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IconCredit Card Payment Pinch The Dollar Stretcher by Gary Foreman Dear Dollar Stretcher, We have a few high interest credit cards. We know now that we were using poor management when we started using these cards and now we are feeling the squeeze from them. Could you tell us how we can pay these cards off? It seems like we never get close to paying them off. Linda from TN Linda has discovered a secret. The credit card companies don't want you to pay off your balance. Those balances led to $50 billion in finance charges last year. And business keeps getting better for the card issuers. All the statistics show that people are relying more on their credit cards and falling deeper into debt. The average balance is now $5,800 per person. Plus the price that consumers pay for the loans also continues to increase. Even with record low interest rates, people are paying 15% or more for their credit card balances. Ultimately, to prevent the payment pinch Linda must make payments that are bigger than any new purchases plus this month's interest charges. So to solve the problem Linda can spend less each month, reduce the amount of interest that she owes or write bigger checks. How can Linda need find a way to charge less each month? A review of her monthly credit card statement could be fruitful. If she finds a series of small purchases or items that she doesn't remember buying, it's time to consider leaving the cards at home. She needs to find a way to identify purchases that could be avoided or postponed. Next, try to reduce the amount of interest that's charged each month. Linda should contact her creditors. Some will reduce her interest rate if she picks up the phone and asks. She'll want to pay off the highest interest cards first. If possible, she should move her balance to a lower interest rate card. Only use the card with the lowest rate for new purchases. Finding a lower interest rate will help, but to really solve the problem Linda needs to see if she can manage to write a bigger payment check each month. Based on a typical minimum payment, Linda can expect to be writing checks the rest of her life! The only permanent way to eliminate the payment pinch is to reduce the balance. Suppose that Linda and her husband were the average couple and had $11,600 in debt at 18% interest. If she made no new purchases and wrote the minimum payment check for $230 she'd only be reducing her balance by $55! Fortunately, it doesn't take much to begin to reduce the balance. What would happen if instead of paying the minimum she paid $250 per month and kept it at that level? She'd have the balance paid off in seven years! So where can she find the extra money? It may not be easy so Linda needs to be motivated. The thought that she's paying $175 each month in interest and not getting anything for it should help. That's money that isn't buying any new clothes, cars or groceries. Could Linda find $25 a month to increase her payment? Tough? Sure! But a little sacrificial cost cutting could yield $5 a week. That's one coffee per day. Or one lunch out per week. One night out per month. Or the premium channels on your cable TV. Perhaps Linda has an asset that could be sold with the money going to pay her debt. Or if she has an asset that can't be sold, maybe she can borrow against it at a lower rate than she's paying on her credit cards. Borrowing against her home equity is an obvious possibility. But look beyond the obvious. She might have a life insurance policy that allows for loans. Or perhaps she could borrow from her 401k plan. It might be time for Linda to consider a part-time job until the card balances are paid off. Although it's tough having a second job, knowing that it's only for a short time makes a big difference. Suppose that she fails in reducing the balance and it keeps going up. She can expect the card companies to begin to increase her interest rate. Each month the financial noose will get a little tighter. If Linda can't reduce her balance and is struggling with the minimum payments she might be wise to seek credit counseling. They will negotiate a payment plan with the card companies that Linda can afford. She can expect to give up her credit cards and her credit history will reflect that she sought assistance. But struggling with the minimum payments is a warning sign of upcoming disaster. Unless immediate changes are made things will only get worse. It's important for Linda and all credit card users to recognize that the minimum payment is dangerous. The first warning sign isn't when paying the minimum is hard. It's when the total that you owe on all of your cards continues to creep up month after month and year after year. If you can't afford to make more than the minimum payment each month slowly but surely you're heading for even more pain in the future. The only safe credit card balance is one that's shrinking each month. Gary Foreman is a former Certified Financial Planner who currently edits The Dollar Stretcher website www.stretcher.com/save.htm You'll find hundreds of articles to help you stretch your day and your dollar. Permission granted for use on DrLaura.com More >>

IconInherited Debts? The Dollar Stretcher by Gary Foreman Dear Dollar Stretcher, I've heard that when parents are in debt and they die the debts are left to the children to pay off. Is this true? My parents had gotten a divorce a few years ago. My mom is doing well because she is a saving queen. My dad had remarried two years ago. His wife does not work but loves to spend money. So now they have a $20,000 debt. If my father dies, his wife is responsible for the debt, right? What happens after she dies and there is still that debt? Also, what happens if she dies first, and then my father--who gets the debt? Judy Judy asks a question that comes up often. Can someone die and 'leave' their debts to you? The answer is no. Parents can't leave their debts to you. In fact, they can't even leave their debts to their spouse. Typically a will controls financial affairs after a person's death. A will distributes assets, not debts. But, before any money can be distributed to heirs, all the debts must be paid. So enough assets are sold to pay for any debts that remain. Only after the debts are paid will the remaining assets be distributed among the beneficiaries of the will. The key point to remember is that you are only responsible for debts that you contractually created. There are certain circumstances that would put Judy at risk for her dad's debt. But she would have had to do something to cause that responsibility. Suppose that Judy's dad asked her to co-sign a loan. Signing would make her responsible for the debt. Not only if her Dad died, but also if he failed to make a payment. But she shouldn't be surprised. When you 'co-sign' a loan, you do just that. You put your signature on the loan application. A similar situation occurs with a joint credit card. A joint account allows anyone named on the account to use it to create a debt. But it also means that everyone listed on the account is responsible for the entire debt that's created. Suppose Judy had a joint card with her dad. And he was the only one using the card. Any debts he left at death would be Judy's. But once again, it should be no surprise to Judy. She signed the joint application for the account. And it's her responsibility to be aware of whether it's being paid off or not. It wouldn't be unusual for Judy's dad and step-mother to have a joint account. In that case the survivor would be responsible for any balances on the account. Joint credit card accounts often create problems in a divorce. Often a couple has a joint account before the divorce. The credit card company isn't going to split the bill just because a couple throws in the towel. As far as they're concerned, both the ex-husband and wife are responsible for the entire amount of the bill until it's paid. And while a court can instruct one party to pay, sometimes it still doesn't happen. Another way that people end up paying someone else's debt is when you let someone use your credit card. Again, it should be no surprise when the bill comes in. So what happens to the debts of someone who dies? The credit card company will first try to collect from the estate. As mentioned earlier, assets will be sold to pay the bills. Then, if the account was a joint account, any survivors will be left holding the bag. If the debt belonged solely to the deceased, then the credit card company will end up eating the debt if there aren't enough assets to cover it. But Judy isn't completely off the hook. She might still want to advise her dad to control his spending. As her father and step-mother get older they could have trouble keeping up with the minimum payments. And, once they fall behind things will get tough. Credit card companies are quick to bump up interest rates when you miss a payment. And that would be trouble. Judy's father will probably be living on a fixed income during retirement. So the payment that was a struggle at 12% interest becomes impossible when the interest rate goes to 20%. And unless they have some assets that can be sold to reduce the debt, the minimum payments will dominate their finances. And that's where Judy comes in. I don't know her relationship to her father, but it would be awfully hard to watch a parent struggle to put food on the table. Even if they caused the problem by foolish past spending. It actually would be interesting if parents could 'leave' their debts to someone after they die. I suspect that many children would treat their parents much better if that were the case. Instead of parents threatening to cut a child out of their will, parents could run up large debts and threaten to put a child into their will! Never mind! It's a good thing that the law doesn't read that way. Somehow I don't think that it would be good for family relations. Gary Foreman is a former Certified Financial Planner who currently edits The Dollar Stretcher website www.stretcher.com/save.htm Permission granted for use on DrLaura.com More >>

IconDebt Collection The Dollar Stretcher by Gary Foreman Dear Dollar Stretcher, I had an outstanding judgment against me for $1,000 to pay off an apartment lease that was broken when my ex-husband and I divorced. The total amount owed prior to the judgment was $1,700. The third-party collector who's been calling me insists that I pay that amount. The court said I owe $1,000, which has been paid in full. What can I tell the collector to make him go away? Sheri Fortunately for Sheri she can take control of this situation without too much trouble. Her biggest ally is something called The Fair Debt Collection Practices Act. It's a federal law that governs what debt collectors can do. It's easy to get a bill collector to stop calling. All Sheri needs to do is to notify them in writing that she doesn't want to hear from them anymore. She doesn't need to give them a reason. A simple "please don't contact me anymore" is sufficient. Certified mail is best. After the letter is received the collection agency can only contact her to let her know that they won't be calling her again or to inform her of pending legal action. Even if Sheri did still owe the money, she has quite a bit of protection under the law. The same request to stop calling works even if you still owe the debt. Obviously stopping the calls doesn't relieve you of the responsibility of paying your debt. Collection agency tactics are regulated by the Fair Debt Act. It's acceptable for them to contact you by mail, phone, in person or by telegraph. But they cannot call before 8am or after 9pm. If you tell them that your employer doesn't approve of personal calls, they can't contact you at work. They can't embarrass you. They can only ask others for your phone number or mailing address. They can't say that you haven't paid your bills. When they contact you they cannot use foul language. No physical threats to you or your reputation. They can't say that you'll be thrown in jail or demand a post-dated check. In short, all they can really do is bug you a bit to collect the debt. Please understand that we're not saying that Sheri or anyone else shouldn't pay their debts. We're just pointing out that you don't need to tolerate abusive collection practices. Getting the debt collector off her back is only the first issue for Sheri. The second one is to make sure that her reputation isn't being harmed. She'll need a good report the next time she applies for credit. Sheri needs to find out why she's being contacted by a collection agency. Either the landlord isn't aware that she's paid them fully or there has been a miscommunication between the landlord and the collection agency. The fact that a judgement is involved could be the cause of the confusion. But it's also a good way for her to document how much was owed. In any case, Sheri's credit rating could be seriously hurt if incorrect data is allowed to stand without challenge in her credit file. To find out what's in her file she'll need to get a copy of her credit report. It'll cost about $8.50 depending on where she lives. There are three large credit rating companies. Sheri can order the report by phone and pay with a credit card. They can be found at: Equifax 800-685-1111; Experian National Consumer Assistance Center(Formerly TRW)800-682-7654; TransUnion 800-888-4213. Once Sheri gets the report she'll need to make sure that the lease is either not mentioned at all, or is shown as closed by full payment. If her landlord wasn't a corporation it's possible that she won't find an entry in the report. If she does find that it shows the lease as still owed or in dispute, she'll need to write two letters. One to the former landlord asking him to notify the credit bureau that he's been paid. A second letter to the credit reporting agency should explain what happened. Sheri will want to include copies of the court decision and her cancelled check proving payment. At that point the credit reporting agency will be required to change the status of the entry and include her side of the story. Since Sheri is recently divorced she should also check the credit report for any other problems that might relate to her ex-husband. Problems can occur when couples split. Just because your ex said that he would pay a bill on a joint account doesn't mean that it was actually paid. It's a lot easier to get things straightened out before the collection agencies start to call. Sheri's in a pretty good position to solve this problem. One letter will stop the harassing phone calls from the collection agency. And a check of her credit report will make sure that she doesn't have problems with this the next time she wants to apply for credit. Gary Foreman is a former Certified Financial Planner who currently edits The Dollar Stretcher website www.stretcher.com/save.htm You'll find hundreds of free articles to stretch your day and your budget. There's even a free weekly ezine. Visit Today! Permission Granted For Use On DrLaura. More >>

IconPatriotic Spending? The Dollar Stretcher by Gary Foreman gary@stretcher.com Dear Dollar Stretcher, During times of national crisis the general public has a natural tendency to conserve. That is actually the worst thing we can do right now. The economy will take a nosedive from the recent tragedy. If you really want to do something for your country go out and spend $20. Then, next week, spend another $20. Always be sure to buy American made from American businesses. By doing so, the country's economy will bounce back much faster, which helps us all in the long run. Donna North Carolina Donna makes an interesting point. Our normal instinct in uncertain times is to conserve our resources and spend less. Yet, after the terrorists' attack, the economy is struggling and could use some stimulus. Consumer spending could be part of that stimulus. So is going to the mall each week and spending an extra $20 a patriotic thing to do? When Donna buys that pizza it does help a local merchant. If enough people join Donna, employees work hours won't be reduced. And, the merchant will buy more ingredients. So Donna's spending will have a ripple effect. But, let's remember that something else happens, too. Donna has either taken money out of savings or borrowed the money. So she has less money than before. And, if she used a credit card she'll repay the loan with interest. So Donna has taken money out of the investment world (banks, the stock market, etc). That means less money is available for businesses to borrow to help meet payrolls. If they can't pay their workers, they'll need to lay them off. So spending alone might not be the answer. Then how can Donna make a decision that helps her country? She can do the most good by making 'normal and prudent' purchases. The terrorists assumed that it would be very hard for business to recover. Fortunately, the capitalist system is resilient. There are many companies that can supply most products or services. If one company is crippled another steps in. The result is that any disruption is pretty quickly fixed. But, being able to supply the goods and services that people need isn't enough. Americans, and consumers around the world, will need to buy what business has to offer. The 'nosedive' will be corrected if we just return to our normal spending patterns. That means going about our business and our lives in our usual manner. If we spend the same amount that we did before the terrorist attack the economy will be just as big as it was before. We really don't need to do any unusual spending. Just go back to doing the same things economically that you did before the attack. If your family goes out for pizza on Tuesday nights, go out this week. If you were going to visit Grandma at Thanksgiving, buy those plane tickets. Donna's right. In any emergency, our instinct tells us to conserve. That's where the 'prudence' comes in. We know that feeding our families tomorrow is more important than buying non-essentials today. So, is buying a new car now prudent? It really depends on your situation. Suppose your old car is worn out. You've saved for a newer one, can afford the payments and had planned to make the purchase now. Then you should start shopping for the car. But if you have a year to go on your present payments and your car is running fine, buying a car to prove your patriotism is foolish. The reason is simple. You don't create wealth by spending money. Wealth is created by producing something of value. Yes, you'll help keep the car salesman employed. But if you borrow money that you'll struggle to repay, you've actually become a burden to our society. More debt makes our society weaker. If you have too much debt you can't afford to help others. You'll be in a worse position if something interrupts your income. Then you could end up asking the government to help pay your bills and become a burden. So what should Donna do? She can ask herself a few questions before making any purchase. Do I need this item or service? Would I have made this purchase before the attack? Can I afford to pay for it? Am I using patriotism as an excuse to spend? Will American businesses benefit from my purchase? One final thought. Now is a wonderful time to contribute to charities helping those who have been affected by the attacks. Perhaps Donna could do more good by giving the $20 to a local food bank. The money will be spent and help people keep their jobs like she wants. But instead of another pair of shoes in her closet, Donna's $20 might help replace a pair of holey sneakers for a child who's parents are unemployed. Do we need Donna and everyone else to help speed up the economy? You bet! But reckless spending will only make it weaker later on. So let's think before we act. Gary Foreman is a former Certified Financial Planner who currently edits The Dollar Stretcher website www.stretcher.com/save.htm . The site contains hundreds of free articles to help stretch your day and your dollar. Permission granted for use on DrLaura.com. "The Dollar Stretcher, Inc." and DrLaura.com does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation. More >>

IconFrightening Future The Dollar Stretcher by Gary Foreman gary@stretcher.com Dear Dollar Stretcher, War is on the horizon. What should we do to prepare ourselves? I was a young teenager during most of Vietnam and I didn't have to make the financial decisions for my family. What do I need to know in order to plan for this frightening future? Wendy W. Charlotte, NC Good question. How can we prepare for uncertain times? As a long time Florida resident, I think that hurricane preparation could provide a good example. At the beginning of hurricane season you don't know whether you'll be affected by a storm or not. But, you know that it's much harder to recover from a storm if you aren't prepared. And that it's much easier to prepare well in advance of the storm. Last minute preparations are the hardest. You also know that you'll need basic supplies, good neighbors and a willingness to tough it out. And that it's not possible to do all your preparations in one day. It takes time. Preparing financially for a war is the same. We know that it's easier to prepare before the event. There's no one big thing that we can do to be 'prepared'. We need to do many small things. And, even if we're untouched by war or terrorists, the preparation won't hurt us. We should do these things anyway. Begin with a regular savings plan. First, because you may need it. Some workers will lose their jobs. They'll depend on savings until a new job is found. Second, because we may have disruptions in the banking system. The enemy would like to cripple the financial system. Have some cash available all times. Your bank could be closed for days. It's also possible that ATM's wouldn't work and stores would be unable to process your credit card. Remember, you can always spend cash. Savings will also help our country. Saved money doesn't just sit in a vault at the bank. It's loaned to businesses to help them grow. And that growth means new jobs and opportunities for all of us. Some argue that consumers need to spend more. That's foolish. You don't create wealth by spending. You create wealth by producing something of value. If you can, buy some stock. No one knows what the stock market will do tomorrow. I believe that the U.S. will come through this and be even stronger ten years from now. If so, now is the time to buy stocks or mutual funds invested in stocks. Over the past 200 years we've seen tough times. Yet, every generation has been more prosperous than the one before it. Don't panic sell the stocks you already own. As we've already seen, the economy is resilient. It will bend. But it's very unlikely that it will break. A note. I'm not suggesting that we profit from other's suffering. Owning stocks is a vote for our future. A vote that says that our loved ones did not die in vain. Resolve to make small sacrifices to build up a 'war chest'. Bring your lunch to work a couple of times each week. Give up your premium cable channels. Or cable itself. Put whatever you save into your 'war chest'. You'll find opportunities to use it to help yourself and your nation. Once you have a war chest be willing to share it with others. But, begin by being certain that your gift is used properly. The best charities use no more than 20% of the monies they receive for overhead and fundraising. All charities are required to provide you with that information if you ask. Do something for a needy neighbor. Many families will suffer financially. Don't wait for the government or someone else to help them. Share your blessings with those who need it. Provide dinner once a week for a family with a laid off breadwinner. Share the clothes your kids have outgrown. Be creative. Think of what you'd need if your income were drastically cut. Then take action. Stockpile some groceries. You might need to survive a week on the food you already have in your home. Almost everything you eat is trucked in from somewhere. Interruptions are possible. Be ready to share your supplies with your neighbors. Make a friend. We're so rushed that we don't really know the people around us. After a hurricane we all check to make sure our neighbors are OK. Why not check on those folks today before the storm? Your new friendship will provide comfort today and be invaluable if times are hard. Learn to cook more and buy fewer prepackaged foods. Plastic starts out as oil. We could face oil shortages. But, even if oil is plentiful, you'll make a dent in your grocery bills by eliminating those individually wrapped items. Think of ways to get more use out of what you already have. It's a 'throw away' age. Perhaps you can't fix your VCR. But you can sew a patch on a pair of jeans. Think before you pitch it out. Hold a garage sale. Our homes are full of things that we no longer need. But someone does. The poorer among us shop at garage sales. If you're embarrassed to take their money, give the items to a charity that will recycle them for you. Look for waste around you. We'll probably never get to the point of saving tin foil, but you'd be surprised how little things add up to a lot of waste when millions of people contribute. None of these things by themselves will win a war. But they will make us better prepared to take care of ourselves, our families and our neighbors if the storm hits our home. Gary Foreman is a former Certified Financial Planner who currently edits The Dollar Stretcher website www.stretcher.com/save.htm . The site contains hundreds of free articles to help stretch your day and your dollar. Permission granted for use on DrLaura.com. "The Dollar Stretcher, Inc." and DrLaura.com does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation. Permission granted for use on DrLaura.com More >>

IconJoint Credit Card Trouble The Dollar Stretcher by Gary Foreman Dear Dollar Stretcher, I have three joint account credit cards with my brother. I was the only user of the cards and now the cards are over the limit and behind in payments. I am on the path to paying them off but my credit history is not perfect any more. Because the credit card accounts were joint accounts my brother's credit history is also effected. He wants to purchase a house and I would like to remove the credit card items from his credit history. I have called the credit card companies regarding removal of my brother's name from the account but they will not do it. I am now thinking about getting a debt consolidation loan but have had no success because I am not a home owner. Is there a way to get a debt consolidation loan to pay off those cards? Thanks, Norm Norm and his brother have gotten into a pretty tough situation. But there are some things that they can do to help his brother to get a mortgage. There's also a lesson for all of us in how to avoid similar situations. A lesson that also applies to couples involved in divorce. First, let's take a look at the facts of the situation. When Norm and his brother opened a joint account they both agreed to be completely responsible for paying off any charges. No matter who used the card. That means that the credit card companies can collect from either brother. Legally it's just as if Norm's brother used the card and has fallen behind in his payments. The credit card company won't remove the brother from the account. That would reduce the odds of them getting paid. So what can the brothers do? Norm is already investigating the best option. That's to pay off the debts entirely. Once closed the accounts will show that they were late but are now repaid. Getting a consolidation loan may be tough. Most lenders want to be able to have a mortgage on a home or some other asset. A 'secured' loan (one guaranteed by real property) offers lower rates. Norm may have some other property that he could put up as collateral. Cars, jewelry, antiques or anything else that has value could work. If he has something like that, the best source for a loan would be a local bank. There are other sources for loans that Norm should consider. If he has a 401k plan at work, he might be able to borrow against that. Typically there's a fixed rate of interest which would be lower than what he's probably paying the card companies now. Another option, although it might be touchy, would be to borrow the money from his brother. It's possible that his brother would get a lower interest rate on his mortgage if he took some money from his down payment and used it to pay off the credit cards. Assuming that none of that is possible, they can include an explanation in his credit report. Norm's brother should request a copy of his report. Everyone should check their credit report regularly. Especially before buying a house or car. Independent surveys show that 70% of all reports contain errors. Ten percent of the errors are significant enough to cause credit to be denied. Norm's brother will want to send a letter to each credit card company. Get a return receipt. In the letter he should simply state the facts. Ask that a note be placed in his credit report. It won't change his credit score, but a potential mortgage lender might consider the information when they evaluate his mortgage application. In a few weeks he needs to recheck and make sure that the information was added. He can write the credit reporting agencies at: Equifax , PO Box 740241, Atlanta GA 30374-0241; 800-685-1111 Experian , PO Box 2002, Allen TX 75013; 888-experian Trans Union , PO Box 1000, Chester PA 19022; 800-916-8800 Norm's brother should tell any potential mortgage lender of the situation before he submits an application. By bringing up the problem first he won't be asking the lender to reconsider a rejection. He'll be advising them of a potential problem and asking that they give it proper, but not undue attention. It's possible that Norm's brother will have to pay a higher interest rate because of the problem. What can we all learn from this? Joint accounts can be dangerous. Especially if you're not the one using the account. Sure, it's hard to turn down a family member when they ask for help. But if they need your credit rating to borrow money, they probably shouldn't be borrowing. Don't help them to dig a deeper hole. If you really want to help them out financially, loan them the money yourself. Even if it means that you have to borrow it first. At least that way if they can't make the payments your credit rating won't get hammered. Couples in the process of divorce should also be careful. A divorce agreement may specify that one partner pay off a joint account. But if they don't, the other partner is still liable as far as the lender is concerned. If you're in that situation make sure that you get statements on the account so you know it's being paid properly. Hopefully Norm will get the debts paid and his brother will find a home and mortgage. Gary Foreman is a former Certified Financial Planner who currently edits The Dollar Stretcher website. You'll find hundreds of free articles to save you time and money. "The Dollar Stretcher, Inc." and DrLaura.com does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation. Permission granted for use on DrLaura.com More >>

IconAre We Really Depriving Our Kids? By Jill Cooper One of the main questions I get asked about frugal living is "won#146;t I be depriving my children if I live the frugal life?" Maybe I can answer that question with a question.How am I depriving my children by having them drink water for every meal instead of juice and soda? Isn#146;t one thing doctors are always complaining about is we don#146;t drink enough water? Cutting out just one glass of soda per person per day for a family of four would save $547.50 a year and make them healthier. How am I depriving my children by having them eat an apple or homemade granola bar for a snack instead of a bag of chips? Obesity is a major problem among children in the United States. If you cut out just one bag of chips a week you would save $104.00 a year and make them healthier.How am I depriving my children by having them walk to school or to a friend#146;s house instead of my always driving them there? Lack of exercise is a big problem. You would save time and wear and tear on your car by having them walk and make them healthier at the same time. How am I depriving my children when I don#146;t buy them every toy they see and want? We wouldn#146;t dream of giving a baby on baby food all the chocolate that he wants because we know it would make him sick. His body can not tolerate that much chocolate even if he desires it. In the same way, an older child can#146;t emotionally deal with the overload of toys. I as an adult become stressed just from trying to buy a bottle of shampoo. Have you ever noticed how many options you have? Trying to make a decision can be overwhelming. Do I get it for thin, fine, dry and damaged or colored and permed hair? The list goes on and on. In the same way when a young child looks at mounds of toys, he can become very stressed over choosing which one to play with. If you watch, you will notice that they tend to play with the same couple of toys over and over. If you didn#146;t give them all the toys they asked for and bought one less brand new toy at $10 a week, you would save $520.00 in one year and you would help relieve them of some stress. It is no wonder our children stay confused. We insist that they should eat healthy yet we take them out to eat 3-5 times a week at Mc Donald#146;s. We give them a bag of carrot sticks in their lunch because it#146;s healthy and then give them a bag of chips when they get home from school to get them off our backs. We want them to have strong character yet the moment they whine or cry for another toy or some candy at the store we give in out of guilt. We are afraid that if we don#146;t give them what they want, they won#146;t love us so to rid ourselves of uncomfortable feelings we say yes. How can we teach them to be strong in character when we are so weak? How could our society and way of thinking have gotten so mixed up that we think a child is deprived if a mom chooses to stay home and not go to work? We have come to believe that moms should work outside the home so that children can have the most expensive clothes, education or material things. (Note I didn#146;t say best but rather most expensive since the most expensive doesn#146;t mean the best.) If a mom goes to work so a child can have all those things it#146;s not considered depriving the child of anything but it#146;s mom. Which do you think does a child more harm- being deprived expensive things or it#146;s mom? For you stay at home moms: Before you become too puffed up with pride be aware that too many social, church and school activities can deprive your children of you just as much as working. Do all things in moderation. Jill Cooper is the inspiration behind her daughter Tawra#146;s frugal cookbook Not Just Beans: 50 Years of Frugal Family Favorites. Not Just Beans is a frugal cookbook which has over 540 recipes and 400 tips. For more tips and recipes visit our website at www.notjustbeans.com . Permission granted for use on DrLaura.com. More >>

IconMAKING ENDS MEET By Joanne Watson Getting By On One Income If your spouse's income alone doesn't cover all your expenses, you may havethought putting your child in day-care and working outside the home was youronly option. However, by lowering your expenses or raising your spouse's income (or acombination of both) you may be able to stay home with your child and stillmake ends meet. Expenses With the expenses of you working (daycare, a second car, work clothes,lunches out, a possible higher tax bracket due to combined incomes) you mayfind that the second job isn't bringing in as much money as you thought. By cutting back here and there, you may be able to make up for thedifference, and still stay home with your child. Money-saving tips: Your Mortgage You can check mortgage rates on-line at sites like www.Americanloansearch.com and www.Bankrate.com . If your current mortgageis at a much higher rate, you may be able to bring your bills in line byrefinancing at a lower interest rate. Groceries Plan meals ahead for 1 week, and only go to the grocery store after you'veeaten. You are much less likely to blow your budget on impulse buys. Take advantage of sales and coupons. Try to stock up when there is a greatprice, and check your pantry before going to the store. On-line coupons are available on sites such as. www.Coolsavings.com and www.Valupage.com that can help you lower your expenses. Major purchases Another great feature of the Internet is that you can comparison shopwithout running all over town. On major purchases, you may save asubstantial amount of money. Surf the sites you are familiar with, and don't forget to check the searchengines for new places to shop. Sites like www.Mysimon.com can help you findthe best bargains on larger items Car payments Can you do without the second car? If your husband works nearby, maybe hecan leave you the car if he takes the bus or if you drop him off. Whether you have one or two cars, if your payments are too high, think abouttrading in and reducing your payment. Keep track of spending. Those "helpful" ATM cards may be using up your freedom $20 at a time. It'seasy to lose track of spending when you don't register each purchase in acheckbook. Put away your ATM and credit cards. Try using only checks for 30days, and for smaller items, decide at the beginning of the month exactlyhow much money you want to spend. Take that out in cash and put it in anenvelope. Then, when it's gone-it's gone-you can't spend money that isn'tthere. A useful guide to cutting back is You Can Afford to Stay Home by MaliaWyckoff and Mary Snyder. Income Sometimes, no matter how much you cut back or how many coupons you clip, youjust need more money. By helping to raise your husband's income, he may be able to make up for thedifference in what you would be bringing home in after-tax (and afterwork-related expense) dollars, so you can stay home.. The just released book, Team Work: How to Help Your Husband make More Money,So You Can Be a Stay-at-Home Mom by Joanne Watson provides strategies on howto build your husband's confidence, help him negotiate a raise, find a new,higher-paying job, or build a business of his own, and how to use theInternet to help him succeed. Team Work tips include: Build his confidence - and you may build his income. Remind him of how terrific he is by asking himto tell you about the five accomplishments he is most proud of. Tell him youknow he is worth more, and his employer is lucky to have him Network Think about who you know. One of those people may be in a position to helpyour husband by introducing him to a potential employer. Employers oftenprefer to hire someone who has been referred to them by a person they trust.Also encourage your husband to join the trade association for his professionand add to his network. Find one at www.associationcentral.com Help your husband to learn new skills. Knowledge is power-and more money. Take advantage of sites that offer freeon-line training such as www.free-ed.net or www.webmonkey.com , and check outthe low cost management training from the American Management Association at www.amanet.org . Offer to watch the kids so he can study. Help "market" your husband. Make sure his resume shows him in the best possible light. You can get yourhusband's resume re-done professionally at a site like www.resume.com . oruse your local phone book. Ask to see samples of their work before choosinga resume writer. Find out if your husband is underpaid. Check out the salary surveys at www.salary.com or at the reference desk ofyour local library to find out what the average pay is for your husband'sposition. If he is underpaid, print out the survey for him to use innegotiating for a raise. Practice for success Help your husband practice asking for a raise or interviewing for a new job.By being prepared, he is much more likely to be cool, calm and collected inthe actual interview. Drill the possible responses and his come-backs to his raise request untilhe is comfortable and confident at it. Rather than let your financial situation dictate your decision about whetherto stay home or return to work, getting (and using) the right informationcan empower you to make choices based on what is right for you and yourfamily. Ed. Note: Tips from Team Work: How to Help Your Husband Make More Money, SoYou Can Be a Stay-at-Home Mom by Joanne Watson are re-printed with permission from Family Books. Permission granted for use on DrLaura.com. More >>

IconChecking and Savings Accounts The Dollar Stretcher by Gary Foreman gary@stretcher.com Dear Dollar Stretcher, My wife and I will be needing a car soon. I want to know how I can go about saving for it. Also, for buying special items for the house, should I use my savings account at my bank? Is it wise to use my checking account for monthly expenses only? Thank you. AC AC packs a lot into one paragraph. And, he's right in assuming that how you handle your money will make a difference in how much money you have. Many families invite money troubles by keeping all their available funds in a checking account. Money flows in and out without much thought. It's certainly a convenient way to handle your money. But, not the best way to manage it. Aren't we making a big deal over nothing? No. A good system for controlling your money can save you time and make you money. It can provide helpful information at a glance and keep your money from disappearing. It's the first basic step to controlling your finances. Think about how your life works. Your expenses could be divided into four categories. Monthly routine bills, larger expected bills (like vacations), larger unexpected bills (like auto repairs) and very large expenses (like a house or car). Just as there are different kinds of expenses, the money that's used to pay for them should be handled differently. And AC has a pretty good system started. Let's flip his questions around and look at the last one first. Yes, it is best to limit your checking account to paying regular monthly expenses. There are a couple of reasons why that's true. It's easy to write a check to pay a bill. That's good. But that easy spending can be bad. If you're saving money for a new stove you don't want the money too accessible. Temptation could make it easy to buy a fishing rod or theatre tickets. When money is real tight it might be necessary to keep everything in a checking account. Naturally, the risk is that the money tends to disappear making it harder to save. AC is doing the right thing by putting some money into a savings account. Taking it out of the checking account protects it. If AC wants to dip into savings for a special purchase he'll need to consciously make a decision to take the money from the savings account. The money won't disappear a little at a time. The 'big expense' money needs to be safe and reasonably available. It's helpful to be able to know how much money you have available for the unexpected. Most people use a savings account or money market fund. And since you don't routinely dip into savings, a look at your account balance will quickly tell you how much you have for the home insurance or auto repair bill. If AC is saving for a new car he might even want to set up a separate savings account just for that purpose. In fact, watching the balance grow could be a way to encourage him to save even more. Making use of a savings account or two along with his checking account could definitely help AC keep track of his money. It could also help him to accumulate it faster. Gary Foreman is a former Certified Financial Planner who currently edits The Dollar Stretcher website www.stretcher.com/save.htm . The site contains hundreds of free articles to help stretch your day and your dollar. Permission granted for use on DrLaura.com. "The Dollar Stretcher, Inc." and DrLaura.com does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation. Permission granted for use on DrLaura.com More >>

IconGetting Out of an Auto Lease The Dollar Stretcher by Gary Foreman gary@stretcher.com Dear Dollar Stretcher: I would like some advice on how to sell, trade-in or otherwise get rid of a car. I have a 2000 Toyota Camry with 53,000 miles on it. The lease is up in 2004. The last car dealer I spoke to told me that I needed to wait for the lease to be up in order to trade down. He said that the difference between what I owe and what it's worth is $10,000 and that my mileage should be okay if I move closer to where I work. Is this person telling me the truth? Is there any other way I can get a lower car payment or get rid of this car before 2004? My goal is to be a stay-at-home mom to my little boy and this car payment is stopping me. Linda Lexington, KY Linda has asked a question that I get regularly. How can I get out of a car lease? Anyone who is already leasing or thinking about leasing should consider how they would answer Linda's question. Linda needs to recognize that a car lease is fundamentally different from buying a car and making payments. When you buy a car you own it and have agreed to pay a certain amount for it. You can sell the car. Typically you can pay your loan off early. When you lease a car you've agreed to keep it and make payments for a certain period of time. You do not own it. So you can't sell or trade it. A typical new car depreciates approximately 30% in the first year. Linda's car isn't typical. It's a high mileage car. A Camry with her mileage is worth about $8,000 less than when the car was new. She hasn't paid that much so far. But she will before the lease is over. A trade isn't going to help even if she went to a much older, cheaper car. It will cost thousands to walk away from the Camry. Unless she can pay that amount now, it will just be added to the cost of the 'cheaper' car. The end result would be payments that are similar to what she already has. If Linda insists on trying to terminate her lease, she should do it directly with the leasing company. Involving a car dealer could cost her more. Linda will need to read her lease agreement carefully. Sometimes there's more than one fee or penalty involved. The transaction charges alone could cost up to $750. She'll want to contact the leasing company to see what it would cost to terminate the lease early. Then recheck their math. Mistakes are rarely in the customer's favor. Very few leases will allow you to turn the lease and the car over to someone else. It might be tempting to try to do that without telling the leasing company. Avoid the temptation. Linda could find herself financially responsible for the other person's accident, negligence or carelessness in using the car. If Linda did find someone who wanted to take over the lease, she should contact the leasing company and arrange to have them work directly with the other person. Experts generally suggest that it's best financially to stay with a lease until it's over. So is there anything that Linda can do? It's possible that the leasing company might extend the term of the lease and lower Linda's payments. Moving to reduce her commute might be a good idea, but that could be expensive. A cheaper solution might be to find a job closer to home. Carpooling could provide Linda with a solution. A three person carpool could cut her commuting costs by 2/3. It would also reduce the excess mileage. Another possibility would be for Linda to provide rides for a couple of co-workers and charge them. That would provide some money to help pay the monthly lease. Before starting she should contact her insurance company to make sure that she has the proper coverage. If Linda's family has two cars they might consider trading their other car for something less expensive. Any money left over could be used to pay the monthly lease payments. The bottom line is that it will be very hard for Linda to stay home with her son until the lease is over in 2004. That's sad, but it's true. What can the rest of us learn from Linda's experience? A car lease is very easy to get into and very hard to get out of. When you commit to a lease you will almost certainly pay the entire amount no matter what happens in your life. Lay-offs, babies and medical problems will not get you out of a car lease. Even if you don't need the car you'll continue to pay month after month until the lease is over. Leasing companies shout about their 'low monthly payments'. If you ask around you'll find someone like Linda who knows just how high those payments can be. Gary Foreman is a former Certified Financial Planner who currently edits The Dollar Stretcher website www.stretcher.com/save.htm . The site contains hundreds of free articles to help stretch your day and your dollar. Permission granted for use on DrLaura.com. "The Dollar Stretcher, Inc." and DrLaura.com does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation. More >>

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