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Simple Savings
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05/07/2010
IconThat's The Ticket: Discount Night At The Movies By Cheryl Gochnauer Cheryl@homebodies.org Copyright 2004 In less than a month, #147;Lord of the Rings: Return of the King#148; hauled in more than $300 million from moviegoers. Ecstatic reviews propelled audiences into theaters across the country, eager to enjoy Peter Jackson#146;s talented team delivering Oscar-caliber performances. Not to be an Orc about it, but the ca-ching of the Ring could have been held to only $298 million or so if ticket buyers had taken advantage of a multitude of discounts available to them. It only takes a change of hobbit #150; er, habit #150; to save money the next time you storm the walls of your local cinema. GO BEFORE 6:00 PM. Matinees ticket prices are usually a couple of dollars cheaper than for prime time shows. That means a family of four can visit the concession stand with $8 extra dollars in their pockets if they head for the theater after school instead of after dinner. LET AGE WORK FOR YOU. Children and seniors pay lower rates, as do students with current ID cards. Some drive-ins admit kids under 11 free. Don#146;t forget seasonal programs like Regal Cinema#146;s ( www.regalcinemas.com ) Family Film Festival and Dickinson#146;s ( www.dtmovies.com ) Summer Kids Movies pass featuring past G and PG-rated films. Sure, they#146;re already out on video, but it#146;s still great to see favorite films on the big screen. And at $1.50 or less per ticket, it#146;s a cheap way to entertain the tots. CHECK THOSE COUPON BOOKS. The next time a fundraising student appears on your doorstep selling Entertainment or Gold C books ( www.entertainment.com ), invite them in. Recent Gold C books included coupons for Cinemark ( www.cinemark.com ), AMC Theatres ( www.amctheatres.com ) and Regal Cinemas. The Entertainment book tends to expand these listings, adding even more movie houses. Also flip through those coupon pages in your phonebook to seek additional discounts. REWARD CARDS. Just like grocery stores, several nationwide theater chains reward repeat customers. Membership is free; ask for card applications at the box office. AMC MovieWatchers accumulate 2 points for every ticket purchased (limit 4 points per visit). As they hit 10-point thresholds, customers receive coupons for free drinks, popcorn or tickets. MovieWatchers also get free popcorn on Wednesdays, and can order advance tickets with no service fee. Many Dickinson Theaters feature the DT Movies Bonus Club Card. One point is awarded for each ticket purchased; moviegoers get free popcorn at 5 points and a free ticket at 10 points. Saving this much money may put you in the mood to return to the movies again. Have fun, and may the Frodo be with you. Comments? Contact Cheryl by writing Cheryl@homebodies.org . Also stop by www.homebodies.org , where you can interact with other parents on a variety of lively message boards. Permission granted for use on DrLaura.com More >>

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05/07/2010
IconLost Opportunities The Dollar Stretcher by Gary Foreman www.stretcher.com Sometimes it's helpful to take a concept out of its original environment and see how it fits someplace else. Today we're going to examine an economic theory and see how it might apply to our personal lives. The Economist website ( economist.com ) defines 'opportunity cost' as "The true cost of something is what you give up to get it. This includes not only the money spent in buying (or doing) the something, but also the economic benefits that you did without because you bought (or did) that particular something and thus can no long buy (or do) something else." To put it simply, for everything you get, you give up something else. That's an important concept. Let's consider an easy example. If you spend $15 on a pair of jeans, you do not have that money available to buy a pizza. The 'cost' of the jeans is not only $15. It is also giving up a pizza. Another way to look at opportunity cost is the amount of time we give up working to buy a product. Suppose you make $12 per hour. Our tax rates are all different, but you can pretty much expect to pay about 1/3 in Social Security and federal, state and local income taxes. That leaves you with $8. Let's further suppose that you go out to lunch with co-workers every day. And a typical lunch costs you $6. Add a tip and sales tax and that lunch brings the total to $7.20. So you give up 54 minutes of your life every day to work just to pay for lunch. How about a different situation. Remember that an opportunity cost is what you give up by making another choice. For instance, suppose that you choose to spend $100 on a credit card knowing that you'll pay the minimum when the bill comes due. In effect you've given up about $140 in the future to make that purchase today. That's because finance charges will be added to the cost of your purchase. We face opportunity costs with our time, too. I can choose to spend an hour watching TV. But that's an hour that I won't be talking to my wife, playing with the kids, doing home projects or sleeping. Of course, watching TV might be the best use of that hour. Still, it's a good idea to think about it before you spend the hour. Sometimes the difference between choices is surprising. Suppose you spend $1 at break time five days a week. No big deal. Right? But if you didn't spend that dollar every day and put it in a bank at 3% interest, you'd have $3,000 in ten years. Or $7,100 in 20 years. Or $20,000 in 40 years. So by choosing that $1 snack each day you've given up a new car when you retire. A good trade-off? Only you can decide. There's also the possibility of trading money today for time tomorrow. For instance, you could use the money from those work day snacks to allow you to retire 3 or 6 months earlier than you would otherwise. Is it unusual to think of 'banking' a few minutes each day towards an early retirement? Perhaps, but it does give you a new perspective on spending. But, what about credit cards? Don't they make it possible to buy both things that we want? Yes, you can use your plastic to do that. But credit cards are deceptive. They lead you to believe that you can spend more than you make. And, for a short time that's probably true. But eventually you get to a situation where you can only afford the minimum payment each month. Once there, you're back where choosing to spend on one thing prevents you from buying something else. And, you've also made the choice of paying interest to the credit card company on the monthly balance instead of having that money for other uses. So how can you use opportunity costs to help you live a happier life? By thinking of the alternatives before you spend your time and money. Even though something looks good, if you stop to compare, you might find something else that you'd prefer to spend your time or money on. Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website /www.stretcher.com You'll find thousands of articles to help you make the most of your time and your money. Visit today! Permission granted for use on DrLaura.com More >>

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05/07/2010
IconReplacing a Leased Vehicle The Dollar Stretcher by Gary Foreman I have a 4 year-old Toyota 4Runner with 33,000 miles that will be at the end of the lease next July. I have never had any problems with the truck and I would love to keep it, but it would cost approximately $17,000 at that time and I will only be able to pay $4,000 in cash. Is it smarter to finance $13,000 on a lesser vehicle that is brand new or only slightly used with a warranty? I have checked into financing the $13,000 for 36 months and can afford to make those payments but that will mean paying for this vehicle for 8 years, yuck. I knew this was a mistake from the moment I did it, but now I have to get out. Thank you. Jill Jill is right. When she signed the lease three years ago, she set herself up for this problem. Leasing is attractive because allows people to drive cars that they really can't afford. That's because you're only paying to use the car. During the course of the lease you build no equity in the car and have to return it to the dealer at the end of the lease. Using Kelley's Blue Book (www.kbb.com) for pricing info, we found that a 4Runner depreciates nearly $12,000 in the first four years. That's the portion that Jill was paying for. Unfortunately for her, the first few years are the most expensive years for any vehicle. That's one reason dealers push leases. It is very profitable business for them. Jill has four basic options available to her. She can buy a new car, lease a new car, buy a used car, or buy her existing 4Runner. Let's look at each choice. Buying a new car will be the most expensive option. A new car will mean the highest yearly depreciation and the highest monthly payments. But, the biggest advantage is that once the car is paid for it belongs to Jill. Once she's finished with the payments she can drive the car payment-free for as long as she likes. She'll also have the benefit of the new car warranty. If Jill chooses to buy a new 4Runner or similar vehicle, she'd be borrowing $25,000 ($29,000 purchase minus $4,000 down payment). On a four year loan the average payment would be $588 per month. That means that the new car payment is nearly 50% higher than the used car payment. And she'd have an extra year's worth of payments on the new car. A sharp dealer could reduce Jill's payment on a new car by showing her a 6 year loan. That would reduce her payment to $403 per month. Basically the same as the used car payment. But, that would mean paying over $4,000 in interest over the life of the loan and making six long years of payments. Another new car option would be to buy something less expensive, like a Toyota Carolla. For $17,000 (the same price as her used 4Runner) she should be able to get good, reliable transportation. Plus have the warranty. Leasing a new car would get her a lower payment. But, after a few years of lease payments she'd be right back where she is now - without a car. Buying a used car would keep her payments down and allow her to own a vehicle once the payments are complete. If Jill finances $13,000 on a used car or buys her present 4Runner (figuring $17,000 purchase price minus $4,000 down payment) her monthly payment would be $401 for 36 months. The disadvantage, as Jill pointed out, is that she could be making payments on a 7 year-old car. But, at the end she'd own a 4Runner worth over $11,000. And, if she were worried about repairs she could buy a 4-year extended warranty for about $1,000. Probably the best long-term choices for Jill would be to buy her 4Runner or to find a used vehicle. The payments are affordable and she will own her vehicle when they're done. With her 4Runner she'd be buying a used car that she's very familiar with. It is also a car with lower than average mileage. If Jill decides to buy her car she can negotiate with the leasing company. Depending on the circumstances they may be willing to let her buy the car for less than the price in the original lease agreement. Ultimately Jill needs to decide how much she enjoys that new car smell and the comfort of a new car warranty. The safest financial deal would be to buy her leased truck or a similar used truck depending on where she can get the best deal. Next best would be to buy a less expensive new car. No matter what she decides we hope that she enjoys many trouble-free miles. Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website and newsletters. You'll find thousands of articles to help you stretch your day and your dollar. Visit today! Permission granted for use on DrLaura.com More >>

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05/07/2010
IconTeaching Your Children the Value of Saving and Investing by Candace Bahr, CEA, CDFA and Ginita Wall, CPA, CFPreg; www.WIFE.org www.MoneyClubs.com Ask savvy investors how they learned their first lessons about money, and they#146;ll probably tell you lessons their parents taught them. The money values we learn as children stay with us the rest of our lives. If you are a parent, teaching your children the value of saving and investing will benefit them the rest of their lives. Here#146;s what you can do: Help your child begin to save. Open savings accounts for your children, and teach them how the bank adds interest to their savings that makes their money grow. Encourage your children to save a little from every bit of money they receive, such as allowances, birthday gifts, etc. You may even want to set up a matching program, contributing fifty cents for each dollar your child saves. Teach your child about stocks. A child in elementary school can start learning about how businesses work. Once your child understands the basics, ask her to think about some of the businesses that might be good stock investments. Then use Morningstar Mutual Fund Guide (available at your library) to find a quality mutual fund that holds some of these companies, or a mutual fund that caters to children such as the Stein Roe Young Investor fund. Many funds accept regular monthly investments as low as $50 a month, so these funds can be a good way to teach children about the stock market while saving for their college education. Encourage early IRA saving. The new Roth IRA is a great way for children who are working summers or after school to begin saving for their future. Imagine how much money you#146;d have today if you had saved $3,000 a year since you were a teenager! Let your kids handle their own money. We all learn by doing, so letting your kids manage a segment of their budget will let them learn valuable financial lessons. They may make mistakes, but they will be small mistakes that may help them avoid larger mistakes as adults. Cofounders sixteen years ago of the nonprofit Women#146;s Institute for Financial Education ( www.WIFE.org ) and the new MoneyClub for women ( www.MoneyClubs.com ), Candace Bahr, CEA, CDFA and Ginita Wall, CPA, CFPreg; are trusted financial guides for millions of women. As owner of her own investment management firm, Candace was recently recognized as one of the top ten brokers in the country for 2003 by Registered Rep magazine. Ginita has been named to Worth magazine#146;s Top Financial Advisors for seven years. Both authors are nationally-recognized experts on women and money and regularly appear on CNN and CNBC and in national financial and women#146;s publications. This article is excerpted from their new book It#146;s More Than Money#151;It#146;s Your Life! The New Money Club for Women (John Wiley, 2004). Permission granted for use on DrLaura.com. More >>

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05/07/2010
Icon10 Sweet Ways to Say "I Love You" -- on the Cheap by Candace Bahr, CEA, CDFA and Ginita Wall, CPA, CFPreg; www.WIFE.org www.MoneyClubs.com Leave him a love note in his lunch box. Put wildflowers for him on the breakfast table. Call him at work and tell him to come home for an emergency--you. Show up at his work with a picnic lunch in hand and a private spot in mind. Don't ask him to do a single thing around the house for an entire week. Wow! Write 30 reasons why you love him on 30 different pieces of paper, one for each day this month. Meet him at a bar and flirt. Take him out for ice cream. Go out together, alone, for a long walk or to see the sunrise or sunset. Say those three little words: "I love you." Just do it. Cofounders sixteen years ago of the nonprofit Women#146;s Institute for Financial Education ( www.WIFE.org ) and the new MoneyClub for women ( www.MoneyClubs.com ), Candace Bahr, CEA, CDFA and Ginita Wall, CPA, CFPreg; are trusted financial guides for millions of women. As owner of her own investment management firm, Candace was recently recognized as one of the top ten brokers in the country for 2003 by Registered Rep magazine. Ginita has been named to Worth magazine#146;s Top Financial Advisors for seven years. Both authors are nationally-recognized experts on women and money and regularly appear on CNN and CNBC and in national financial and women#146;s publications. This article is excerpted from their new book It#146;s More Than Money#151;It#146;s Your Life! The New Money Club for Women (John Wiley, 2004). Permission granted for use on DrLaura.com. More >>

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05/07/2010
IconCutting College Costs by Candace Bahr, CEA, CDFA and Ginita Wall, CPA, CFPreg; www.WIFE.org www.MoneyClubs.com If you have children, chances are that providing a college education for them is high on your list of goals. With the cost of tuition, fees, and room and board for four year at a private university averaging $108,000 and state school costs averaging $42,000 for four years, it#146;s no wonder parents are in a cold sweat. Those figures can really hurt your pocket book. At this point, you might be saying, #147;Why bother? I#146;ll never be able to save enough.#148; But ignoring the problem won#146;t make it go away. There are lots of ways you can conquer the education cost woes. Here are a few: There is $100 billion of financial aid distributed to students in the form of loans, scholarships and grants each year. Be sure you get your share. Many scholarships are not based on need. For example, merit, athletic, and music scholarships are often available to students who excel in those areas. Apply to a variety of colleges. Aid packages can vary significantly from school to school. Negotiate. If you are not satisfied with the aid package a school offers, talk to the university. Start your child at a community college. Two-year colleges are a lot cheaper than four-year universities, especially since most students live at home while attending. First, however, your child should determine which four-year college he/she will transfer to and make sure that all credits from the community college are transferable to the four-year college. Encourage your child to accelerate his/her studies by taking some summer classes or extra credits throughout the year. It#146;s possible to finish a four-year degree in three years. That means considerable savings for you. Take advantage of the latest tax breaks. The Hope Credit gives you a 100% tax credit for $1,000 of tuition and fees for junior#146;s first year of college, and 50% of $1,000 for the second year. The Lifetime Learning Credit gives you a 20% credit of up to $10,000 of tuition for you or your child. There are income limitations, so be sure to check with your tax advisor to see if you qualify. The best thing to do is plan ahead. Remember, with financial aid and scholarships, and plain old working-your-way-through-college, the costs don#146;t have to bury you. Cofounders sixteen years ago of the nonprofit Women#146;s Institute for Financial Education ( www.WIFE.org ) and the new MoneyClub for women ( www.MoneyClubs.com ), Candace Bahr, CEA, CDFA and Ginita Wall, CPA, CFPreg; are trusted financial guides for millions of women. As owner of her own investment management firm, Candace was recently recognized as one of the top ten brokers in the country for 2003 by Registered Rep magazine. Ginita has been named to Worth magazine#146;s Top Financial Advisors for seven years. Both authors are nationally-recognized experts on women and money and regularly appear on CNN and CNBC and in national financial and women#146;s publications. This article is excerpted from their new book It#146;s More Than Money#151;It#146;s Your Life! The New Money Club for Women (John Wiley, 2004). Permission granted for use on DrLaura.com. More >>

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05/07/2010
IconComparing Options by Gary Foreman The Dollar Stretcher www.TheDollarStretcher.com I would like to know if it would be unwise to stop my 401k contribution for the next 1 1/2 to 2 years and use the money instead to pay off unsecured debt and student loans? After I pay my bills each month and allocate budgeted dollars for groceries and gas, I'm lucky to have $50 leftover for debt repayment or savings. About $400/month goes into my 401k, and it is currently valued around $40,000. I'm 29, married (stay at home spouse), and have a 15 month old daughter. We really want to get out of debt quickly, I estimate that my regular monthly payments, plus a booster payment of $400/month will pay it all off in 2 years. After that, we want to own at least 75% of our home in 10 years (we have a 30 year mortgage). Amy We will all face questions similar to Amy's. And sometimes it seems like we're trying to compare apples to oranges. It's hard to even know where to begin. On a basic level, she's right that the first step to a good financial future is getting out of debt. Even if that means delaying saving for retirement. Paying interest on borrowed money will make it harder to accumulate assets. That's not to say that she shouldn't save any money for retirement until all of her debts are paid. But paying off high rate credit cards should be a priority. There is some risk to paying off debts first. Some people are perpetually in credit card debt. And if they wait to save for retirement they might never get started. But Amy appears to have the necessary discipline to pull it off. A second way to look at the question is mathematically. Often that's the best tactic. The trick is finding a way to compare the different options that you're considering. In this case Amy is really asking about her net worth three years from now. Remember that increasing assets or reducing debts improves your net worth. She can use one of the calculators that are available to determine what will happen to the two accounts under different circumstances. One of my favorites is at Bankrate.com . Her goal is to figure out what the amount due on her credit card and what her 401k balance will be in 3 years. Amy will be creating two different scenarios. In one she'll stop contributing to the 401k and use $400 to pay off debts. In the other, she'll continue to contribute to her retirement and only pay off $50 per month. Try to make the comparison as neutral as possible. The assumptions that you make in creating the examples can predetermine the outcome. Especially in longer time periods. To really do it right, she should take the balances under each scenario and calculate what her net worth would be. If that's too complicated, then simply compare the amount of debt paid off vs. the amount her 401k would increase. Even if she doesn't have access to a computer a simple comparison can be created using a calculator. To estimate how much debt is to be paid off she'll need to create a list with 4 columns. The first column is for the beginning credit card balance. To that she'll add the second column which shows the amount of interest owed for that month. She can calculate that from the amount owed multiplied by the annual interest rate being charged divided by 12. From that total she'll subtract column three which is the amount of the payment for the month. The result is column 4 - the ending balance. Which naturally is the beginning balance for the next month. A second table can be created for the 401k plan. The first column is for the beginning balance. To that will be added the second column (investment earnings) and the third column (new contributions). The total will be the ending balance in column 4. And, once again, the ending balance from one month will be the beginning balance of the following month. Don't forget to include any employer matching contributions. They can make a big difference in your account growth. She can compare the results to see which would work better for her. One other thing for Amy to consider. Both of her choices are good. One might be slightly better than the other. But either one is better than doing nothing. Doing nothing is the worst choice that she could make. Gary Foreman is a former financial planner who currently edits TheDollarStretcher.com website and newsletters. You'll find thousands of articles to help you stretch your dollar and your day! Permission granted for use on DrLaura.com More >>

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05/07/2010
IconEnough Auto Insurance? The Dollar Stretcher by Gary Foreman gary@stretcher.com How do you figure out how much car insurance you really need???? I would appreciate any help in this area. Thanks. Debbie Debbie asks a good question. If you buy too much auto insurance you're wasting money. But if you buy too little, you could have a very serious problem down the road. And, to complicate matters, the answer isn't the same for everyone. Not only will our need for insurance change as we acquire wealth, but even the value of the car we drive makes a difference. Let's begin by understanding the purpose of insurance. And that's to pay for financial commitments that you can't handle yourself. In this case, commitments that come from accidents involving your car. Generally drivers must be able to pay for any losses that they cause others while driving their car. Since the potential amount of damages is greater than most drivers assets, they use insurance to make up the difference. Let's start by examining the types of dangers car owners face. The most obvious one is to our car. The second would be to our health and the health of our passengers. Finally, an accident could put our money at risk. The first priority is to protect our car. If you lease or finance your auto, you may be required to carry collision and comprehensive coverage. Collision pays for damage to the vehicle caused by your car running into another car or object. A simple definition of comprehensive is that it covers things that aren't caused by a traffic accident. Things like theft and fire. How much coverage does Debbie need? She'll need to choose a deductible that's low enough so that she can afford to pay it. And, she'll need enough collision to cover the balance of the value of the car. The best way to reduce the cost of auto insurance is in the collision and comprehensive coverage. If Debbie hasn't built up her savings, she'll probably need to have a low deductible. But if she's able to put a few extra dollars in savings, she could raise the deductible and make a serious dent in her insurance bill. As Debbie accumulates more savings, she'll get to a point where she could replace the car all by herself if she had an accident. At that point she may decide that she doesn't want to carry collision at all. Next Debbie will need to consider what insurance she needs to protect her wealth. Remember that by owning a car she's agreed to be responsible for any damage that it causes. Liability coverage pays for damage that you're responsible for and have caused to other people or their property. If her life savings is only $300, then there's not much a lawsuit could take from her. Some would advise that she should only buy the minimum liability coverage required by the state. But Debbie might be uncomfortable with that. Not having enough coverage to help a child crippled in your accident might not be something that she'd want to live with. As Debbie accumulates wealth her need for liability coverage becomes more important. She wouldn't want a lifetime of savings to be wiped out in one accident. Fortunately, increasing her liability coverage is not that expensive. In fact, many people purchase a 'liability umbrella' that kicks in when your auto liability limits are reached. Implied in Debbie's question is how to control the costs of auto insurance. At a minimum, she will need to buy the coverage that's required by her state. The most common requirements are liability and no-fault coverage. Raising her deductible on collision can do a lot to reduce her bill. And, if she's driving an older car, she may be able to go without collision coverage. No sense paying $1,000 a year for insurance to cover a car that's worth $1,200. Naturally she'll want to compare costs between different companies. Just make sure that everyone is quoting the same coverage. Debbie may also qualify for some discounts. A safe driving record, a car alarm or multiple car discount could help. Using the same company for your home or recreational vehicles (boats, RV's) might also cut her bill. Don't be afraid to talk with your agent. Each state has it's own laws. And insurance terms can be confusing. So don't be afraid to ask questions now. Not only could you save money today, but it's too late to change your policy after you've had an accident. You might find that you've purchased the wrong coverages. Gary Foreman is a former purchasing manager who currently edits The Dollar Stretcher website and newsletters. They've been helping people save time and money since 1996. Permission granted for use on DrLaura.com More >>

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