Monday, December 5, 2011

So Long.....For Now

Friends and Family,

I have decided to take a break indefinitely from blogging and focus on some personal matters for a while. I feel like I haven't had as much time or energy to devote to my blog as I would like. Plus this site is a lot of work to keep up and at this point something I can't keep up with. So right now I think it's better to focus on some other aspects of my life and take a hiatus from writing. Don't worry, I won't be take a hiatus from budgeting or attempting to spend less and save more!!

I want to thank all of my readers, especially those of you who have been with me since the beginning. This has been a truly great experience that I would highly recommend to anyone trying to reach what appears to be an unreachable goal. I'll still be skulking around the Interwebs checking up on my fellow personal finance bloggers and making sure they stay on track.

Take care and stay tuned!
Sarah

Monday, November 14, 2011

Why We Switched To PerkStreet

We recently decided to switch to a PerkStreet checking account even though we were fairly satisfied with our current checking accounts. Why? Rather than have our money sitting in an ING savings account earning 0.9% interest annually, we decided it was worth it to move part of our money to PerkStreet so that we could earn cash back rewards worth more than the 0.9% we are currently earning at ING.

The Details
In order to earn 2% cash back rewards on debit card purchases (without a PIN), you must maintain a minimum $5,000 balance in your checking account at all times. If your account falls below $5,000 you will earn 1% cash back (which is still pretty decent). In addition, there are certain rotating retailers that allow you to earn 5% cash back (limited to $250 a year). To use PerkStreet's example, if you maintain a $5K balance and spend $2,500 a month on your debit card, you can earn $600 in annual rewards.

ING vs. PerkStreet
Here is why we decided to take the plunge. Beware, Math Nerd logic ahead.......I compared my annual rate of return on $5,000 using an ING savings account and Perkstreet checking account rewards.


ING annual rate of return on $5,000 = $45 ($5,000 * 0.9%)  If you want to get technical and include compound interest, then add a whopping 19 cents.
Annual debit card spend to equal ING rate of return = $2,250 ($45 / 2%)  If you look at these numbers, in order to earn the same amount of money as ING using PerkStreet, I will need to spend

Friday, November 11, 2011

Shot of Happiness Week 2: Accountability

www.choosetobehappy.com
This is the second in a series discussing the book How We Choose to Be Happy: The 9 Choices of Extremely Happy People--Their Secrets, Their Stories.Last week we discussed Intention as the first step in choosing happiness. This week we move on to

Choice 2: Accountability
"If intention is an inner-driven desire to play in the ball game of happiness, accountability is its natural outcome - the urge to step up to the plate and hit the ball."

No Victims Here
The kind of accountability that Foster & Hicks are talking about is the ability to be in control of our lives, the ability to move ahead no matter what life throws at you. A big part of the message in this chapter is that happy people don't see themselves as victims. Rather, happy people focus on finding solutions and looking for what they can do to make their lives better.

"Happiness depends on ourselves." - Aristotle

The authors' research shows that blame along with greed, envy and jealousy are some of the biggest indicators of unhappiness. So how do you overcome the "blame game" and move closer to accountability. Always consider your part in a situation and ask yourself what you can change and what you have learned from this experience. By addressing the one thing that you can change (yourself), you will get yourself out of the useless cycle of trying to change others.

Wednesday, November 9, 2011

Money Crashers

I stumbled upon Money Crashers last month during one of my many periods of web surfing procrastination.  Money Crashers is a comprehensive personal finance site that discusses pretty much anything and everything on the finance sphere. Budgeting, extreme coupons, finance book reviews? They're all there. How about learning about winterizing your home or getting out of your T-Mobile contract without a fee? Check and check. Even better, you can find a listing of the top personal finance blogs out there on the Internets (even The $60K Project is on the list!) - all the great personal finance bloggers you could ever want!

Some Great Money Crashers Articles
How To Make An Efficient Weekly House Cleaning Schedule Template & Checklist Chart
14 Unique & Inexpensive Host and Hostess Gift Ideas
How to Find a Job Online Using Craigslist - 16 Step Process
U.S. Securities and Exchange Commission (SEC) History & Fraud Cases
Give Better Gifts This Holiday Season

Monday, November 7, 2011

Financial Update - October 2011

So somehow our October net worth is about $20,000 more than September's update. Here are my two guesses as to why:
1) Kelly Blue Book increased our car values by about $2,000 each. Not really sure why because I went through the same process as last month and even made sure to note wear and tear where applicable. I'll take it but am not really convinced.
2) Our retirement funds had big gains - partly because we significantly increased our contributions but also because there have been some decent gains since the last time I looked at our net worth.

Challenges: We spent quite a bit on medical expenses and travel in recent weeks so our checking account is a bit slim this pay period. Fortunately, we just got checks in the mail for some of our side hustles and will be using that money to catch up and get back on track. Until then, beans, rice and veggies will be a part of our diet.

The upcoming holidays also mean spending a little more than a typical month due to gift giving, travel, holiday parties, etc. We already have most of our travel paid for so we're in pretty good shape. As far as gifts, I find the best thing to do is make sure you communicate with your family and friends in terms of gift buying. Some years my family has enforced a spending limit, and other years we have only purchased gifts for the kids. Depending on your financial situation, it might be in your best interest to start the gift buying conversation. You may find that others have financial concerns as well but may not want to speak up about it.

2011 Goals: Two of our goals this year include creating a $15,000 emergency fund and maxing out our 401(k) contributions. Unless some sort of miracle occurs in the next month or so, we won't be accomplishing these goals during 2011. But that's okay. Considering we just started saving in September we are still doing pretty well - halfway to our $15,000 emergency fund and a significant increase in our retirement contributions. I think it is safe to say that we will complete our emergency fund in early 2012 and will also be able to fully max our retirement next year.

What's Ahead: We are still annoyed at our last student loan and have been thinking about starting up our debt payoff program again so we can finally get rid of it and be debt free! Maybe after our emergency fund is fully funded? We'll see!

Stay tuned,



Friday, November 4, 2011

Your Shot of Happiness


I have been thinking about the concept of happiness a lot lately and even wrote about it in a blog post a few weeks ago. I decided to read the book "How We Choose To Be Happy" and write a series discussing the 9 choices of extremely happy people.

www.choosetobehappy.com
Formerly consultants who solved personnel issues, authors Rick Foster & Greg Hicks decided to turn their attention towards happy people. As part of an extensive research campaign, they set out to talk to happy people and learn their secrets. What they discovered was that these people all seemed to create happiness by making the same nine choices. This blog series will explore each of these 9 choices as discussed in the book. Why am I doing this? Because I think a lot of us tie up money with the concept of happiness and one of these does not necessarily precede the other. I also believe that many of us are always searching for something to make us happy when maybe all we need to do is choose to be happy.

Choice #1: Intention - "the active desire and commitment to be happy, and the fully conscious decision to choose happiness over unhappiness"

According to Foster & Hicks, the intention to be happy is what drives us towards living as happily as we can while also driving us toward the other 8 choices of happy people. This is why intention is at the center of the wheel (see above). If we don't intend to make happiness a reality in our lives, then we have by default chosen something other than happiness. In addition, the authors believe that we do have control over our happiness - just as I can "make myself miserable," I can also do the opposite.

"Those who wish to sing always find a song" - Swedish Proverb

How To Create Intention
Rather than just trying to get through your day, create a story each morning about the day you intend to have. Through these stories you will create your own realities which ultimately drive your feelings and actions. The most important take away from this chapter is that you can learn to be happy and intention is the first step in that direction - "at the heart of happiness is the realization that we can always choose our reaction."
"Why not seize the pleasure at once? 
How often is happiness destroyed by preparation, foolish preparation?" - Jane Austen

Action Items
1) Set your intention and revisit it throughout the day
2) Make a list of your most important intentions. Evaluate your list and eliminate the items that are responses to other people's expectations or what you feel you "should" do
3) After every item write the following phrase "...and I intend to feel happy doing it." 

"Joy has nothing to do with material things, or with a man's outward circumstance. A man living in the lap of luxury can be wretched, and a man in the depths of poverty can overflow with joy"
- William Barclay     
Stay tuned,
   




What do you do in your everyday life to make sure you live with the intention of being happy? What struggles have you encountered when trying to remember this intention?

Wednesday, November 2, 2011

October Budget Review

Did you listen to The $60K Project podcast interview at The Consumerism Commentary? Download episode 131 to your iTunes and take it with you wherever you go! And don't forget to tell your friends!

Have you reviewed your budget to actual spend for October yet? You can learn a lot from looking at a past month's spending habits. Action: Find one category where you feel you could have spent or budgeted better in October and incorporate that change into your November budget.


Recurring Budget Items
October was a rough month for us. Our recurring expenses came on track when taken as a whole, but a trip to the vet for Duke and the addition of another monthly medication put our projected vet expenses over by $165. Luckily we were under budget in some other areas so it evened out.. Note to readers: Pets are expensive, especially as they get older.

As a general rule of thumb, your recurring expense section shouldn't see too much variance each month since these should be expenses you can reasonably estimate

Non-Recurring Expenses
No complicated Excel spreadsheet necessary - we paid a boatload of medical and travel expenses in October. Mike and I both have recurring doctor appointments at this point so we are just going to have to tough it out. Travel expenses were related to my trip to Chicago to the Financial Blogger Conference so at least I will get a business deduction on my taxes. The toughest part of the month was when we decided to transfer money from our savings back to our checking account. This is the first time we have had to do this and it almost feels like we failed in some way.. But it's tough to stay within budget with such a large amount going towards medical bills. On the bright side - at least we have savings to dip into when we need it!!

November Budgeting Process Changes
One major change to the November budgeting process - Mike is taking over the budgeting/bill paying process for the time being. I have been in charge of documenting our progress for the past year (with Mike's input) so I thought it would be a good idea to get Mike more involved. Last time I checked he had turned my 4-column Excel spreadsheet into a 10-column and counting, but he swears he's "simplifying" the process. Can't wait to see how simple it is!!

Stay tuned,




Does your partner in crime understand your budgeting process and bills that need to be paid? It's important that everyone involved understands the process and goals that you want to achieve.

Wednesday, October 19, 2011

$60K Project On Vacation

Did you listen to The $60K Project podcast interview at The Consumerism Commentary? Download episode 131 to your iTunes and take it with you wherever you go! And don't forget to tell your friends!

Hi everybody!

The $60K Project has decided to take a two week vacation - after all, it's been a year since this site started and I need some time to relax, unwind and figure out what the future holds for us. Don't fret because we will be back in full force on November 1.

Content Requests?
Do you have any specific types of content you would like to see in the coming months? Be sure to leave a comment with any suggestions you have.

What Should I Read?
There are so many good reads on this website. While I'm away, keep yourself busy with:

The 12 Steps To Debt Freedom: My 12-step method for successfully paying off debt.
How The $60K Project Started: Check out Day 0 and Day 1 of our project and find out how all the madness started.
The Salary Myth: Income vs. Debt: One of my favorite posts. It taught me that bringing in a decent income doesn't necessarily mean you are in good financial shape.
Word of the Day: Another one of my favorites purely because of the word Awesomesauce.
Lessons Learned From Duke: My dog has taught me more about living life than most humans I know. Let Duke impart his wisdom on you in this post.
The Hidden Cost of Cheap Gas: A lesson learned personally - the gas grade doesn't matter (87 vs. 91) as much as the brand. Certain brands of gas just have gunk in it that will choke up your fuel line.
Keeping Up With The Joneses: The infamous Mr. $60K Project (aka Mike) wrote a really good guest post about the pressure to keep up with the Joneses and how it can impair your financial health.
5 Money Tips From My Nephew: I interviewed my 11-year-old nephew about money and I'm pretty sure he knows more about fiscal responsibility than I do.
June is Myasthenia Gravis Awareness Month: Something I am all too familiar with as I have been recently diagnosed.
Lowering Your Cost For Medical Procedures: Did you know it's possible to pay less for certain medical procedures? This is something I have recently found out.
Smashing Debt With A Snowball: Challenging the economic notion that we are rational beings when it comes to the purchases we make.
How I Paid off $60,000 in Ten Months: And how you can do it, too!

Thanks for your patience and understanding. It's hard to believe but, yes, there are other things going on besides working on this blog!

Stay tuned,

Friday, October 14, 2011

You Can Choose To Be Happy

Image: FreeDigitalPhotos.net
I am a closet philosopher. My undergraduate degree was Philosophy, Politics & Economics (aka pre-law) only because I thought a straight philosophy degree wouldn't be as practical in the real world. I think about the meaning of life - and any and all related tangents - on a more than regular basis.

Lately my random thoughts have turned towards the concept of happiness. A lot of financial decisions are made to achieve a certain level of happiness. But can you find happiness by seeking/searching/accomplishing? Or could it be that happiness is simply a choice - something that you don't actively seek out but just need to accept into your life?

Think about it - there are so many situations in life that are going to be unpleasant. Work, relationships, money, social pressures, family. You can't control these situations so what are your options? The only thing you CAN control is how you react to these unpleasant situations. Let's use that guy who cut you off on the freeway this morning as an example: how many minutes after you laid on on the horn, shook your fist (or your finger) at the window and screamed an obscenity did it take before you let go of the situation? Did you mention it to your coworkers or to your family when you got home? Did it alter your mood for the rest of the day? Or do you just shake your head and move on while singing the Zac Brown Band at the top of your lungs?

Choose Happy
Happiness doesn't seem to be something that can be obtained. It exists and is within your grasp at all times. You just need to let go and allow it in
1. Start your day with thoughts of gratitude
2. Smile
3. Hang out with people who bring happiness
4. Make other people happy - it will probably make you pretty happy too
5. Try to figure out how you can get something good out of your crummy work/relationship situation until you have the means to move on. My dad wrote an entire book at work!! Shh...don't tell anybody!
6. Say it out loud - I choose to be happy

I can wake up everyday and focus on what it is that I don't have yet, where I should be in life, how awful I feel, horrible I look, how dirty the house is, tired I am......the list goes on - negatives seem to be so easy to find. Or I can wake up and make a concerted effort to be thankful for what I have accomplished, where I am and the people who surround me. 

Next Steps
As I congratulated myself on my AHA! moment, I Googled 'Choose To Be Happy' and figured out I'm actually late to the game when it comes to this concept. So check out these additional resources to help you decide whether you agree with this philosophy.. 

Some Happiness Resources
How We Choose to Be Happy: The 9 Choices of Extremely Happy People--Their Secrets, Their Stories
WebMD: 7 Steps to Becoming a Happier Person
The Happiness Project: Or, Why I Spent a Year Trying to Sing in the Morning, Clean My Closets, Fight Right, Read Aristotle, and Generally Have More Fun

Do you consciously choose happiness? What do you do to promote happy thoughts and feelings in your life?

Stay tuned,

Monday, October 10, 2011

September Budget Review

After you create your budget, do you take the time to go back and review to see where you actually ended up compared to where you wanted to be? It's a good idea to do this on a regular (monthly) basis so that 1) you can see whether you are sticking with your budgeted goals, and 2) determine if any of your budget line items need to be altered. Let's take a look at our September 16-30 budget to give you a bit of practice.

Recurring Budget Items
First up are the recurring expenses - these are expenses we pay every month and can reasonably estimate what the cost will be (rent, utilities, food, gas). As you can see, we overspent in the food category by quite a bit but were way under for gas (yay working from home!). Overall we were about $55 under budget on recurring expense items. If you find yourself way over or way under on an expense item that should have little to no variance in cost every month, think about changing your budget to better reflect these recurring items It may free up some money that you could put towards another budget item.

Non-Recurring Budget Items
 Non-recurring expense items are a little more difficult to deal with. They may include unexpected expenses such as a car repair, one-time expenses such as your dog's birthday present (guilty), or any "splurge" items you buy during the month that shouldn't be included as a recurring item (Groupons). As you can see we had quite a few non-recurring items in September. Both car registrations were due and we decided to splurge on a Groupon for a bartending class for Mike (potential career move???). We also transferred my post-tax bonus amount to our savings account. Finally, we had some personal expenses (haircut) and some medically related expenses (that parking money is because Mike has to pay to park when he goes to physical therapy- which just seems lame to me).

How Did We Do?
Overall, we were right in line with our recurring expense budge, but one area we need to try to keep more in check is the food line item. This period we did go out to eat a few times when we felt busy and hadn't properly prepared for food during the work week. To reduce our expense, we really need to plan our meals for the week and create a Sunday shopping list for these meals. We have found that when we go to the grocery store multiple times during the week we end up not shopping with a list, buying "extras" and spending more.

As far as the one-off non-recurring items, we need to better determine if the purchase is truly necessary - wants vs. needs. We definitely had a few items we could have done without or tried to spend less on. Duke's $25 toy wasn't too necessary even though he did turn 10 this year which is a huge milestone!!!

Overall Budget Grade - B

Upcoming Challenges: We are swimming in medical expenses right now with one of use recovering from surgery and the other trying to find alternatives to surgery but most likely preparing for it in the near future. This is one of the reasons we have started an emergency fund because we are aware that medical expenses could be a large part of our budget over the next 3-6 months.

Successes: Despite some unexpected and pricey vet bills in early September and some one-off expenses that couldn't be avoided, we are happy to report that we are paying cash for everything. We don't really feel like we have very much money right now since it is being eaten up by these one-offs. But a few years ago many of these items would have gone right on the credit card. Progress!!

Stay tuned,




Do you do a monthly review of your budget and compare it to what you actually spent? Do you get any value out of an exercise like this? Do you use any more automated ways (like Mint) to do your analysis? Send your suggestions our way!!

Friday, October 7, 2011

Is it Time For Us to Buy a House?

When do you decide that it's time to buy instead of rent? This is a conversation Mike and I have been having recently. We currently pay $1,250 a month to rent our 2 bedroom, 1 bath townhome. We pay for water and electricity, and the yard is taken care of by the Homeowners Association (the HOA fee is paid by the landlord). Any major repairs are also paid for by our landlord. If we bought a house, we would potentially be paying more for utilities (assuming we buy a bigger place) and would be responsible for basically any home-related expenses including utilities, yardwork and home repairs.

Admittedly, there are so many different ways to determine whether it is a good time to buy. I am taking a relatively simple approach at this early stage in the game and just trying to determine how much house we could purchase and still maintain a similar monthly expense budget. So below I look at what amount of loan we could afford that would be equal to our current rent payment of $1,250. Based on the mortgage calculator below (you can upload this Excel spreadsheet to your computer if you like and mess around with it), Mike and I could take on a $231,000 home loan assuming a 3% interest rate, 30 year loan term and taxes estimated at approximately 1% of the total value of the home. If we can put 20% down when we buy, we can afford a purchase price of about $289,000 and still pay $1,250 a month in mortgage and taxes.



Front-End Ratio is Hooey (IMHO)
Do you know the rule of thumb that you should apparently use to figure out how much house you can afford? As a general rule, your monthly housing expenses - including mortgage principal, interest, real estate taxes and homeowner's insurance - should not exceed 28% of your gross monthly income. If I followed this rule, then my total monthly housing expense would be more than 50% of my take home pay!! This doesn't seem anywhere near reasonable to me. How did I get to 50% of my take home? Taxes, health insurance and 401(k) deductions take a big chunk out of my paycheck each period. It seems more reasonable to base the calculation on monthly take home pay as opposed to gross monthly income. Otherwise, there is the potential to become house poor real quick.

So if we can find a house we like in that price range, then it might be reasonable to consider buying given that our monthly mortgage payment would equal what we currently pay in rent. Rather than that amount going towards someone else's investment, why not pay it to ourselves?

So should we consider buying? Mike and I are considering it if we can buy a home and keep our expenses close to where they are currently. But we will not be using the front end ratio rule to determine what we can afford.

Stay tuned,

Tuesday, October 4, 2011

Finance Lessons Learned - FINCON11

I was lucky to be able to spend three days with some of the most influential personal finance bloggers at the Financial Blogger Conference this past weekend. I brought home a notebook completely filled with notes from presentations and inspirational quotes from the big hitters to help me improve my blog content, design and reach. My action list is now a mile long after the great ideas that came from both impromptu conversations and formal presentations. Even though these bloggers didn't specifically discuss strategies for improving personal finances, I thought I would share a few snippets of wisdom with you that can provide essential advice for those of us trying to get our financial act together.

"What does your dream look like? How do you get there?" 
~ Kelly Whalen, The Centsible Life
If you are reading this, you most likely know that you want to pay off debt and get your finances in order, but do you know what it is you are working towards?

Friday, September 30, 2011

Financial Blogger Conference - Here I Come!

As The $60K Project jets off to Chicago for the Financial Blogger Conference - better known as #FINCON11 in the Twitterverse - I find myself super excited and also super nervous at the same time. Super excited to meet the faces behind many of the tweets/words/comments I receive on my blog. Super nervous because I'm human and can't imagine not being nervous about meeting a bunch of new people, trying to keep names straight, speed networking and trying to think of interesting things to say. I won't even get into my minor freak out about what to wear (yep, I'm shoe shopping tomorrow morning before my flight). Let me just say I had to take my winter clothes down from the attic because 50 degree weather is considered winter in San Diego. Oh, what a tough life I lead!

Despite the pre-game jitters, I feel like this will be a great opportunity to learn some great skills to apply to my blog. Here is some knowledge I would like to come away with this weekend:

Wednesday, September 28, 2011

Financial Update - September 2011


I haven't been so good about financial updates since we switched our focus from paying off debt to building up savings. I decided that once a month I want to update you on our current financial goals and also provide a snapshot of our net worth. I'm hoping that this additional analysis will help us figure out where our financial focus needs to be.

The Goal Tracker (the thing with all the colorful bars over on the side) keeps track of the goals we have accomplished and the goals we are currently working on. As you can see, the $60,000 in debt we paid off shows up as the maroon bars. Our remaining debt, fondly nicknamed Albatross, is the bright yellow bar, and the green bars depict our current savings goals which are:

Create $15,000 Emergency Fund. Since we just started saving about a month ago, it feels good to be

Monday, September 26, 2011

Side Hustle: How to Make Money Pet Sitting

Vlado / FreeDigitalPhotos.net
In need of some extra cash? Love animals? Why don't you consider becoming a pet sitter? More specifically, a pet sitter who house-sits at the same time. As a dog owner, making sure Duke is well taken care of while I am out of town is a high priority. At one point, I had a dog sitter who would come over three times a day to walk him and feed him, but I stopped using her when Duke ended up with a $1,500 ear surgery after we got home. A second dog sitter I know is pretty good but she is so busy that I can't even consider her unless I know months in advance when I'll be gone. Plus although she is great, she also only visits three times a day and leaves Duke home alone at night. Our top choice in dog sitters is actually the front desk woman at my company who dog sits on the side to pay for her vacations. Joanne is awesome - she stays at our house while we're away and is one of those people who truly loves animals. Plus she only charges $25 a day which is ridiculously low for the level of service she provides (compare that to $60 a day for the two previous sitters mentioned who only visit three times a day). But she is also reaching the too busy point - last time I saw her she told me she hadn't slept at home in 6 weeks.

The ideal and least stressful situation for a pet and its owner (in my opinion) is to have someone stay at your house with your furry friend. That likely means a pet sitter is super flexible and has no family relying on them to take care of them every day. A pet sitter also needs to establish a level of trust with a person to be let into their home. How do you get to this level?

Thursday, September 22, 2011

Weekly Roundup Cocktail Party Edition

I usually like to do reading round ups on Friday so you readers will have some nice material to read and talk about at your fabulous cocktail and dinner parties over the weekend. Since I am sitting here wishing it was Friday, I decided to give you some excellent reading material a day early. Skim through the categories that interest you, impress your friends with your wit and wisdom while delicately balancing an extra dirty martini. And most important - enjoy your weekend!!

Thursday, September 15, 2011

Tying Up Some Link Love & Loose Ends

First - an important clarification.  

We are not debt free.

Although we just kicked $60,000 of debt to the curb, we still owe $50,000 towards our last student loan. Mike and I decided to start focusing on saving rather than paying off this last debt for multiple reasons. Initially I did not include our last student loan in our debt payoff tracker - mainly because it would then become the $110K Project which just doesn't roll off the tongue as easy as $60K Project. Plus paing off $110,000 in debt would be pretty much impossible for us to do in a year.

I want to make sure I'm not misrepresenting myself to my readers so I have decided to add the $50,000 to the Financial Goal Tracker. Although it will depressingly sit there with a gigantic balance to be paid, I want to make sure there is full disclosure for everyone that visits my site. So check out that bright yellow bar on the left side of the screen - that's our albatross.


Switching Gears
I am lucky to have some really great blogs that have mentioned my site and sent readers my way. Today I want to say thanks to a few of those sites. I hope to pay it forward and make this a regular thing. Grab a glass of wine and your iPad and enjoy some great reads.

According to my good buddy, Google Analytics......

Top 5 All Time Referring Sites
1. So Over Debt
2. Blonde And Balanced
3. No More Spending
4. Young And Thrifty
5. Minting Nickels

Top 5 August Referring Sites
1. So Over Debt
2. Young and Thrifty
3. Minting Nickels
4. Prairie Eco Thrifter
5. Blonde and Balanced

Special thanks to Canadian Dream Free At 45 for including me in the Carnival of Personal Finance #326 - I am honored to be included among a lot of great writers. This carnival is like a "Who's Who" of personal finance blogs so make sure you add this to your reading to-do list.

Stay tuned,

Wednesday, September 14, 2011

Coupons & Credit Cards: More Similar Than You Think (Guest Post)


In the day 298 post, Sarah made a comparison between cable services and credit card promotions – they are both a hook, line, and sinker. I completely agree and we should all view them as such before we bite the bait. They only make sense if used 100% responsibly. For the cable “deal” that means it should be the exact same package you were going to buy anyway. For the credit card “deal” it’s only worth considering if you always pay your bill in full every single month and the card won’t cause you to overspend.

But what about coupons? Are they just as problematic as credit cards?

My background with credit cards                 

First off, let me explain my background with credit cards so you can know where I’m coming from. When I was 18 years old, I was in a very bad accident that left me with mountains of medical bills. What insurance didn’t pay ended up going on credit cards. This burden of debt became such a large part of my life, I created a forum/blog  dedicated to credit cards, as a place for myself and others to discuss the good and bad that come with using them.
But even throughout my own debt ordeal, I never once blamed the banks for my debt. Why? Because it was my decision and responsibility. It was my decision to use the credit cards for that purpose. Don’t get me wrong, there are many shady tricks banks pull off which they definitely are at fault for, but when it comes to the concept of spending more than one can pay at the end of the month, I think we have no one to blame but ourselves.

Why I think there’s a double standard

Credit cards can be used for good or bad. Someone can use them to earn cash back, gas rebates, or airline miles, and pay their bill in full every month. Or someone can use them to spend beyond their means, raking up a balance and incurring interest. I think our culture generally does a good job highlighting the pros and cons that come with credit cards.
Coupons can be used for good or bad, too. But unfortunately, you rarely hear about the latter. For some reason, our society seems to portray them as the greatest thing since sliced bread. But is that an accurate representation? Could the argument be made that coupons (and promotions in general) are also very damaging to our finances, when used the wrong way?
How many times have you (or someone you know) bought something just because a coupon was involved? I’m definitely guilty of doing that sometimes! Just a few days ago actually, I ended up spending $15 at CVS so I could use a $3 off coupon. Without the coupon, I probably would have spent $5 or $6 because I only went there for some darn dental flossers. I tried to use the excess spending to stock up on various supplies, but that was still wasteful. Why? Because even though the items were on sale, they still were more expensive than Target or Walmart. Conclusion? I wasted money.
Coupons + credit cards = double the trouble?
Even though credit card rewards are trivial in the grand scheme of things, we all know some people use them as an excuse to spend more. So what happens when you also add coupons into the mix? Last week I was having lunch with a friend, and his friend, who I’ll call Nicole. She said “I need to go to JCPenney after this, you want to come?” I said no thanks and asked why she was going. Her response was something like this “Well I have a coupon for $15 off a $75 purchase and my JCPenney charge card is giving double points right now.” Now if you think that’s bad, the scariest part is what she said next: “There is absolutely nothing I need or want right now, but I don’t want to lose out on this deal so I will find something.”

Conclusion?

Just like credit cards can be an excuse to overspend, the same can be said about coupons. From the grocery store to Groupon, it’s such a prevalent problem. The most dangerous part is that unlike credit cards, very few people view coupons as dangerous… but they really should be!

Mike started Credit Card Forum in 2008 during the peak of his debt, which has since been paid off completely! Speaking of store-affiliated cards, his most recent post was about why the Walmart credit card is a rotten deal.
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