I qualified for a $500 discount on any new Ford vehicle that I purchased because I had recently graduated from college. This discount can be used in addition to whatever the promotion the dealers offer. I am not a big fan of buying new vehicles and even if I did, I doubt I would go for a Ford. But if there is anyone out there who is looking to buy a new Ford vehicle (2006, 2007 or 2008 models) before January 2008, then this may be a good deal for you.

Here are the eligibility requirements –

You are eligible to take advantage of this offer if you:
Are an undergraduate student currently enrolled full-time at an accredited Four-year College/University, Junior College, Community College or Trade School in a minimum of 2 classes of an equivalent of 6 credit hours, OR
Graduated or will graduate from an accredited Four-year College/University, Junior College, Community College or Trade School May 1, 2005 and Jan 2, 2008*, OR
Are currently enrolled in an accredited Graduate School program.

If you are interested in this offer, you can find more details on the Ford College Student Purchase Program 2007 website.

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What Would You Do With "Found" Money?

Yesterday, I was over at the Grad Girl’s blog and came across this article where she wonders if she should buy one share of the high priced Google stock (at $505.72 per share). Her thinking is that she has $600 coming her way next week as payment for a magazine article she wrote, and since it is money earned beyond her regular income, she can afford to take the risk. This is exactly how I used to think before (and sometimes still do) and reminded me of what I had read in this book that changed my thinking a bit.

According to the book, this is a form of mental accounting that most of us engage in resulting in us valuing some of our money as less valuable than the other money. Here is an example story used in the book to drive the point home. It is apparently a tale well known in Las Vegas as the "Legend of the Man in the Green Bathrobe". If you have already heard the story before, please bear with me for a minute.

By the third day of their honeymoon in Las Vegas, the newlyweds had lost their $1,000 gambling allowance. That night in bed, the groom noticed a glowing object on the dresser. Upon closer inspection, he realized it was a $5 chip they had saved as a souvenir. Strangely, the number 17 was flashing on the chip’s face. Taking this as an omen, he donned his green bathrobe and rushed down to the roulette tables, where he placed the $5 chip on the square marked 17. Sure enough, the ball hit 17 and the 35—1 bet paid $175. He let his winnings ride, and once again the little ball landed on 17, paying $6,125. And so it went, until the lucky groom was about to wager $7.5 million. Unfortunately the floor manager intervened, claiming that the casino didn’t have the money to pay should 17 hit again. Undaunted, the groom taxied to a better-financed casino downtown. Once again he bet it all on 17 – and once again it hit, paying more than $262 million. Ecstatic, he let his millions ride – only to lose it all when the ball fell on 18. Broke and dejected, the groom walked the several miles back to the hotel.
"Where were you?" asked the bride as he entered their room.
"Playing roulette."
"How did you do?"
"Not bad. I lost five dollars".

Now this is something familiar to many of us that have visited Las Vegas. Maybe we didn’t win/lose to the tune of millions, but all of us have at some point rationalized the loss of a few dollars (or maybe a few hundred/thousand dollars) that it was not our money to begin with anyway. But when you think of it, if we had not let our winnings ride, and cashed out, it would have become our money and we could potentially do wonders with it. Yes, you can reason that if we don’t take any risks, we will never win big. But the question is why don’t we apply the same reasoning to our own money? For instance, I can safely make the statement that not many of the people reading this article would wager their entire 401K on a single bet, no matter how good the winning streak is, because we all know that the house always has an advantage and we will eventually lose. While we are not willing to take the risk with our hard earned saved money, we throw the caution in air when dealing with "found" money. The risks are the same and since we are talking about our winnings, it is still our money, but the way we deal with is very different since we mentally compartmentalize that money to have less value than the money that we have worked hard to earn and save. This probably also explains why so many lottery winners squander away their fortunes.

Now let us go back to the story of the man in the green bathrobe. All of us feel bad for the man and think he was an idiot to a certain extent. But would you feel anymore bad for him (and think he is a bigger idiot) if he had blown away their wedding gifts instead of the winnings at the table? I would. So, not only do we treat “found” money differently from the "earned" money, we also mentally classify which of the "found" money is more disposable than the others.

This mental accounting can be both harmful and beneficial. For instance, all of us compartmentalize our retirement savings as sacred and usually don’t play around with it. This is the beneficial side of mental accounting that protects our wealth. On the other hand a lot of us are very careless about "found" money. A dollar in found money is still the same as the dollar in earned money. But due to our ingrained mental accounting habits, we tend to treat it with less respect.

Going all the way back to the Grad girl’s article that triggered this post, even though she is willing to take on higher risks (by investing in individual stocks), she is still not careless or negligent in the fact that she plans to invest the money. But most people just burn the "found" money on shopping for clothes or cool gadgets. What makes this worse is that different people consider different things as "found" money. For instance a lot of people consider gifts, bonuses, previously forgotten money in savings account, inheritance or tax refund as "found" money and blowing away that money can be as harmful in the long run as refusing to start a 401K account!

Another harmful effect of this mental accounting is that, we sometimes end up being too conservative with our savings. For instance, we categorize our hard earned money as valuable and hence something not to take too many risks with. In our case, when we have some additional money left over beyond our regular budgeting, we tend to pump it into our mortgage. Now our mortgage has an interest rate of 5.125% and any form of stock/mutual fund investing will yield more than 5.125%. But, investing in stocks entails a lot of risk, whereas paying off the mortgage ensures guaranteed returns. In the long run, this thinking will probably cost us a pretty big chunk of change :(

So, in summary, here is what I hope you take away from this article:

We all have a tendency to resort to mental accounting and treat some money as more/less valuable than other.

Mental accounting can protect us from squandering away our saving, while at the same time cause us to spend our found money recklessly.

Whenever possible consciously try to avoid being too conservative with "saved" money and too liberal with "found" money.

Re-evaluate the definition of what qualifies as "found" money.

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Mid-week Humor: Rent-A-Wife for $65/hr

(Click on image for enlarged view)

This is an actual ad on Austin Craigslist! $65/hr!!! And that’s for a part-time wife!! Man, I make way less than that for being a full-time wife *plus* my full-time job put together!!! :)

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A Dollar a Day Keeps the Pests Away

My knight in shining armor (known to some of you as the better half) will climb the loftiest mountains, fight the vilest creatures and brave the meanest storms without flinching or wincing. But put a tiny little fire ant on his arm and watch him cringe and whimper, as he breaks into hives, turns a fiery shade of red and helplessly itches all over. Even his throat and tongue swell until he can hardly speak! Add breathlessness to that and you have me panicking and driving like a maniac to rush him to the nearest emergency room!

So, when we bought the house with a small sized yard that the better half had to maintain, I knew we needed to give some serious thought to pest control. Especially in our part of the country where the fire ants owned the land long before humans did! Living in an apartment until then, my only encounter with the terms pest control were on the notices that the apartment people left to inform me that the apartment was treated while I was away. Aaaahhhh, the bliss of non-homeownership! Now with lawn mowing, driveway cleaning, remembering garbage days, programming sprinklers and changing air filters, we also had to take care of pest control!

Frugal souls that we are, our first approach was to DIY. Yep, we marched into home depot, the two weekend warriors, picked up some fierce looking red ant spray and scattered it all over the yard. We watched carefully for the next few days to see if we would see any of the tiny terrors. And for a few weeks there were none. Just when we were about to break out the bottle of champagne, they started making a comeback. One or two at a time, at first. And then with friends and relatives. And if you have watched the discovery or national geographic channels, you know, ants have large families!

Our next resort was to call the friendly neighborhood pest control man. Actually, I called several of them comparing and calculating. Finally, I chose one who offered cheapest-by-comparison-but-expensive-nevertheless service and had the whole house treated, inside and out. The next few months were just great! I put a reminder on my calendar to call the guy again next year. What my friendly little pest control man didn’t tell me though, was that where I live (and probably the rest of United States as well), stores are not allowed to sell chemicals that stay potent for more than 3 months. So even the best chemicals (assuming he used the "best" chemicals) would be effective for only 3 months. Agreed we need to save the environment, but geez, what do you take us home owners for? But like I said, our pest control guy forgot to mention this to us while he was here, and we simply shredded the quarterly reminders he sent us assuming they were an effort to sucker us into shelling out some more of our hard earned shillings. Ha Ha, you ain't gonna get us this time, pest man!

The winter wasn’t that bad actually. But come summer, we were hit by the attack of red ants like never before! Our yard was literally teeming with life. Creeping and crawling. Making intricate patterns across our drive way. Spilling out of the yard and threatening to take over our house. Fortunately, we noticed the problem before they found their way in. The thought of those critters crawling all over my house, still sends cold shivers down my spine. This time, I called a reputable pest control company, found out all the info I could and signed up for an annual contract with pre-scheduled quarterly treatments. The tab? $368 (–10% discount for signing up the annual contract). Or in other words approximately a dollar a day! Just to keep the pests away!

Sigh! It’s days like these that I tend to agree with Jim’s devils advocate post - Rent Forever, Don’t Buy A Home!

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Costco: Good Value for the Money, but Not Frugal

For reasons that I just cannot explain I just love shopping at Costco! I don’t know if it’s the aisles and aisles of well stocked borderline gourmet stuff, or if it is the free samples they let me graze on while I shop. Or maybe it's the fancy electronics that always seem oh, so within reach. But, overall, I really enjoy the experience. And no matter how good my intentions are before I start my shopping trip, when I walk out of the store I almost always have stuff costing at least $100 in my cart! So, I reckon if I limit my Costco sojourns to once every four to six weeks, I should do fine. Well, after last weekend’s trip, I decided to do a list to see if Costo was really saving me any money. Surprisingly (and a little disappointingly), I don’t think shopping at Costco is really saving me any money at all. I may get more stuff for my money compared to regular grocery stores (where I hate shopping, for the record), but when I consider the actual amount of money I spend, I probably spend more rather than less, when I shop at Costco. Here is my analysis –

If you are a small family, you are limited in what you can really buy at Costco.
Costco is a wholesale store. We are a family of two. For small families like us, practically speaking, it makes no sense to buy any perishable goods. What will I do with a 2lb bag of garlic or 10lb bag of apples? On the other hand, it’s a great place to buy non-perishable stuff in bulk. For example, my Costco shopping list usually consists of some of these items – soaps, body wash, body lotion, detergents, kitchen towels, toilet paper, frozen food, cereal, milk, multivitamins etc. I know I save a lot of money on these items. But the question is, does the quantity that I buy save me enough money to justify the membership fees?

Impulse buys at Costco cost way more than impulse buys at a regular grocery store.
Since it is a wholesale store, if you make an impulse buy, it’s usually in much bigger quantity than at a regular grocery store. That means that it costs more too. For instance, on my last shopping trip, I picked up a bag of pecans. On my way to the checkout line, no less. In a regular grocery store, this discretion would have probably cost me $5. But at Costco, it costs me $10. And when I brought it home, I realized that the quality is not all that great :( So now, I am stuck with a big bag of pecans, I didn’t particularly like :(

Wrong product/brand/choice cost is much higher too.
Which brings us to the next point, at Costco, mistakes are expensive. Not just on impulse buys, but for items on your regular shopping list as well. And making mistakes, especially with the choice of a brand is relatively easy at Costco, since they stock only a limited type of brands. For instance, during one of my earlier trips to Costco, we wanted to pick up some cereal. I don’t remember if they were out of the particular cereal we were looking for or if we just felt very experimental, but we picked up the strawberry-yogurt cereal instead. I mean its strawberry and yogurt, so what’s not to like about it. Turns out, it’s a nice cereal, but I just don't like eating it the first thing in the morning. Again, I am stuck with huge double box of cereal, and a nasty choice, eat it or waste it?

Some deals are not as good as they seem to be.
Finally, some deals at Costco are just not as good as they seem to be. Take for example, the gas price. Gas price at Costco is consistently 5 cents less per gallon, than the local gas stations in my area. If my gas tank is completely empty, it can take about 12 gallons, which works out to savings of 60 cents per tank. More often than not, I fill up much before my gas tank is completely empty. So my average gas purchase is around 10 gallons. That makes my savings 50 cents, per fill up. But, the closest Costco from my home is about 25 miles round trip. That’s a gallon of gas right there. With the current gas prices, it’s easy to see that I spend much more on gas to get to Costco and back, than I save on gas. Of course, I don’t go to Costco to just buy gas, but you get the idea, right? Usually, the number of Costco stores is a lot fewer than regular grocery stores. So, more often than not, a Costco trip involves at least a short commute. Add the gas price to the membership fees, and you’ve got to wonder, are you saving enough to justify shopping at Costco?

So, overall, here’s my conclusion. Unless you are extremely disciplined, you will likely end up buying at least a few items that you were not planning on buying anyway, and they cost you more at Costco than regular grocery stores. So, while you might get more stuff for the same amount of money by shopping at Costco, some of that stuff may not be what you actually need and so, Costco isn’t a very frugal place to shop at! For small families, the cost of membership could possibly well exceed the amount saved. So, if anything, for small families, Costco can be definitively anti-frugal!

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Dealing with Products that Tug At Your Heart Strings to Loosen Up Your Purse Strings

Everybody wants a piece of your money. Over the years marketing gurus have perfected the art of reaching out to your emotions to get to your purse. Even men immune to emotional tugs are no longer safe. The marketing geniuses seem to have figured out that "the way to a man’s wallet is through his wife’s heart":) Here, take a look at these crafty gift ideas. The first one is bag of customized M&Ms, where you can have your personalized message imprinted on one side of the M&Ms! Just in time for Valentine’s Day! The second is a "diapergram" where you gift the new mom with a bushel of – get this – diapers with custom messages on them. The ones I saw had the baby’s name printed on it. Yes, your bundle of joy can now poopie in a diaper with his/her name on it. Literally!

(Click on image for a full-size view)

So what do you do when you are faced with the "cute" products that reach out to your heart and whisper "buy me"? Well, I am not going to say resist it. Really, I’m not. Just like other aspects of your life, even in your financial life all work and no play makes jack a dull boy. Sometimes, you have to indulge, just for the heck of it! Sometimes, you need to have some fun. But wait, before you amble over and introduce that brand spanking new credit card to the wonder of online shopping, ask yourself these three questions.

Will this product really ADD value to my life/relationship/etc.?
Try to sort the emotions from actual product. Will the "cute-fied" product add value to your life or relationships? Will it boost your love life? Will it help your friend get through a rough patch? Will it help a colleague smile through the first few difficult days of being a new mom? If you find that the new product adds some value, then it may be worth a buy. But, if the recipient of the gift it just going to think "what a cheesy gift" and dump it in the thrash can the moment you're out the door, or if the gift can only retain its cute-value for about 10 seconds, it’s probably not worth shelling out your hard earned shillings.

Am I willing to give up something else to get this product?
Now, for the true test of the worth. Let’s take the example of the M&Ms. Suppose you strongly believe that your sweetheart will pledge his/her undying love to you for all of eternity when you gift that bag of M&Ms. And you really want to buy it. What are you willing to give up in exchange for it? Look at your budget (you do have a budget, right?) and see what you can strike off to divert money to buy this gift. Remember, it’s a whim. It’s an unexpected, unplanned expenditure. While I believe that some impulsive buying and indulgences are healthy for your personal life, they should not come at the cost of throwing your financial life off the track. So, if you really want to buy that gift, then you should be able to give up something else for it. If you can’t bring yourself to give up something for it, you probably don’t want it bad enough. Save it for the next whim-attack.

Have I been indulging my whims too often?
In my case, most whims fizzle out in the previous stage. When a few of them get past that stage and I have decided to buy it, I will look at my past record of whim indulgence. It’s not something I write down and track diligently. It’s just something I look back on. If I am doing this too often, check if there is a pattern emerging. Am I really giving up something to indulge my whims, or did I just rationalize my way out of it. If so, then it’s time to acknowledge that I might have compulsive shopping problem and deal with it. On the other hand, if I have been buying something on a whim very often, and proving that I really need it by foregoing something in my budget, then my budget probably needs to be modified. But if there are no red flags, no record of indulging too often, go ahead, shop to your little heart's content. Enjoy the pleasures small materialistic things can bring. It's these little things that make life beautiful :)

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Five Reasons Why You Cant Make Me Buy a New Car

I graduated in August 2006. I have a fairly stable job that pays me a relatively good salary. So, why do I still drive a 14 year old car with 155K miles on in, you ask? Let’s say a new car will cost me $20,000.

At $2.80 a latte, the new car is equivalent to 7143 lattes! If you like the Latte Factor Philosophy, that’s 19.56 years of one latte every day!

The average cost of lunch at our cafeteria is $6. Assuming 260 working days in a year, I would have to brown bag my lunch every single day for 12.8 years to pay for that car!

The person who bought a brand new $20,000 car in August 2004, now has a “used” car which might fetch him $10,000 to $15,000 depending on which brand the car is (and whom he sells it to :) But the person who bought shares of Google at their IPO and held on to the stock now sits on stock worth $98,661! (GOOG historical stock chart)

If I lose my job and have to go on federal minimum wage of $5.15/hour, and put away every penny I earned towards the car, I would have to work for 3883.5 hours just to pay down the principal. Note that I am not even considering the interest payments here (or the taxes on my earnings!)

For crying out loud, a car is a mechanical contraption for transporting people from Point A to Point B. My 14 year old car with 155K miles on it, does that part just fine! So why would I buy a new car?

Well, those are just my reasons. If you have any more reasons why I shouldn’t buy a new car (or any that I should, for that matter), make sure to leave a comment below.

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