Can You Actually Make Money Chasing Rates?
One common tactic I see on personal finance blogs is what I like to call “rate chasing.”
This tactic usually involves carefully watching the yield rates on savings accounts over at Bankrate.com (or a similar service), always signing up for one of the top accounts, and transferring their savings to that highest-yield bank.
For me, at least, I don’t find this tactic of much use at all. Here’s why.
The interest difference between a good bank’s interest rate and the top interest rate is pretty small. I took a look at Bankrate’s 50 newest additions to their database and sorted them by APY. The best rate found on that list was 1.40%; the median one (the one in the middle) was 0.95%. In other words, you’re gaining just 0.45% by choosing the top bank over a random bank.
That’s not much money. Let’s say you have $5,000 sitting around to play with in this fashion. The amount you’ll gain over the course of a year is $22.50 by rate hopping from the median bank above to the top bank above. And, in truth, it’s usually worse than that.
It takes time to locate the right offers. In order to keep up with these offers, you have to visit sites like Bankrate very regularly to find out what’s on top today. This is a small, continual drag on your time as you have to actually evaluate the top offers to make sure there’s not some sort of catch and to make sure that the rate was actually reported correctly to Bankrate.
It takes time to sign up for new accounts. If you do find a new offer, you have to sign up for that account. This can be an arduous process depending on their sign-up procedures, sometimes requiring mailing documents back and forth and waiting quite a while – another source of eating away at your valuable time.
The more accounts you have, the more identity risk concerns you have. While banks have amazingly strong security procedures, no security system is perfect. Each individual bank might have a 99.9% chance of keeping your personal data safe this year, but if you have fifty accounts out there, the chance of all of your accounts being safe this year drops to 95%. Identity theft is a real mess to clean up, so it’s worth your while to minimize the number of access points to your personal data.
Diminishing returns are in effect. Let’s say you’re at a bank offering 0.5% on your savings account. You can earn at least a little by hopping to an account earning 1.3%, right? That’s $80 extra per year on $10,000.
But once you’re in that 1.3% account, the benefit of the next leap is much smaller. You might dig for a while and find a 1.5% account, earning you $20 for the jump per year. The next time, you have to search a long while to get 1.6%, earning you $10 more.
My approach is simple. I usually encourage people to simply get an online savings account with a great customer service reputation and a reasonably competitive rate and just stick there without worrying about what other banks are doing with their rates.
Would I ever rate hop? Yes, in certain situations, I would rate hop. First, the interest rate competition in online banks would have to heat up. If you were seeing a top rate of 6% APY versus a median of 3%, then you’re talking about some significant interest. This is particularly true if you’re dealing with a large balance – say, $50,000 or more. 3% of $50,000 is $1,500 – that’s definitely worth your time.
But that doesn’t reflect the reality of the banking market and it also doesn’t reflect the day-to-day reality of most people. So, for now, I have to say that rate chasing is a pretty ineffective tactic for spinning more money out of your savings.
Continue reading Can You Actually Make Money Chasing Rates? …
From The Simple Dollar.
What Works?
Of all of the parenting tactics I’ve tried, nothing has worked better at facilitating good behavior and a trusting bond like floor time. Simply getting down on the floor and playing with your children builds trust and good relationships like nothing else.
Of all of the dieting tactics I’ve tried, nothing has worked better than portion control (coupled with not keeping “junk” snacks in the house). The “saucer” strategy, in which you eat nothing at a meal except what will fit on a saucer, works like an absolute charm.
Of all of the saving tactics I’ve tried, nothing has worked better than simply automating it. Ordering the bank to simply scrape a small amount from my checking each month and put it in a savings account means I don’t have to think about it, and that means I won’t forget about it or talk myself out of it. The money is just there when I need it.
Of all of the time management tactics I’ve tried, nothing has worked better for me than the “inbox.” I keep a pocket notebook with me and whenever I think of something I need to do, I fill a whole page describing it (big words over several lines). I toss these pages in my “inbox” at home and go through them once or twice a day, making sure each one is dealt with.
When I stick to these singular tactics, I usually succeed. When I go away from them, I fail.
In fact, I’d say that finding tactics for success in life and money that actually work is well worth investing quite a bit of time.
Why? Because the ones that work make your life flow so much smoother that you quickly make the time and money back.
It’s worth the time to read through a list of 100 money saving tactics and try out fifteen of them just to find one tactic that genuinely and consistently saves significant money for me.
It’s worth the time to try every kind of easily-available fresh produce because the more fresh produce I actually like, the easier it is to have a very varied diet while still eating really healthy.
It’s worth the time to try all sorts of time management tactics because when I find one that shaves ten minutes off of an average day, I’ll make that time back over the long run.
The key to success is investing the time to figure out what really works for you. They might not be the same things that work for me – in fact, they probably won’t be.
I’ll close this message with a few challenges.
If you’re looking to spend less money, spend some time going through this list of 100 money saving tactics. Identify twenty that might just fit in your life and give them each a genuine shot. You’ll probably find that fifteen of them don’t fit you. The other five? They’ll be valuable enough that the entire time will be worth it.
If you’re looking to spend less time, use the same approach with my upcoming series on Getting Things Done, which will be loaded with time management ideas. Read the series carefully. Pick the elements that you think might work for you and give them a genuine shot. The ones that do work will stick and they’ll end up saving you so much time / making you so much more productive that you’ll flip.
Whatever that area in your life is that you want to work on, start trying some tactics. Go on a daily walk. Eat only the food that fits on a saucer. Read a challenging book for an hour a day.
Just try something instead of sitting there wishing it could be better.
Continue reading What Works? …
From The Simple Dollar.
What Works?
Of all of the parenting tactics I’ve tried, nothing has worked better at facilitating good behavior and a trusting bond like floor time. Simply getting down on the floor and playing with your children builds trust and good relationships like nothing else.
Of all of the dieting tactics I’ve tried, nothing has worked better than portion control (coupled with not keeping “junk” snacks in the house). The “saucer” strategy, in which you eat nothing at a meal except what will fit on a saucer, works like an absolute charm.
Of all of the saving tactics I’ve tried, nothing has worked better than simply automating it. Ordering the bank to simply scrape a small amount from my checking each month and put it in a savings account means I don’t have to think about it, and that means I won’t forget about it or talk myself out of it. The money is just there when I need it.
Of all of the time management tactics I’ve tried, nothing has worked better for me than the “inbox.” I keep a pocket notebook with me and whenever I think of something I need to do, I fill a whole page describing it (big words over several lines). I toss these pages in my “inbox” at home and go through them once or twice a day, making sure each one is dealt with.
When I stick to these singular tactics, I usually succeed. When I go away from them, I fail.
In fact, I’d say that finding tactics for success in life and money that actually work is well worth investing quite a bit of time.
Why? Because the ones that work make your life flow so much smoother that you quickly make the time and money back.
It’s worth the time to read through a list of 100 money saving tactics and try out fifteen of them just to find one tactic that genuinely and consistently saves significant money for me.
It’s worth the time to try every kind of easily-available fresh produce because the more fresh produce I actually like, the easier it is to have a very varied diet while still eating really healthy.
It’s worth the time to try all sorts of time management tactics because when I find one that shaves ten minutes off of an average day, I’ll make that time back over the long run.
The key to success is investing the time to figure out what really works for you. They might not be the same things that work for me – in fact, they probably won’t be.
I’ll close this message with a few challenges.
If you’re looking to spend less money, spend some time going through this list of 100 money saving tactics. Identify twenty that might just fit in your life and give them each a genuine shot. You’ll probably find that fifteen of them don’t fit you. The other five? They’ll be valuable enough that the entire time will be worth it.
If you’re looking to spend less time, use the same approach with my upcoming series on Getting Things Done, which will be loaded with time management ideas. Read the series carefully. Pick the elements that you think might work for you and give them a genuine shot. The ones that do work will stick and they’ll end up saving you so much time / making you so much more productive that you’ll flip.
Whatever that area in your life is that you want to work on, start trying some tactics. Go on a daily walk. Eat only the food that fits on a saucer. Read a challenging book for an hour a day.
Just try something instead of sitting there wishing it could be better.
Continue reading What Works? …
From The Simple Dollar.
What Works?
Of all of the parenting tactics I’ve tried, nothing has worked better at facilitating good behavior and a trusting bond like floor time. Simply getting down on the floor and playing with your children builds trust and good relationships like nothing else.
Of all of the dieting tactics I’ve tried, nothing has worked better than portion control (coupled with not keeping “junk” snacks in the house). The “saucer” strategy, in which you eat nothing at a meal except what will fit on a saucer, works like an absolute charm.
Of all of the saving tactics I’ve tried, nothing has worked better than simply automating it. Ordering the bank to simply scrape a small amount from my checking each month and put it in a savings account means I don’t have to think about it, and that means I won’t forget about it or talk myself out of it. The money is just there when I need it.
Of all of the time management tactics I’ve tried, nothing has worked better for me than the “inbox.” I keep a pocket notebook with me and whenever I think of something I need to do, I fill a whole page describing it (big words over several lines). I toss these pages in my “inbox” at home and go through them once or twice a day, making sure each one is dealt with.
When I stick to these singular tactics, I usually succeed. When I go away from them, I fail.
In fact, I’d say that finding tactics for success in life and money that actually work is well worth investing quite a bit of time.
Why? Because the ones that work make your life flow so much smoother that you quickly make the time and money back.
It’s worth the time to read through a list of 100 money saving tactics and try out fifteen of them just to find one tactic that genuinely and consistently saves significant money for me.
It’s worth the time to try every kind of easily-available fresh produce because the more fresh produce I actually like, the easier it is to have a very varied diet while still eating really healthy.
It’s worth the time to try all sorts of time management tactics because when I find one that shaves ten minutes off of an average day, I’ll make that time back over the long run.
The key to success is investing the time to figure out what really works for you. They might not be the same things that work for me – in fact, they probably won’t be.
I’ll close this message with a few challenges.
If you’re looking to spend less money, spend some time going through this list of 100 money saving tactics. Identify twenty that might just fit in your life and give them each a genuine shot. You’ll probably find that fifteen of them don’t fit you. The other five? They’ll be valuable enough that the entire time will be worth it.
If you’re looking to spend less time, use the same approach with my upcoming series on Getting Things Done, which will be loaded with time management ideas. Read the series carefully. Pick the elements that you think might work for you and give them a genuine shot. The ones that do work will stick and they’ll end up saving you so much time / making you so much more productive that you’ll flip.
Whatever that area in your life is that you want to work on, start trying some tactics. Go on a daily walk. Eat only the food that fits on a saucer. Read a challenging book for an hour a day.
Just try something instead of sitting there wishing it could be better.
Continue reading What Works? …
From The Simple Dollar.
The Simple Dollar Time Machine: March 13, 2010
Many newer readers of The Simple Dollar haven’t been exposed to the hundreds of great articles in the archives of the site, so this is a weekly series that highlights the five best posts from one year ago this week, two years ago this week, and three years ago this week. I call it … the Time Machine.
One Year Ago (March 7 – March 13, 2009)
A Guide to Making Inexpensive and Delicious Homemade Pizza Our homemade pizza makes several meals for our family for a dollar a pop or less. Not only that, it’s delicious and fairly healthy, too.
Frugality and Feeling Deprived Frugality doesn’t have to feel like deprivation at all if you spend some time reflection on what exactly bounty means in your life.
The Frugal Laptop This worked great for about ten months until a separate hardware issue cropped up with the laptop. I’d still advise anyone to try this, though.
A Step-by-Step Guide to Getting Your Credit Card Interest Rates Reduced This tactic works well, but be aware that many credit card companies might also reduce your credit limit at the same time, particularly if you’ve had a history of being late on your bills.
My Worst Job – And What It Taught Me Those simple, menial tasks that you hate are often the perfect opportunity to show the world that you’re a great worker.
Two Years Ago (March 7 – March 13, 2008)
How I Turned That Ship Around: Another Look At My Financial Meltdown … And The Aftermath When things were at their absolute worst for me financially, here’s the game plan that I followed.
The Financial Recovery Toolkit: Ten Tools I Used In My Financial Turnaround Hand in hand with the above article, here are ten tools I used to make that turnaround possible.
Chipping Away at the Paycheck to Paycheck Routine One big challenge that people have is breaking away from the idea that you have to spend what you earn. Financial security comes from freedom from your work and this is the first step.
The Credit Card Holy Wars: There Is No “Right” Answer … But Here’s My Take Should you have a credit card? Shouldn’t you? I think there are reasonable arguments on both sides of the coin.
Ten Ways to Translate Your Passion Into Additional Income If you’re passionate about something, you already have a leg up over a lot of people in that area. People pay for passion.
Three Years Ago (March 7 – March 13, 2007)
Are Your Friends Always Spending Money? Ten Frugal Activities – And Advice On How To Suggest Them When you begin to turn your financial life around, it’s often a struggle to overcome the social barriers. Here are some tips for making it work.
Why Johnny Can Read: Simpson’s Paradox and the Greatly Exaggerated Death of American Public Education The reason for writing this was an ongoing debate with readers about public versus private school. Is private school worth the dollars?
How To Transition From Car Loans To Paying Cash For Automobiles Paying cash for automobiles is a huge money saver because you’re not paying the interest on the car loans. Here’s how to get there.
Love, Marriage, and Money: Should a Couple Combine Their Finances? This isn’t always a straightforward issue, and it’s not just a trust issue either (which is what people often try to break it down to).
Nine Financial Reasons For Getting Involved In Your Local Community Community involvement can really help out your financial life, directly and indirectly. Here’s how.
If you’d like to browse through more of the archives, visit the chronology, where all posts are listed in chronological order.
Nine Ways to Get More out of The Simple Dollar
This is kind of a FAQ for new readers and is posted each week along with the Time Machine. Here are nine great ways for new readers to dig deeper into The Simple Dollar.
1. Subscribe by email or RSS. Visiting The Simple Dollar’s website is great, but for many people, it’s more convenient to receive the articles in another form. It’s easy to join 60,000 other subscribers and get The Simple Dollar’s content by email or in your RSS feeder (if you’re unfamiliar with RSS, check out Google Reader.
2. Comment. Each article on The Simple Dollar has lively discussion. Just click on the green square in the upper right of each article on the website and join in!
3. Read my story of financial meltdown and recovery. The Simple Dollar isn’t based on what I’ve read in books or learned in school. I’ve made a lifetime of financial mistakes – The Simple Dollar is a record of what works for me during the process of getting my life on a better track.
4. Download my free 49 page e-book. Everything You Ever Really Needed to Know About Personal Finance On Just One Page is completely free. It summarizes all of the key lessons I’ve learned along the way about personal finance in one tidy package – in fact, all of the main principles can be found right on the cover.
5. Follow me on Twitter – or other social networks. I post tons of interesting articles, quotes, follow-up material, commentary, and other material on Twitter. Follow me! If you’re unfamiliar with Twitter, it’s essentially an open discussion forum for people to share ideas and thoughts with other like-minded folks – you just choose the people you want to listen to and their ideas and thoughts are all delivered to you on a single page.
I also participate on several other social networks. Feel free to check me out on del.icio.us (it’s where I collect links, from which I select the ones that appear in my weekly roundups), wakoopa (what software I use), GoodReads (what books I’m reading), Facebook, and FriendFeed (which aggregates everything). I also have an irregularly-updated personal site, TrentHamm.com.
6. Dig through “31 Days to Fix Your Finances.” 31 Days to Fix Your Finances is an article series that outlines how you can get a grip on your finances over the course of a month.
7. Send me your questions and suggestions. Send me an email and let me know what you’re thinking, what you’d like to see, and any questions you might have. I try to respond to as many emails as possible and I read them all. I may even use your question in a future article!
8. Become a “Friend of The Simple Dollar.” If you find the stuff on The Simple Dollar valuable and are willing to spend five minutes or so a month to help me out with small things, please consider signing up to be a “Friend of The Simple Dollar”.
9. Email a great article you find to a friend. Find an article that you think your friend would love? At the bottom of each article, you’ll find a link that says “Email this” – just click on that, type in your friend’s address, and send it right along to them!
Continue reading The Simple Dollar Time Machine: March 13, 2010 …
From The Simple Dollar.
Here’s a Guaranteed Way to Maximize Your Investment Returns
I have discovered a surefire way to drastically increase the returns you get on all of your investments, no matter what you’re investing in. If you follow this advice, I guarantee that if you have a winning investment now (even if it’s just barely in the positive), my tip will strongly improve the cash that investment puts in your pocket.
Even better, I’m not going to sell you this sure-fire tactic in some sort of two-day seminar or an investment kit. I’m going to give this advice away!
Are you ready for it?
Here is the one guaranteed way I’ve found to increase your investment returns.
Live cheaper and direct that saved money into your investments.
It simply works. You can spend years and years studying investments to squeeze another percent out of your returns by getting just the right mix of investments without overshooting your risk tolerance. Or you can simply spend less each year, bump up the raw amount you invest by 10%, and quickly start seeing a 10% increase in your investment return.
The truth of the matter is simple: frugality and saving/investing are deeply linked to each other. Living within your means and spending less than you earn lets you use that excess money towards whatever goals you have in life – which is exactly the purpose of investing. The less you spend, the bigger the “gap” between your spending and income becomes, the more you have to invest, and the bigger your returns are.
There’s a reason Warren Buffett lives in an older house in Omaha, Nebraska, after all.
Another important thing to remember: investments don’t have to be stocks. Cash in a savings account is an investment – it’s simply a very secure one with a low, fixed rate of return. Virtually anything you buy or any account you place your money into where you expect to recoup some of what you put in and hope to recoup more than you put in is an investment. Vintage baseball cards can be an investment, for example.
Here’s an example of what I’m talking about. A 25 year old person wants to start investing so he can open a business in his later years, but he can’t see where he can possibly afford to start doing it. He’s happy with his life and most of the “frugality” ideas he’s heard sound unenjoyable.
Instead, he finds just a small handful of money-saving tactics, the type he can do once and save a lot of money from over the long run.
He installs a programmable thermostat in his home and programs it, saving $20 a month on his energy bill.
He also spends a weekend air-sealing his home to reduce air flow to the outdoors, saving another $20 a month on his energy bill.
He decides to give up soda, mostly as a way to lose weight, and starts drinking water instead. That saves him another $30 a month.
That’s it – no other changes. He then sets up an automatic savings plan and transfers that $70 a month into a savings account for investing purposes. Over the next twenty five years, he averages a 5% rate of return on his money – yes, 5% is really low, I know, and he could likely do much better than that. At age fifty, he has $43,000 in the account to seed his small business with. If he gets an 8% return, he has $67,000 to start with.
That money came from the magic of frugality leading investments. By cutting back your spending and channeling the money you’re saving into investing, even if it’s just into a savings account, you start building for whatever dreams you have for the future.
That’s the secret of bumping up your investment returns.
Continue reading Here’s a Guaranteed Way to Maximize Your Investment Returns …
From The Simple Dollar.
The Gradual Shift
When I hit my financial bottom, I realized that a lot of things in my life needed to change. I went through my closets and sold off a lot of my entertainment collections. I started trying out every frugal tactic under the sun. I created a debt repayment plan and hammered some of my debts with the money I made from the sales and from the frugality.
Yet the biggest shift – naturally choosing not to spend money at every opportunity – was much more of a gradual change. I didn’t wake up one morning with complete success in this area. In fact, it took quite a while before my “default” mode when I went into a bookstore was not to buy a book. It took a long time before I stopped putting unnecessary stuff into my shopping cart.
Why did it take a long time? For one, the old ways were my normal behaviors. It was just the way I had done things my entire adult life, and bulldozing those patterns – especially bulldozing a lot of patterns at once – is easier said than done. For another, I still derived a lot of personal short-term comfort from those choices. I got a nice rush from owning a new book or something like that in the short term – it was only later on when that book was read (or sitting unread on my shelf) and I realized that it had gobbled down $15 or so that I felt bad about it.
What caused an overall mind shift away from that? Obviously, from the subject of this post, it was a gradual shift. However, there were three big key elements that convinced me to break the habits of unnecessary spending in my life.
First, I focused in on one or two key areas where I had a lot of money leaks. For me, the big one was the book store. I love to read, don’t get me wrong, but buying three or four new books a week isn’t exactly a habit that creates long-term financial security.
So, to start with, I really focused on my book-buying habit. I went on a lengthy sabbatical from bookstores. I just didn’t buy any new books.
The effect of this is that it forced me to discover and utilize other methods for feeding my book-reading hobby. I found PaperBackSwap (one of my first orders from there was the remaining four Douglas Coupland novels I’d never read, for example). I rediscovered the library – and I started utilizing the waiting lists for big new releases. I started swapping more books with friends as well.
By the time I gave up on the book store sabbatical, I found that my tendency to buy books with reckless abandon had been broken. I still pick up a book on occasion, but more often than not, it’s one that I’m pretty sure I’m going to read multiple times and thus mine extreme value from.
Second, I tried to be mindful of spending in other areas but I didn’t beat myself up over failures. I found that, time and time again, if I beat myself up over a mistake, I would be much more prone to just repeat that mistake.
A much better approach for me was to simply say, “I made a spending mistake. That’s okay, though – one mistake doesn’t break me. What can I do in the future to not repeat that mistake?”
From there, I’d try different things. I eventually adopted a new driving route to work, for example. I altered my evening routine so that I’d often have a lunch packed for me to take to work the next day so I didn’t have to eat out each day.
I was mindful of my mistakes and I constantly experimented. Sometimes things would click and just work. Sometimes I’d repeat a mistake a few times. It was a learning process.
Finally, I got more involved in communities and interpersonal relationships that didn’t value spending. I started spending more time with some community groups while spending less time with my buddies that were spending money left and right in a seemingly never-ending game of one-upsmanship. I focused a lot on a small handful of personal relationships with people who reflected where I wanted to be with my life and didn’t focus as much on relationships that pulled me away from that ideal state.
Over time, I found myself doing less “going out with the boys” to do expensive things and more evenings inviting people over to our house to play board games. I found myself filling my evenings with community meetings instead of going out with people who spent most of their time being negative. I joined groups that matched my interests instead of just trying to keep up with the others in my usual gang.
The people I surrounded myself with began to gradually reinforce good spending behaviors instead of reinforcing bad ones. I no longer felt a social need to have the latest and greatest thing – and that helped a lot.
A final tip that helped: I reduced my mass media consumption. I’m not talking about the advertisements – I’m talking about a lot of the content itself. Shows where people demonstrate unbridled excitement at the possibility of winning some material item. Magazines that talk breathlessly about the latest and greatest product. Whenever I see those things, I just toss them out. I have no need to be influenced by what other people want.
It takes time – at least, it did for me. Good luck.
Continue reading The Gradual Shift …
From The Simple Dollar.
Pop prices are jumping up
I thought it was a mistake. I should have taken a picture with my cell phone camera to have some proof.
A 2-liter bottle of pop was marked “on sale” last week for $1.75 at a supermarket in Monroe, Mich. No, that’s not TWO bottles. That was the price for ONE bottle.
But take a look at the sales fliers in your newspapers this weekend: Rite Aid has coupon special to get four Coke 2-liters for $5. Busch’s Fresh Food Market chain in southeast Michigan has Pepsi 2-liters at two for $3.
Actually, I’ve been seeing a lot of two for $3 pricing lately.
I guess I was kind of fooled by the Super Bowl promotions during the past two weeks.
Pop has been so easy to get locally at $1 a 2-liter that I’ve pretty much taken that as the normal price. Right now, it’s not. Oh, yeah, don’t get me started on the 12-pack deals. I know to pick up those when I can get three 12-packs for $10 or less, because I have seen them priced at more than $5 a case when sales are not in effect.
I’m trying to do some searches on the web to find out what’s going on. But most of the headlines I’m finding are about prices rising in certain overseas markets because of the cost of sugar.
We do buy pop. Most of it goes into my husband’s lunch box or goes on road trips so we aren’t buying pop in the overpriced convenience stores and vending machines.
I used to buy canned pop on an as-needed basis – basically three or four cases a month. That stopped a few years ago when our cash flow got tight. I realized the best way to tackle the problem was stock up on three to five cases at a time when the prices were low.
At home, we alternate other beverages with 2-liter pop. It’s definitely a tactic to invoke when prices are that high. Lemonade mix, coffee, iced tea, cold water all are good frugal options. Gee whiz, even milk is cheaper at the local price of $2 a gallon right now as compared to the “sale price” of $1.75 for the pop 2-liters.
Continue reading Pop prices are jumping up …
From Monroe on a Budget.
Debt Reduction and Elimination Ads: The Real Scoop
Iris writes in:
I was wondering if you could comment on the debt reduction/elimination ads I keep seeing on tv. Are these companies reputable? Are they doing anything that I can’t do myself? I would hate to pay a huge fee for something I could do myself. I would really like to reduce our debt load so I can free up more funds in our budget every month for, say, groceries. Advice?
The first and most important thing to note is that not all debt reduction and elimination programs are the same. Although they’re often collected under the same grouping, these programs tend to provide an array of services.
Unfortunately, all of the services provided are either dangerous or easily replaced by free materials.
One common service provided is education inhow to pay off debt. They explain, in great detail, how to create your own debt repayment plan and stick to it. They provide workbooks and other information to make the process as painless as possible.
The catch here is that you’re paying a lot for materials that can be found at the library or online for free or even at your local bookstore for a much lower price. If this is what you need, start off by checking The Total Money Makeover out of the library.
Another common service provided is direct management of your debts. Instead of teaching you how to make a debt repayment plan, they essentially take charge of all of your debts, do it for you, and provide you with a single monthly bill.
The catch here is that the fee for their service is often very high, usually running into the thousands of dollars. Considering that a person can make up such a debt repayment plan themselves for free, this is a pricey service. There can be some merit here, though, if a person simply wants an “enforcer” or a “coach” to help them do it.
A third common practice is renegotiation of debts. This is often the tactic used by programs that promise very rapid elimination of your debt. They’ll negotiate your debt for you, often functioning as a debt collection agency themselves, then you pay them a lower, negotiated amount.
The catch here is that this functions as a nuclear bomb on your credit report. Your credit score will be in the trash for years if you take this approach. The actual amount you have to pay for this debt is less, but any debts you take out in the next seven years – or any insurance you take out – will cost you more, and any applications you make where your credit report is used as a factor will not reflect well on you.
In short, all of these plans do what they advertise, but they often cost far more than they’re worth.
The key thing to remember is this: no debt reduction or elimination plan is worth anything if it’s not paired with a sincere, long-term change in your own spending. If you’re merely using these services to give yourself some breathing room without changing your spending behaviors into a more frugal spend-less-than-you-earn attitude, it’s just a matter of time before you’re back in the same boat again – and often in worse shape if you’re back in this boat with poor credit.
On the other hand, if you first get your personal spending habits into shape and truly go forward with a “spend less than you earn” mindset, you can handle the debt repayment plan yourself. They’re easy to set up, won’t destroy your credit, and don’t cost an arm and a leg, either.
Good luck.
Continue reading Debt Reduction and Elimination Ads: The Real Scoop …
From The Simple Dollar.
Why should you bother with buy one, get one free deals?
Once you look at the drugstores as an alternative source to the supermarket for over-the-counter medicines, vitamins and sometimes, yes, groceries, you’ll notice an advertising gimmick that can be a bit annoying:
The drugstores I most frequently shop at – including Rite Aid and Walgreens – like to offer two buy one, get one free deals.
Why don’t they just sell the product half off so you can get one bottle of whatever you need right now and save money right now?
Well, they don’t. And since I never took classes in advertising or retail management, I have no idea why certain promotions work better with the public than others. I have only my common sense theory that if a tactic doesn’t profit a business in the long run, they won’t do it. Buy one, get one free deals obviously work out for the retailers.
How do you get buy one, get one free to work for you?
Simple: you start thinking about saving money in the long run, rather than in the short term.
If you got caught short on cash one week because there are more bills than money, what makes you think this situation will never happen again?
If you look at your cash flow, you will likely find this happens on a pretty predictable basis based around your pay cycles and bill cycles. And if someone in the family – maybe both – have been forced to take a layoff, furlough days or a pay cut, then you ARE dealing with a long-term income problem rather than a cash flow problem for the week.
Buy one, get one free deals are very helpful for families who are in this situation.
If you have a coupon, you can use it toward the product you are “buying.” If the coupon says buy two to get the discount, put four in your shopping cart.
You have now saved yourself money NEXT month rather than THIS month.
If you don’t need the free product, then put it on the food pantry or personal care product charity donation boxes such as those at your church, day care or business. Donating freebies is one of the tactics that families on a budget can use to help share their talents and resources with other needy families.
Continue reading Why should you bother with buy one, get one free deals? …
From Monroe on a Budget.