This economic downturn hasn’t been kind to a lot of people.  Jobs that haven’t been taken away from people have had their hours cut, their workload increased, or their cost of living allowances taken away.  Jobs that people used to be able to count on are on very fragile ground.

If this US Debt Clock is accurate, we’re getting a new person on the unemployment roster every 17 seconds now.

What can you count on in this economy?  I think the only thing that you can absolutely count on in this economy is that you can’t count on anything in this economy. Retirements have been upended by plummeting 401(k)s and IRAs.  Nest eggs have been cracked by crashing home values.  Many people, all of a sudden, won’t be able to retire.

It’s foolish to take anything for granted.  There’s far less within our control than we probably realize, and proposed solutions that aim to make things better will almost certainly just make them worse.

When you think about “preparing for the future,” think instead of “hedging against the future.”  How?

• Cushions, cushions. Bolster that emergency fund to buy time in the face of job loss.  Bolster your food supply in case price controls cause shortages.  (Price controls are another solution that will backfire.  Think gas station lines in the 1970s.)
• Diversify your investments. If you’re heavy in anything (or only have a couple of asset classes) look around some more.  And don’t forget to invest in yourself.
• Diversify your income streams. Only have one income stream?  Start working on another!  And then another.  Your one income stream can go bye-bye at any time.
• Retire into something rather than just retire. It would be great if one of your new income streams involves something you really enjoy, and can do well into the traditional retirement age.
• Take care of your health. I’ve recommitted to this. The less you need health care, the better, because it will be more expensive, and you’ll wait longer to get it.
• Pray.

Hot hot hot money questions at Cash Commons

On last week’s post on whether you should be able to put your tithe on a credit card, I received a well thought-out response from commenter Brian.  I’ll reprint it here, and discuss it.

I work with more than 800 mainline protestant churches in Ohio. I say the credit card issue reflects larger issues in the church: The world is not the same that it was in the 50’s. Churches that do not recognize this will die.

This is seen in changes in music styles, less formal relationships with clergy, more short-term committee assignments and the way organizations of church women operate.

If we are to be relevant in our world and reach out to people, we have to be willing to do so on their terms and this includes finances. By allowing our “customers” to pay their pledges the same way they pay many other expenses, we are saying to them that we recognize we’re not in the 50’s anymore.

What is the good of churches allowing nontraditional giving methods?

1. Fewer people carry cash or check books with them at all times.
2. Regular on-line transfers help even out giving over the year. We know that if you don’t plop it in the pew you won’t put it in the plate, so giving traditionally dips in the summer time, during bad weather and on holiday weekends.
3. Electronic transfer allows greater privacy in giving. If I write a check and put it in the plate, volunteer counters and others may see what I give. But a concise electronic statement would only be seen by the Financial Secretary who would actually record my pledge.
4. Cash and checks have to be handled. They have to be counted, counted again, prepared for deposit and driven to the bank. In an era where volunteer time is harder to come by, let’s let our volunteers focus on doing the work of the kingdom and not tie them up counting money.
5. Cash is also a safety liability. Although this is quite rare, a pile of cash can be misappropriated, and with no cash register receipt to balance against, such a theft would go unnoticed.

I believe there are many positives to churches accepting credit cards, electronic funds transfers and other “modern” ways of conducting business.

Like I said, very well-thought-out comments.  Thank you!

My original post discussed the downside of tithing with a credit card, focusing mainly on the possibility of leading congregants into financial temptation and retarding spiritual growth, while not really discussing directly the advantages that such transactions can bring to churches.  Brian lists out some of these advantages, and I agree that many congregants would appreciate the fact that giving in this way was an option.

Like anything a church does to make itself more relevant, it should do so while holding true to biblical principles. And if I would be in a church that was considering this change, and if the leadership of the church made the decision to accept credit cards after faithful prayer and with the guidance of the Holy Spirit, I really wouldn’t argue.  For example, if the church made training available from Financial Peace University, Crown Ministries, or some other Christian financial ministry, then that would give the opportunity to soften congregants’ hearts in order to examine their giving in the context of this new technology.

If a church doesn’t seek guidance from the Holy Spirit with regard to this, and does it for, perhaps, worldly reasons (”We need more regular giving” or “We need to encourage more giving”) then that’s where problems are more likely to crop up.  That was the context of my original post.

I do disagree on one point within item #4.  I have helped with counting the offering for quite some time, and this is the work of the kingdom just as much as taking a missions trip to Africa.  I’ve learned a lot doing this, and I have no doubt that performing this task has helped me to grow spiritually.  Besides, even if credit cards come to the offering plate, checks and cash won’t go away, and counting up the offering will still need to be done.  From my experience, counting up 50 checks doesn’t take that much more time than counting up 15 checks, because of all the other set-up and tear-down work that’s needed.

Anyway, any more thoughts on this? I’ll be happy to write about it again next week.

Hot hot hot money questions at Cash Commons

Getting a bolstered emergency fund is a great idea now.  (It usually is, but now especially.)  One way to get to a decent cushion is to spend less so that the extra can go into savings.

Many kinds of expenses can be cut, but the easiest ones to eliminate are ones that you probably won’t miss anyway.  Expenses like the following:

• Seasonal expenses. Are you paying year-round for an activity that you only do in the summer (or winter)?
• Hobby-related expenses for a hobby you’ve lost interest in. Maybe you were gung-ho about scrapbooking, and the stamp of the month delivery just goes in a drawer now because other things have become more important.
• Job-related expenses that aren’t necessary anymore. Say your last job required membership in certain professional societies, or more likely, required a certain kind of dress or appearance.  Or perhaps you’ve moved from up-front sales to more of an office job, and the wardrobe that was necessary for dealing with customers all the time isn’t needed anymore.
• Any luxury that doesn’t deliver like it used to. It could be a monthly massage, a monthly trip to The Melting Pot, premium movie channels, etc.

The Frugal Lawyer saved money on some little things that she admitted weren’t that important, like eyebrow threading, open-toed shoes, and magazine subscriptions.  She observes:

These aren’t huge savings, but the little amounts will add up over time.  Particularly if I am putting the extra money into savings or toward paying off debt.  I’m still looking at my regular spending to find other things that I can trim from the budget.

Little things do add up. What irrelevant expenses can you cut out of your spending?

Update: Thanks to Amateur Asset Allocator for including this post in the Money Hacks Carnival!

Hot hot hot money questions at Cash Commons

Managing a checking account isn’t rocket science but it’s not basket weaving either.  (No offense meant to basket-weavers.  I tried to weave a basket in eighth grade art class and it ended up looking more like a Frisbee.)

But managing a checking account boils down to one key skill:

You have to know that the money is available before you make a payment or a withdrawal.

This can be illustrated in a number of ways:

• A deposit isn’t in your account until the bank says it is. Bank and credit union policies differ.  Some banks or credit unions will trust you until they can’t:  If you go to an ATM or a teller and deposit a $200 check, they may give you use of the money immediately.  Others may place a hold on the funds until the check clears.  The bottom line is that it’s up to you to know when you can use those funds, either by verifying your balance at the bank, or through a call-in service, or online.
• A withdrawal or a payment has left your account when the bank says it has. Checks clear a lot faster than they used to, and automated clearing house (ACH) withdrawals can happen very quickly.  It’s therefore wise to assume that there is no lag between when you make the payment and when it’s debited to your account.  For recurring debits like a mortgage payment, it’s best to earmark those as “debited” at least a few days in advance of the expected payment date.
• Relying on a linked savings account as a buffer will cost you. If you have a linked savings account, your bank will probably offer as a service the ability to dip in automatically to funds there if your checking account goes negative.  This saves bounced check fees and non-sufficient funds (NSF) fees, but banks charge for each transfer from savings.  This is the “slap on the wrist” charge.
• Relying on more extensive overdraft services will cost you more. This is essentially a loan from the bank that carries a per-transaction fee.  If your account goes negative, and you don’t have sufficient funds in a linked savings account to cover the charge and the fees, then if you’re opted in to this overdraft service, the bank will intervene, make the payment anyway, and charge you a larger fee for covering your six on that transaction.  This goes beyond slap on the wrist to spanking.
• There’s always the big guns:  non-sufficient funds fees and bounced-check fees. The savings-transfer fees and overdraft service fees mentioned above are less costly than NSF fees.  These are not only assessed by the bank, but by the merchant that you didn’t pay.  All because you didn’t know that the funds were unavailable when you wrote the check.
• Your “balance” may not be your actual balance. Some banks may include the amount of your overdraft service protection when you ask for your balance.  So, if you have $100 of protection through an overdraft service, and your actual funds are $500, then the balance might report as $600.  It’s still up to you to know that you really have only $500.
• Know what happens when you pay with a debit card at a gas pump. I don’t pay with debit at a gas pump, but I do know that stations put a hold on some amount above and beyond what you’ll actually pump, just to be sure that they’re paid.  Be sure you understand how this affects your balance, and for how long.
• Know the other rules of your account. Do you have a minimum balance?  A maximum number of transactions per month?  Teller fees?  Paper statement fees?  All of these and more can affect your balance.  Be sure you understand them.
• Do not expect the bank to hunt you down the second you go into the negative. It may take a few days for the notice to get to you.  This happened to me a few years ago.  My checking account got low, and the savings transfer kicked in on one transaction, along with a $5 fee.  By the time I got notice of the first fee (sent through the mail, not even at first class rates), I had already made three more transactions, at $5 apiece.  Of course, if I had kept more careful track of things, I wouldn’t have done it in the first place.  Nonetheless, it was $20 later before the bank brought it to my attention.

These are specifics, but if you always know your actual available funds before you make each and every payment, things will go fine.

Update: A special thank-you to Money Crasher for featuring this post as an Editor’s Pick in the Carnival of Personal Finance!

Hot hot hot money questions at Cash Commons

And the fifth person is really thinking hard about it.  He’ll come around eventually.

No, seriously: Who doesn’t want to save money on their car insurance? I don’t know of any good reason why you wouldn’t, so here are some tips for knocking that expense down as much as possible.  Hopefully at least a couple of them are new to you:

• Buy a car that doesn’t cost that much to insure. If you’re in the market for another car, considering the total cost of ownership of the car is a wise thing to do.  Buying used is a good start.  But is the car likely to be driven fast?  Is it likely to be stolen?  Or is it likely to be driven carefully?  This will factor into the insurance cost.  Take it into account as you’re looking.
• As with anything else, shop around for insurance. Some companies give you more insurance (or better policies) for your money.  Look around.
• Don’t be stupid with your driving. Tickets and accidents classify you as more of an insurance risk.  The insurance company may forgive you once, or even twice, but after that, it will cost you for a few years if they have to pay out on your behalf, and it’s your fault.
• Look into car options that reduce insurance costs. This is part of the tip I just mentioned, but things like automatic seatbelts, passenger-side airbags, etc. — things that tend to make vehicles safer — make them less costly to insure.
• Kick the deductible higher. A higher deductible means that the insurance company has less at risk should you file a claim.  They pay whatever they pay, and deduct the deductible.  A higher deductible means a lower payment.  So if you’re a careful driver and can self-insure some part of an accident, this is a good strategy.
• Drop collision on low-value cars. If your car’s value is $1,000, the company pays 75% of that in a total, and you have a $500 deductible, you get a whopping … $250 for your car.  Is it worth paying collision for that?  Probably not.  Now, if your car is worth $15,000, it’s probably worth it to have collision.
• Watch for glass claims. A friend was surprised when the cracked windshield glass claims counted against larger big-ticket claims he wanted to make later.  This is something to consider before taking this extra coverage.
• Ask about other discounts. Good grades?  Multiple policies?  Other types of policies with the same company?  Defensive driving?  Be shameless in getting everything that’s offered to you.
• Pay by automatic electronic funds transfer. Our car insurance company offers a small discount ($20 over six months) just for agreeing to have the payments transferred directly out of our checking account.  They can do this because it saves processing costs.  If I pay by credit card, the insurance company has to pay merchant fees; with EFT, the bank pays the fees.
• Pay all at once. The really big discount, though, comes for us if we pay for six months at a time.  The discount is the equivalent of a full month of insurance.  If you have the cash, this can be a big money-saver right there.
• Pay for small accidents out of pocket? I looked around for the answer to this one, and it’s unlikely that this is proper, so I wouldn’t try it.  I was a little miffed that we had to pay something like $1,500 in increased premiums because of an almost imperceptible “tap” that we made to a parked car.  I thought at the time it might be a win-win if we could pay for their repairs directly, plus a bit for their “trouble,” but it’s likely that it’s either against our policy, against the law, or both.
• Skimp on liability insurance? Though there are minimum levels of liability insurance that need to be purchased in many states, skimping on liability insurance isn’t a good idea. The example that Brian T. Jones uses in his book Getting Started: The Financial Guide for a Younger Generation (read my review here) is hitting a school bus.  Even if you have $500,000 in liability coverage, and the jury awards $1,000,000 to the families of the kids you hit, you’re on the hook for the other $500,000.  Kiss your financial life goodbye.  Not a good idea to skimp on liability.

(Thanks to Taking Charge for including this post in the Carnival of Personal Finance!)

Hot hot hot money questions at Cash Commons

Get rid of cars that aren’t working anymore.

Last week we got rid of a van that we found out would cost almost as much to fix as we had paid for it.  (No, not this one.)  The vehicle had sat for long enough that it didn’t start anymore.  We had someone tow it away for a song ($80).

In any case, I’m just glad not to have to look at it in my driveway anymore.

We did a good chunk of what is considered good due diligence when we bought this used van:

• Checking what the market price of the vehicle is
• Checking for big warning signs on the vehicle (leaks, bad internal odor, etc.)
• Taking it for a decent test drive
• Asking about the vehicle’s history
• Verifying title

What we didn’t do was take the vehicle to a mechanic to have it checked out.  A lot of places recommend this, but I wonder what people would say if I actually took them up on it.  It seems a little odd to ask, “Hey, can I take your vehicle to a mechanic?  I promise to bring it back.  Really, I do!”  In retrospect I suppose it’s probably no different than taking it for a test drive.  It just takes a bit longer.

It turned out that we only drove this van for a few months before it had some serious issues.  We had bought this van because the other van (yes, this one) seemed to be falling apart, too, but thankfully that one was a relatively inexpensive fix, and it works fine now.

In any case, we logged on to our auto insurance company’s website and cancelled the coverage for our clunker.  We’ll be getting a couple hundred dollars back in a couple of weeks.

Now we’re down to two cars for the first time in quite a while.  I question whether the extra car we had was worth it.  I don’t think it really was.  The couple of times we made use of the extra car really didn’t justify the extra cost, and we ended up with more headaches with the extra vehicle.

But the good news is that I’m paying a lot less for my auto insurance!

Hot hot hot money questions at Cash Commons

I’ve hosted a number of blog carnivals over the years, and I really like the way FMF has set up the Best of Money Carnival.  It’s been very enjoyable, and easy, to host this one.  The Best of Money Carnival, as the name implies, highlights the best personal finance posts from the past two weeks in a top-ten-countdown fashion.  This week, vis-a-vis KC & the Sunshine Band, I’ll introduce the posts, and tell you why I liked them.

Number 10: Confessions of an online poker player, posted by an anonymous professional poker player over at Budgets are Sexy.

Why I liked it: I had read this post before I knew it was submitted to the carnival, and it was fascinating reading.  First, it’s a business that has to be learned.  Second, it’s work, just like any other profession.  Third, knowledge is power, just like everything else.  “Poker is the hardest way to make an easy living,” J. Money of Budgets are Sexy wrote in his submission.  Anyway, a neat read.

Number 9: Carnival of Debt Reduction:  The Federal Debt and Deficit Problem Issue, posted over at Ask Mr. Credit Card.

Why I liked it: Seriously, it’s not for self-serving reasons – yes, I do manage the Carnival of Debt Reduction! – but beyond that it’s an involved post even without all of the debt reduction links.  Lots of data for your perusal.  (No, Mr. Credit Card, you weren’t hallucinating.  It was a good post!)

Number 8:  Can you benefit from energy efficient rebates? posted at Frugally Green.

Why I liked it: It’s a nice outline of which energy-efficient upgrades are eligible for the rebate.  Though when somebody gives me something like a tax break I have to ask why, there’s little reason not to take it if it doesn’t make sense all around.  The last paragraph of the post gets back to the real message though:  “Even without the incentives being offered to us, we should carefully consider the cost savings and benefits that we can realize by purchasing more efficient products.”

Number 7:  The Labors of Labor by Wench Wisdom.

Why I liked it: This post comes after the recent minimum wage increase in the United States, and calls people to action to improve their own lot rather than fight for higher minimum wages:  “The answer to these maladies doesn’t lie in unionization, but rather a trip to the mirror—the fate of your continued employment and rate of pay depends on you …”

Number 6: How much money do you need to retire? by Redeeming Riches.

Why I liked it: The conversation at the beginning of the post is good.  It reinforces the rest of the post.  The main point:  “The short answer to the question, ‘How much money do I need to retire?’ is ‘It depends’.  Because every person and situation is different there are just no hard and fast rules to help determine what’s appropriate.”

Number 5: Searching for an inexpensive new couch by Two Pennies Earned.

Why I liked it: Straightforward, complete illustration of all the nooks and crannies they looked for their new couch, plain and simple.  Lots of lessons learned!

Number 4: Have You Ever Had A DEBT FREE Christmas, And Will You Accept My Challenge? posted over at Enemy of Debt.

Why I liked it: Perfect timing on this post!  Who knows how early retailers will start thinking about Christmas this year?  This post beats the “Holiday Merchandising Season” to the punch.  I also like the call to action distilled to a fill-in-the-blank checklist.

Number 3: Make money writing for Hubpages, posted by Christian Personal Finance.

Why I liked it: ChristianPF followed through on something I dabbled in a couple of years ago.  Anyway, the tradeoff between writing, and maintaining, your own content and posting content to a ready-made audience is interesting.  Seeing how the latter works was a bit different than I expected.

Number 2: My jobs, I get my dream job, posted by Free Money Finance.

Why I liked it: I’ve been blogging almost as long as FMF and I know for a fact how hard the guy works.  He posts a lot and stays squarely on the pulse of personal finance.  The frequent links to the mainstream articles are great, but his real gems have been his original posts.  This is one of them.

Number 1: Faith-Based or Socially Responsible Investing – Delusions of Righteousness, posted by Provident Planning.

Why I liked this one the best: Socially-responsible investing is not immune to marketing.  What makes marketing this kind of investment very touchy is that it needs to address people’s faith.  This post takes a very clear stand on which common claims are reasonable and which aren’t.  I’m not sure I agree with all of what he says, but I agree with some, and in any case Paul Williams sticks his neck out far enough to earn this week’s Best of the Best title.

Well, there you are!  Thanks to everyone who submitted posts this week.  I had lots of fun with this Carnival!  Enjoy the rest of your week.  If you enjoyed this post, I invite you to subscribe to my feed or follow me on Twitter.  Peace!

(Photos:  *Vintage Fairytale* and faeryboots)

Hot hot hot money questions at Cash Commons

10. The Semi-Automatic Millionaire: A Powerful Shotgun Approach to Living and Finishing Off Your Rich Friends
9.  The 9 Steps to Financial Bondage: Practical Steps So You Can Worry Forever
8.  Poor Dad, Poorer Dad: What the Rich Teach Their Kids About Money — You Won’t Find Here
7.  The 168-Hour Workweek: Work 24-7, Live in Your Cube, and Hate the Rich
6.  The Pauper Next Door: The Not-So-Surprising Secrets of America’s Joneses
5.  The Partial Money Makeover: A Kinda-Sorta Plan for Financial Fitness, Maybe
4.  You’re Broke Because Someone Else Did It: No, It’s OK, It’s Not Really Your Fault
3.  Beat Up On Wall Street: What You Should Have Already Known To Make Money In The Market
2.  The Complete Profligate Gazette: Promoting Spendthrift as a Viable Alternative Lifestyle
And the number 1 failed personal finance book title is …

1.  Stink And Grow Rich: They May Not Hear You Thinking, But They Sure Can Smell You Coming!

Hot hot hot money questions at Cash Commons

The writers of Wise Bread have put out an important resource for weathering the recession in style with their new book: 10,001 Ways to Live Large on a Small Budget.  There’s something for everybody: from someone just getting acquainted with the frugal lifestyle to someone who was born with a coupon in their mouth.

The book itself is printed on high-quality paper, and the text is easy to read.  The main content of the book covers two broad categories, frugality and personal finance, which are broken down further in the table of contents:

• Frugality
  • Food and Drink
  • Travel
  • Health & Beauty
  • Fun & Entertainment
  • Shopping & Bargain Hunting
  • Green Living
  • Education & Self-Improvement
• Personal Finance
  • Financial Planning & Budgeting
  • Credit Cards & Debt
  • Investing your Money
  • Housing & Home Improvement
  • Career & Money-Making Ideas

I found that skimming through the book was easy.  In many cases, the subheadings were a good summary of the tip itself, so I could see quickly whether I needed to read the rest of that tip.  (I passed on the beauty tips.  Asking the book to work miracles would be unfair.)

Some of the tips I had heard before — I’d better heard of at least a few frugality tips after blogging for four years! — but others were new to me.  I didn’t know that vinegar was a good thing to add to drinking water.  Or cucumbers.  I didn’t know that I could polish my wedding band in beer.  And I never would have thought to hang a ping-pong ball from a string in my garage so that I would know when to stop moving.  (Not that I can actually move in my garage at the moment, but if I ever can, I’ll know what to do!)

I know that there will be at least a few that you haven’t heard of, too.  The few tips you haven’t heard of will make 10,001 Ways to Live Large on a Small Budget pay for itself easily.  Then you get the rest for free!

Hats off to the folks at Wise Bread for putting together this great reference.

Hot hot hot money questions at Cash Commons

Caught this article from a carnival on Earn What You Spend:

The End of Personal Finance: Decades of advice turn out to be so much garbage

As Ring Lardner said, “Them’s fighting words.”

Personal finance is far from throwing in the towel, and if anything, will be more important in the coming years.

Author Helaine Owen happily assumes the role of Monday-morning quarterback to call into question the advice of MSM gurus such as Suze Orman, Jim Cramer, and Jean Chatzky after seeing it fall apart before everyone’s eyes in the past months.  It’s not especially difficult to see that stocks were not the place to be recently.  Owen finds it distasteful that the Giant Personal Finance Advice Machine promotes individual empowerment for tackling finances, with the (reasonable) flip-side that if you don’t tackle them, and instead get into trouble, that it’s your fault.  Clearly seeing that the advice being fed to us is of little profit to us, she admits that personal finance is not likely “to crawl away and die anytime soon for a simple reason: We think we need it.”  She then gives a hat tip to those calling for change at a federal level.

Personal finance is personal. Suze Orman gives advice — some of it reasonable, some of it otherwise — but the way she takes care of her finances is different than the way she recommends we take care of ours (whoever “we” are).  As she should: Suze Orman’s finances are hers, and hers alone, just like our finances are ours, and ours alone.  Suze Orman has become very successful helping people to wake up to their problems and dig themselves out of them, and I’m not taking away any credit she should get for helping those people.  But she cannot possibly know, or care, about those people’s finances as much as is necessary.  It is our job to take care of our finances.  It can’t be anyone else’s job.

The real problem that’s coming up has nothing to do with whether Jim Cramer or Suze Orman or Jean Chatzky or Liz Weston or even Larry Winget are right.  The real problem is the notion that it can’t be we that are responsible.  That’s wrong.  We are responsible for processing the advice we receive, getting enough of it, and, above all, thinking for ourselves.  Don’t just write down the stocks that Jim Cramer yells out in between sound effects.  Don’t just dollar-cost-average because it’s what your financial planner recommends.  And don’t even do what they do: If Suze Orman has municipal bonds, I hope they’re not CA state munis.  Think about your own finances, because no one else really will.  They’re thinking about their own finances.

We do what we can, and we live with what happens.  We don’t sue, we don’t blame, we don’t open our hands for a bailout.  Personal finance is here to stay, but we need to take it personally.

Hot hot hot money questions at Cash Commons