Debit versus Credit

Saving Money at Lunch Time

Today we’re featuring a guest post from the good folks at BeattheEconomy2009.com

Every parent wants to send their child off school with a good, healthy lunch. Mine did. However, many parents mistake a good lunch as one filled with attractively-packaged, sugary, expensive items. This should not be the case. Packing a brown bag lunch will be less expensive than having your child buy lunch. Also, on top of keeping money by making lunches this article explains, through personal experience, how to save even more money by watching what you put into those lunches.

My typical lunch growing up was a PB&J sandwich, a bag of chips, some variation of fruit (applesauce, fresh fruit, or yogurt), and two cookies. I had this lunch, with a few changes once in a while, every day at school… for twelve years. It’s not a huge lunch but I survived, my parents saved money, and you and your kids can too.

So, you’re probably asking, “Well then, what should I put into my child’s lunch?” The answer begins at the grocery store. Divide the lunch into four categories- a main item (sandwich or leftover pizza), a side (chips, crackers), a fruit/veggie or variation (apple, banana, applesauce), and a small dessert (cookies). This will ensure that the lunch has enough to fill its owner and give him or her the necessary nutrients to succeed in school. To start saving money you need to follow these easy steps:

1. Avoid expensive, unnecessary items (i.e. juice boxes, soda, fruit roll-ups, and other sugary packaged foods)

1. Drinks. Kids do not need juice boxes or sodas in their lunch. Every school and business place has some sort of a drinking fountain or water dispenser. Water is the best drink for you and best of all, it’s free! I never had in 12 years of school any kind of drink in my lunch. It saved my parents tons of money and forced me to be healthier.

2. Treats. Avoid those unnecessary treats like fruit roll-ups or ding dongs. These items are full of sugar, are not filling, can cause obesity, and are very expensive. Eliminate these from your shopping list. I still believe something sweet is a good way to end a meal so instead replace the expensive items with cheap store brand cookies. They come in large packs, are cheap, and taste very close to the brand name. This way, you can stick two little cookies in a baggie and still have a treat in your lunch (except this way it will be a lot cheaper). By the way, if you are worried about the store brand thing, it’s a cookie! It can’t taste that much worse than a brand name cookie.

Buy your items in bulk

1. Sandwiches. If you’re going to be buying sandwich items such as peanut butter or lunch meat, buy the biggest package possible for the best price. You’re going to be using it every day and that means it probably will not be going to waste. Buying a small jar of peanut butter every week or two will end up costing a whole lot more over the course of a year than if you bought a big jar that lasted a month or two.

2. Side Items. Buy the big boxes of chips or Costco-sized packages of individual applesauce. Smaller packages are going to cost much more than buying the big box or bag. It might cost a little more up front but will save lots of money in the end.

Be Smart.

1. Buy the cheapest bread. Your kids will not know a difference.

2. Shop Around. Invest some time viewing the ads that come in your local newspaper before going to the grocery store. Clip some coupons and be sure you are buying at the cheapest price. A box of chips might be on sale for three bucks at one store and regularly-priced at five at another. It might take a little more time but you’ll know it is worth it when you start to see the money you save.

3. Store brands. Stick to the store brands (unless it is in fact horrible, but in most cases, they won’t be).

4. Lay down the law. If your kids are with you in the store, tell them that if they ask for it, they won’t get it.

Once you have your groceries, it is time to pack the lunch.

1. Have the kids make their own lunch. They will appreciate the lunch much more once lunchtime rolls around. It will give them a sense of accomplishment and force them not to take you for granted. I’ve made my own lunch since the second grade so do not think your child can not.

2. Set limits. Set a limit for what each person can bring each day. If you decide to buy cookies, make sure to let everyone know that two is the maximum per day, etc.

Note: If your children are used to much bigger lunches full of sugary treats, they might be upset at first. Do not give in. Remember, you are saving money and helping to ensure your child does not become obese.

Follow the steps mentioned above and I guarantee you will save plenty of money. For more tips on how to save money visit BeatTheEconomy2009.com

January 30, 2009
Does A Large Down Payment Save Money In The Long Run?

I love spreadsheets.

I’ll be the first to admit that I’m a total spreadsheet nerd. My wife and I have been talking lately about buying a house sometime next year and that’s led me to do some number crunching in Excel, trying to figure out how much money we should put down on a house.

After some extensive crunching and comparing I’ve come across some interesting results, which to be perfectly honest with you I didn’t necessarily believe at first. Before I tell you what I learned though, I’d like to get your opinion on the matter.

[poll id=”6″]

Make sure you vote before continuing the rest of this post.

(more…)

January 29, 2009
Have You Had To Adjust To A Reduction In Salary?

The United States economy shed about 2 million jobs in 2008. Some people have been fortunate enough to keep their jobs but have had to accept salary cuts. The point is that millions of people have had serious reductions in salary. Are you one of these people?

[poll id=”4″]

While browsing through financial reporting sites such as CNN and Yahoo I’ve come across several articles which share readers experience with adjusting to much lower salaries. Naturally all of the readers were forced to cut back on expenses. While some were able to cut unnecessary expenses (such as cable) others were forced to downsize to such extremes as losing their home to foreclosure and moving into a rental property.

I’m extremely grateful that my wife and I have not had to do any downsizing, but I’m naturally concerned about the future. I’ve realized while reading all of these stories that topics that I preach on this personal finance blog such as establishing an emergency fund and avoiding debt, are more relevant now than they’ve ever been.

While those who have already had to make major lifestyle changes probably won’t have much of an opportunity to build an emergency fund or cut back on expenses there are still us lucky few who have our jobs and continue to earn our normal salaries. With that being said I want to emphasize the three lessons I learned while reading these articles and thinking about this blog post. They’re not earth shattering, and I’ve gone over this again and again… but they’re so important.

Live Within Your Means

Don’t Take On Too Much Debt

Establish an Emergency Fund (6 – 12 months of living expenses)

Please share your stories with us here at Debit versus Credit. If you’ve had to adjust due to a layoff or otherwise tell us what you’ve done to adjust. If you’re just starting an emergency fund so you can be prepared for the future share your story with us! We’d love to cheer you on!

January 28, 2009
The Rule of 72

I’m a huge fan of math tricks, especially when it makes solving complex issues just a little bit easier. There’s a great trick that can be used to easily figure out how long it will take compounding interest to double your investment: it’s called The Rule of 72.

This is an easy trick. You simply divide 72 by your interest rate to solve for the number of years that it will take your initial investment to double in value.

Let’s take a look at a few examples. At my credit union the savings account pays 1% interest, so 72 divided by 1 is 72 – it will take an investment of $1,000 (or any amount) 72 years to double at a rate of 1 percent. On the other hand the current rate on the Orange Savings Account at ING Direct is 2.4%. So 72 divided by 2.4 is 30 – or in other words it will take 30 years for my investment to double if I were to place it in the Orange Savings Account.

See how much of a difference a small percentage increase can make? Let’s really have some fun with this now. If you could manage a return of 10% annually you could double your initial investment in 7.2 years! Or if you could manage a return of 15% you would be able to double your investment in 4.8 years!

The Rule of 72 can also be used to calculate a interest rate you’ll need to double your money in a certain amount of years. For example let’s say you want to double your money in 3 years. So divide 72 by 3 and you’ll come up with 24, which means you’ll need to earn a return of 24% in order to double your money in 3 years.

January 27, 2009
Credit Repair For Sale: Just Say No

We will clean your credit up, no matter how bad it is. Bankruptcies, bad loans, judgments and liens – we can remove it all.

You’ve probably heard lines similar to this before. Maybe you heard it on the radio, maybe you saw a commercial on television, or maybe you saw an ad online or in the newspaper. Either way you were likely listening to half-truths or possibly even full-fledged lies. The truth is that these so-called credit repairing companies probably won’t repair your credit much (if any) and will likely charge hundreds to thousands of dollars for just about nothing.

Here’s the truth about credit repair. It’s not easy and it takes time and discipline. If you want your credit repaired then you should consider yourself the responsible party – after all, you were the one who messed it up in the first place, so why shouldn’t you be the one who has to work on fixing it? Let me tell you how.

Get Yourself A Copy of Your Credit Report

Go to annualcreditreport.com and get yourself a copy of your credit report from one of the three credit reporting agencies (or all of them if you want) for free. In the increasingly electronic age that we’re living in I’d recommend checking your credit report as often as possible so you can avoid disasters such as identity theft and incorrect reporting. If you stagger the reports you get from annualcreditreport.com then you can check your report every four months.

Make Sure You Know What’s On Your Credit Report

You didn’t think that you were done after getting a copy of your credit report did you? Now that you’ve gotten yourself a copy of your credit report it’s time to study it. What’s on it? Make sure that everything listed is something that you recognize. For example if there is a home loan on your credit report but you don’t own a home (and never have for that matter) then there’s something seriously wrong. So be sure to comb through your report and make sure nothing looks out of the ordinary.

Get Your Spending Under Control and Pay Down Your Debt

You will likely never improve your credit score unless you can manage to get your spending habits under control and start to pay down your debt – especially credit card debt. Once you start to pay down any high debt levels you might have you will start to see your credit score increase.

A two-fold parting question for you: how is your credit and have you had any experience with credit repair agencies? I’d love some feedback on the matter.

January 27, 2009
Fix Up Old Furniture and Save Your Funds

Today we’re featuring a guest post from moneybargainideas.com.

In a difficult economy, there are many creative ways to save money that don’t necessarily require searching for discounts or clipping coupons.

For example, do you have a beloved, but old chair that’s starting to look a little rough around the edges? Maybe a flea market find of a sofa that’s well built, but boasting a few holes? You can learn how to reupholster old furniture and save money.

Keep reading to learn how reupholstering can save you money, and a basic outline of how to tackle the do-it-yourself (DIY) reupholstering project.

How Does Reupholstering Old Furniture Save Me Money?

Whether you use a professional upholsterer or DIY person, you’re restoring an old piece of furniture and foregoing the expense of purchasing a whole new piece.

Not only is reupholstering great for restoring older furniture, it also represents a return to a more sustainable way of living. Instead of indulging in the consumerism mentality of constantly buying everything new, you can refurbish an older piece and work with what you already have – and enjoy the results!

Reupholstering older furniture allows you to repair broken frames, fix or replace strings, install new padding, choose your own customized fabric and even monitor the quality of craftsmanship that goes into the structure. With those kinds of options and features, you can’t afford not to reupholster old furniture.

What Are the Basics of Reupholstering Old Furniture?

If you’re just starting out reupholstering an old piece of furniture, here are some simple and basic steps to give you an overview of the project. You may want to consult a more thorough DIY book or video to help you through it.

First, you need to assemble your tools, including a pair of needle nose pliers, new fabric, batting, carpet knife, chalk, heavy scissors, screwdriver, industrial staple gun, reupholstering hammer, a tack puller and a claw tool.

If you like, you can often purchase a full reupholstering tool kit from many hardware retailers.

The Next Steps

Then you essentially disassemble the piece of furniture, replacing batting and hardware as you go, and finally reattaching new fabric using upholstery tacks, staples and glue. Of course, when you actually start to reupholster old furniture, it’s going to be a lot more complicated, but that’s the basics of any reupholstering project.

For beginners, try to start small and focus on a surmountable project, like a dining chair cushion. From there, set your sights higher to full-length sofas and massive headboards, because once you get the upholstery bug, you won’t be able to stop working on old furniture to save money.

January 27, 2009
Fighting a Crisis of Confidence

Many people have been comparing the current economic crisis that we’re facing to that of the Great Depression. While we are seeing some similarities between the Depression and the economic crisis of today, they are largely a different beast. In fact I’d like to argue that while the Great Depression seemed to have been largely caused by a lack of liquidity in the financial markets, this economic crisis is being fueled by a lack of confidence.

The Depression versus The Economic Crisis of 2008

In the Great Depression bank after bank failed when their customers, afraid of losing everything to a bank failure, ran on their banks. With an emergency increase in liquidity (such as the bailout that was passed last year) most of these banks would have survived, but they didn’t because of the Fed’s failure to act. While some banks have indeed failed in this Economic Crisis they are largely intact due to a little something called the FDIC (and of course the NCUA).

The Crisis of Confidence

Today the beast we’re fighting is much different than that of the Great Depression. The Economic Crisis of 2008 will be known as a Crisis of Confidence. Banks are afraid that if they lend to other banks and consumers that they won’t be paid back. I took the liberty of bolding the operative word in that last sentence to emphasize my point. Banks are not confident that they will be paid back if they lend, so instead they choose not to lend. Their fear is caused by a lack of confidence, and how do you fight a crisis that’s being fueled by a primarily psychological reason?

The Federal Reserve and the Treasury Department have been trying to fight this crisis of confidence by increasing liquidity. They’ve lent billions upon billions of dollars to banks upon the assumption that these banks would then use said “bailout money” to lend to other banks and to consumers. By and large, however, this has not been what the banks are doing. The Fed likewise has been doing what it can to get banks to lend to each other. By dropping the Federal Funds Rate to .25% they were hoping to give the banks more incentive to lend to each other (because it’s cheaper to borrow money with a low rate). Read this quote from TIME Magazine about the Fed’s recent decision to drop rates to near 0%.

With rates already effectively trading near zero despite the Fed’s previous target of 1%, the decision does not actually change rates and only sends a negative message about the state of the economy. That worsens confidence.

There we have it. I’m not the only one who believes that the Fed has made some seriously bad decisions while fighting this Crisis of Confidence. By lowering rates below 1% (where they’ve NEVER been before) they effectively told the American people, banks and businesses that they’re scared and don’t know what else they can do. By lowering rates below 1% they may have prolonged this recession that we’re facing today.

The Past is Not the Present

The current Federal Reserve Chairman, Ben Bernanke, is known by many as a scholar of the Great Depression, but I’m afraid that he literally thinks the Depression is what he’s fighting right now. I don’t know if he’s delusional or just wants to screw our economy up in the long-run, but I will be the first to admit I’m not happy with the job he’s done since taking the role of Fed Chairman. Here’s hoping that somebody with power realizes that in order to fix this current economic crisis they need to address the confidence issues that are plaguing America.

January 26, 2009