by The Queen on January 11, 2010
in Financial
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The New Year is here and so are New Year’s resolutions. One of the most popular resolutions for 2010 is to get in shape – financial shape that is. Wwe are kicking off a Financial Resolutions series this week. Join us every Monday in January. We will be tackling your money concerns and offering you tips on how to get ahead in 2010.
Opening the series, is the most requested topic – getting out of debt. Americans carry nearly 1 trillion – that’s right trillion dollars in credit card debt, with the average household owing nearly $9,000. These are staggering statistics. So here are some tips to help get out of debt and avoid becoming a statistic.
Face the Facts
When asked how much they owe, the majority of people with credit card debt underestimate their total debt. They pay the minimum payment of each bill and avoid looking at their total balance or total debt. That’s like driving with no road signs. You have no idea how far or fast you have to drive.
Calendars are on sale now, so buy a large monthly view calendar. Then collect all your credit card bills and input all their info on the calendar. Write when they are due, the minimum payment, total due and interest rate. Now on one easy to read piece of paper you have your entire debt picture. Take a good look at it. How scary is it? How committed are you to getting the balances to zero?
Change Your Behavior
Paying down debt is a process. It is not something you do in a day. To be successful long term, you have to change your habits and behavior. The reason you got into debt is spending. So you have to stop spending and start saving to pay off your debt. Think about it like stopping smoking.
Stop hanging out with spenders – A smoker trying to quit does not hang out with smokers. So if you are trying to stop spending, avoid friends and situations where you will be tempted to spend. That means no cocktails and dinner with the girls every Friday or no three day weekend trip just because you have MLK off. You don’t need to stick a Getting Out of Debt sticker to your forehead. Just tell people that you love spending time with them but your goal for 2010 is to stick to a budget and you have exceeded your entertainment/shopping/vacation budget for the month.
Find a new habit – Many smokers start chewing gum instead of smoking cigarettes. You should find a new habit to substitute other costly ones. Stopping at Starbucks on the way to work because you can’t make good coffee at home? Try McDonald’s, their McCafe’s are cheaper but still good. Love buying books or going to the movies, discover your local library. Honestly, I hadn’t been for nearly a decade and was amazed at the selection and easy at home access to the catalog where I can make reservations for items online. You get the idea. Don’t stop doing something, just find a cheaper or free alternative.
Start Paying it Down
Once you face your debt and start changing your behaviors to preserve more funds to pay down your debt, you are ready to choose a pay off strategy. There really is no right or wrong way to pay off debt. It is a personal choice.
If you are a more logical person, you would opt to pay off the credit card with the highest interest rate first and then work your way down.
If you are a more emotional person, and you need more reinforcement and encouragement, pay off the credit card with the least balance. You will feel that sense of accomplishment and will be energized to continue.
If you need to improve your credit score, pay off the credit card where you are at or near the credit limit. This will help your credit utilization ratio which accounts for a third of your credit score.
Consumer Reports offers a more thorough overview of payoff strategies: http://www.consumerreports.org/cro/money/credit-loan/how-to-pay-down-your-debt/overview/index.htm
Once you get out of debt, you want to avoid any new debt. And the best way to avoid it is to have an emergency fund. Join us again next Monday to learn the importance of an emergency fund and how to set one up.
You can almost smell the turkey now. Thanksgiving is just a couple of days away. You can look forward to a festive day filled with lots of fun, lots of family gossip and loads of carbs. So while the gym may be open the next day, there is an even better way to burn those carbs – shopping. Yes, the Day After Thanksgiving sales are this Friday. With so many sales and promotions, it’s hard to know where to start.
Here are the Do’s & Don’ts for The Day After Thanksgiving so you DO end up with deals that DON’T break your budget.
Do’s
- Do your homework – Before showing up at a store at 5am just to join the crowds, do your homework. First make a shopping list of all the gifts you need to buy and the amount budgeted per gift. Second browse the Black Friday ads either in your newspaper or online at bfads.net or dealnews.com/blackfriday
- Do shop on Thanksgiving – Physical stores may be closed on Thanksgiving, but online stores are open and brimming with deals. Many retailers will offer special Thanksgiving Day deals and promotions to entice you to step away from the turkey and shop. If you want to shop at physical stores, wait until night time and hit the outlets. North Georgia Premium Outlets open at 12am on Friday.
- Do know price match policies – Instead of running around town from store to store, ask your favorite stores about their price matching policies. Many stores will honor the price in a competitor’s ad, you just have to ask and show the ad. However limited quantity or time items may be excluded from these policies. Target and Wal Mart are in a particularly fierce battle and look to sway the other’s customers with price matching. Dealnews.com has a nice price match policy reference list along with customer service numbers.
- Do learn the return policy and get a gift receipt – Stores have gotten even more stringent with their return policies this year. Make sure you know how and when an item can be returned. It is also helpful to provide a gift receipt with the gift. This is most important when purchasing electronics as many times they have limited return periods and even restocking fees.
- Do dress appropriately – Shopping on Black Friday can become a long day. Make sure to dress in warm layers that you can adjust as you go through the day, especially if you plan to be start shopping at 5am. Keep other items to a minimum. Bring a small bag and only the credit cards, checks or cash you need that day, not your regularly packed wallet.
Don’ts
- Don’t leave the house without a plan – If you don’t know what you are buying or whom you are buying for don’t go shopping. Hitting the stores just to go deal shopping is no deal at all.
- Don’t buy for yourself – The purpose of Black Friday is gift shopping. You are looking to save money on gifts for others not gifts for you.
- Don’t rush to buy, especially electronics – Let’s be honest, you’re not standing in line in the cold at 3 am to buy an LCD TV for your uncle Bob or your kid’s teacher. You are buying these expensive electronics for yourself. If it’s for yourself, wait until after New Year’s to buy. You can get a better deal then and avoid the crowds. New electronics come out in early spring and stores will have lots of promotions on existing models early in the year.
- Don’t forget about coupons – It’s easy to get overwhelmed by all the sales and promotions but don’t leave money on the table by forgetting to use coupons. Stores have many coupons this time of year, so pair them with the sales and get even more savings. ShoppingQueen.com will feature lots of printable coupons.
- Don’t worry about missing out – Black Friday is no longer the only big shopping day. So if you didn’t get all your shopping done, don’t worry. Cyber Monday is next week and you can take advantage of sales and promotions online. Tune in next Monday to hear how to snag the best deals on Cyber Monday.
by The Queen on May 18, 2009
in College
This is from my segment on Atlanta & Company on May 18, 2009.
It’s one of the proudest moments in any parent’s life—dropping off your child at college. Ah, what a sense of accomplishment. But get ready to drop off your bank account at college too. Going to college can be expensive and we’re not even talking about the cost of tuition.
Most parents think all the costs of college are listed in the college acceptance package, but that is just the beginning. You need to factor in many other costs too.
Give them a salary
You’re sending your kids to college on their way to the real world, so introduce them to the real world early. Give them responsibility for their finances when they head off to college. The best way for them and you is to give them a salary. Give them a fixed biweekly salary and teach them how to budget. If you just offer to help pay for things and give them a credit card to charge other things, you are setting yourself up for disaster.
When you give them a salary they can learn to make it work and you have limited your expenses by giving a firm amount. To come up with the amount sit down with your student and figure out all the costs and who will be responsible for what. A good resource to start the conversation is 40 Money Management Tips Every College Student Should Know.
Living costs
Part of the college experience is living on campus and enjoying dorm life and cafeteria food. This is also a great way for parents to control costs. While on paper living with roommates in an off campus apartment seems cheaper, it almost always ends costing way more. Not only are there numerous more monthly bills to pay like rent, utility bills and grocery bills but none of these costs are fixed costs so every month costs can change. For example what happens when a roommate decides to move out, suddenly the rent has dramatically increased. And let’s not even talk about the cost of furnishing an apartment even with used items.
So if your child desperately wants to live off campus, pay their salary based on on-campus housing and dining costs. They should be responsible for coming up with the difference by getting a part-time job. And if their grades would suffer with a part-time job then living off campus would also harm their grades.
Transportation Costs
Will your child take a car with them to college? If so, get ready to pay. And the more urban the college location is, the higher the costs and the more reason NOT to take a car. Parking permits at colleges can cost hundreds of dollars a year and gas and insurance costs more in urban locations too. So why pay all that when you can take advantage of both public transportation as well as free college shuttles that transport students around local shopping and dining areas. And if there is an occasional need for a car the majority of colleges now have Zipcars you can rent by the hour.
Send all bills home
The mailing address for all bills should be the parent’s address no matter who is paying the bill. You want to monitor the bills to make sure they are getting paid. The student can sign up for online access to view and pay the bill online. Otherwise students end up having bills lost or forgotten in their college post office box, address from last year or who knows where.
Don’t forget about fun
Make sure their salary includes some fun money too. College students will eat out and go to parties and the best way to keep it under control is to give them a firm monthly budget for that. Let them that amount is firm and they should learn to plan and save funds for months when their entertainment expenses might be higher such as homecoming or spring break.
