Thursday, March 24, 2016

Debt as a Matter of Life

Credit cards make debt, not safety nets

Disclaimer: There are times when going into debt is simply unavoidable. Unexpected bills, a loss of income or major life changes can throw anyone's finances off. Those are not the people I'm talking about here. I'm talking about those who go into credit card debt continually and unnecessarily.

Some time ago, I was sent a link to an article in the Terre Haute Tribune-Star called "Americans Using Credit Cards to Pay for Basics." Unfortunately, the page is no longer online, but it was disheartening to read. It's not because I think times are so tough that people are having to go into debt just to survive, but I hated it because it showcased people who really don't know how to survive without credit cards. It even evokes sympathy for them.

I don't know these people who are having to buy food and pay bills with credit cards (Excuse me, doesn't using credit cards create bills that have to be paid?), but I would bet almost anything that they would benefit from a little education in frugal living.

The article states that "groceries, emergency car repairs, medical bills and kids' tuition" are being paid by credit card. Okay. I'll go with emergency repairs and medical bills when necessary. The rest is baloney.

If times are that hard, they could find a food bank. They could adjust their diets. They could avoid eating out, buying convenience food, paying for name brands. They could learn different ways of obtaining food. Do they make too much to get food stamps?

Kids' tuition? When it makes sense to pay for your kids' tuition when you don't have the money to pay for daily expenses, it also makes sense to burn dollar bills in the fireplace for warmth because you don't have the money to pay the heating bill. Kids can work for a year before starting college and they can work during college. Lots of kids do. There are grants and student loans that the kids are responsible for, not the parents.

I'll even go so far as to say that a college education is not as necessary as, say, eating or breathing and it's not the parent's responsibility to go into debt for it. If a parent can pay for tuition and wants to, that's fine. But if a parent feels obligated to the point of putting themselves into debt, that's not fine.

Using credit cards as a "safety net" is not smart, although I know there are (a very few) times when it's necessary. The problem is two headed. It comes when people can't discern between what is really necessary and what is not and it comes when people don't realize how crucial it is to have an emergency fund.

I'm not really blaming the people. They've grown up in an economy that encourages debt. They don't know any better and that makes me really fear for this country. When our economy slides into a real depression, many won't have the fortitude, knowledge and common sense to survive it.

During the Great Depression, there were those who committed suicide because they couldn't handle life without their money. This time, it will be because they don't know how to handle life without being able to charge it to a credit card.

If you know someone who lives like this, do what you can to convince them to get out of the credit card trap. Who knows, you could save someone's life.

Thursday, March 17, 2016

Easter is on its way

Keeping costs down at Easter time can be frustrating. Those big, beautiful and pricey Easter baskets and popular retailers seem to make fun of smaller efforts, but you can create an Easter basket that looks just as good (or better!) for much less.

The Basket

Start at your local dollar store or low cost outlet. I have seem some intricately designed wire woven baskets for a dollar bill that would thrill a girl of any age. The baskets could be used later to hold things on a dresser or in the bathroom.

Traditional woven baskets are cheap at dollar stores, too, but the ones I have seen are not sturdy enough for a day's worth of egg hunts. Try thrift stores, and go now before the Easter rush is on. Check thrift store baskets for stains or worn areas that could mean a candy and egg disaster.

If you're the least bit crafty, you can make your own. Braided, crocheted or knitted baskets can be made quickly with thick materials. Look at containers you have on hand and repurpose them. Be sure to provide a sturdy handle.

The Candy

Dollar stores to the rescue again, but include places like Big Lots. You can sometimes find large bags of mixed types of candy for a good price.

Make your own by using some simple, tried and true recipes. Don't make mashed potato and powdered sugar "eggs" dipped in chocolate unless you're prepared for a drippy, sloppy mess as the day warms up. Try peanut butter balls, homemade lollipops or popcakes.

The Other Goodies

If you sew, whip up a batch of bunnies and chicks. If you knit or crochet, you can do the same. Look for free patterns on the internet and you will be amazed at what's out there. Choose small projects that can be made with scrap material or leftover yarn. A half dozen baby bunnies will entice any child.

The Grass

If you didn't save last year's Easter "grass," gather white and/or pastel colors or other colorful pages from catalogs or magazines and run them through a paper shredder. If you don't have a paper shredder, it really isn't too tedious to cut a few sheets while watching TV or talking on the phone.

Crumple the pieces in your hands until they make a fluffy bed for the candy and other goodies you've created.

Decorate the whole thing with a big bow (or a length of yarn or a piece of material).

No other child will have an Easter basket like yours!

More about Easter:
Here Comes Peter Cotton Tail
Are You Ready for Easter? 
Hunting for a Frugal Easter

Monday, March 14, 2016

Answers To 5 Excellent Questions About Reverse Mortgages

Can you get a reverse mortgage? Should you? What are the pitfalls and benefits of this popular way to use your home for retirement income? Guest author Matt Allen answers these and more questions that will help you really understand what reverse mortgages are all about

When is a homeowner eligible for a reverse mortgage?

In the past, a homeowner only needed to be 62 and have enough equity in their home to qualify. Today there are several other things that come in to play as far as being eligible for a reverse mortgage.

You need to pass the financial assessment. The whole purpose of the assessment is to look at your willingness and ability to pay your taxes and insurance. They look at your credit history, your mortgage / rent payment history and your property tax and insurance history for the last two years. You are also required to have a minimum disposable income based on household size and region you live in.

If you fail the financial assessment, you will be required to set up a LESA, lifetime escrow set aside. This is an escrow account that is set up to pay your taxes and insurance. The amount of funds required will be determined by your life expectancy. In other words, if your life expectancy is 15 years, you will be required to set aside 15 years of taxes and insurance in an escrow account. These funds can come out of the equity in the home. If there is not enough equity, you will need to fund the account with your own proceeds. If you do not have enough proceeds to fund the account, you will not qualify for the loan.

Other things that may keep you from qualifying are being less than two years out of bankruptcy, foreclosure, short sale or home loan modification. Unpaid tax liens will also need to be paid off before you will qualify.

What if a homeowner still owes on the home?

A homeowner can still get a reverse mortgage even if there is an existing mortgage. It is a common misunderstanding that a home must be owned free and clear in order to qualify for a reverse mortgage. All liens against the property must be paid off through the proceeds of the new loan. The amount of equity you will need in the home to qualify will depend on your age. At 62, you will need roughly 48% equity in the home. At 90, you will need roughly 28% equity.

If the names of two people are on the mortgage and one isn't old enough, can the other get a reverse mortgage?

The answer to this question is yes. However, there are two scenarios with this question.

The first scenario is that the two people are married. If they are married then they are required to have both spouses as part of the loan. The younger spouse is considered a non-borrowing spouse. The benefit to the younger spouse is that they can defer the sale of the home when the older spouse passes away. However, the younger spouse loses other benefits of the reverse mortgage. For example, let’s assume there was a line of credit available. The younger spouse no longer has access to that line of credit once the older spouse has passed away or is no longer living in the home.

The second scenario is that the two people are not married. The risk in this scenario is that the younger person will not be part of the transaction. When the older person passes away or no longer lives in the home, the mortgage note becomes due and payable. At this point, assuming the younger person is receiving the home, they will need to either purchase the home out of the estate or sell it. Based on their situation at the time, they may not qualify for a new loan or there may not be enough equity in the home for them to purchase a new home.

When should a reverse mortgage not be considered?

There are some really good reasons why a reverse mortgage may not be the right choice. Below are some of the most common reasons I would recommend someone not doing a reverse.

1. It is a short term solution – If you are planning on selling or moving within the next year or two, I would not recommend a reverse mortgage.

2. You need some quick cash – If you are having some cash flow issues, for example, you need a new roof or a new transmission in your car, there are less expensive options such as line of credit through your bank.

3. Poor money management – This is not necessarily a reason not to get a reverse mortgage, but I would highly recommend getting help with setting budgets and managing money before you get access to tens of thousands or even hundreds of thousands of dollars.

4. Investment purposes – The reality is that it is your equity and you can do whatever you want with it. However, if you are being pushed to get a reverse mortgage so that someone can “invest” those funds for you, don’t do it.

How do survivors (children or other beneficiaries of the estate) handle the sale of a home when the owner had a reverse mortgage?

When the last homeowner has passed away or has not lived in the home for 12 months or more, the mortgage will need to be satisfied. At this point, the estate / heirs can do one of several things.

1. Sell the home.

2. Purchase the home out of the estate.

3. Pay off the loan balance with cash.

4. Let the bank foreclose.

5. Sign a deed in lieu of foreclosure.

The first step is to contact the servicing company and let them know what your plans for the home are and how the loan is going to be paid off. You have three months initially to get the lien satisfied. However, you can get three month extensions for up to a year to get the home sold. It is critical to contact the servicing company on a monthly basis to keep them informed of the progress and actions that have been taken. You will need to request the extensions from the servicer.

It is critical for you to know that the estate / heirs are not personally responsible for the debt nor are they responsible for any losses associated with the loan. There can never be more owed on the home than what it is worth. The lender can never collect more than what they are owed.


Matt Allen MLO-254296  is a Sr. Reverse Mortgage Banker with Pacific Residential Mortgage in Oregon. 1555 E McAndrews Suite 301 Medford OR 97504. You can learn more about reverse mortgages by visiting his website Credit on approval, terms subject to change without notice, not a commitment to lend. NMLS-1477/WA CL-1477 This content was not approved by nor endorsed by HUD or FHA. Equal Housing Lender

Sunday, February 21, 2016

Send Your Car to Work

There are only two ways to get ahead financially in this world. One is to learn to control and save the money you make and the other one is to find ways to make more money without working 24/7. I talk a lot about saving money and that's what this blog is all about... but if you don't have it to save, then what?

Then you go looking for ways to make a little more. To do that, you can work longer hours or start your own side business. Both take a lot of time and energy but I have a better way! ;)

I have recently been made aware of a program called TURO, where you can actually rent out your vehicle on the days when you don't need it. If you have one that isn't used often, it would be a perfect way to make extra money. 

The idea is simple and seems to work very well. You list your vehicle with TURO and they play matchmaker with those who need it for a few hours or a day or whatever. They take care of the insurance and exchanges and everything. All you have to do is hand the keys over.

How much you can make (I heard that!) depends on the type of vehicle you have and what you choose to charge, and, of course, the demand in your area. Try out the calculator that gives you an idea of what's possible. 

Really, I can't think of an easier way to make money!

Disclaimer: Nope, I was not compensated for this, although I was asked to review it. I would feel comfortable using the service on either side, but take a look and see what you think.

Monday, February 1, 2016

9 Ways to Use Cardboard Tubes

Image courtesy
One of the best parts of being frugal (and the part that sometimes will get you the strangest looks) is finding uncommon uses for common or throwaway things.

So did you save the tubes from the wrapping paper at Christmas? Neither did I. Thinking about it today, though, I wish I would have!

There are so many things one could do with them. They're part of the "raw material" of consumerism and as such, they can be ultimately useful and just plain fun.

Tubes from toilet paper (yes, those...) aluminum foil, plastic wrap or wax paper tubes, and miscellaneous other sources, such as rolls of plastic gloves, are all fair game for these uses. Since you use many of those things anyway, you might as well get some frugal use from them!

  1. Make fire starters with them. Stuff them full of shavings or very small kindling size pieces of wood, then pour melted wax into them. 
  2. Use them as small logs by rolling paper, especially newspaper, tightly enough to fit inside. They burn longer than just paper.
  3. Use them to corral a tangle of electric cords by putting all the cords through one tube before plugging them in.
  4. Make bird cakes for your feathered friends by adding bird seed to suet and stuffing a toilet paper roll with it. Thread a wire or cord through the center and freeze, then when you need it, peel the cardboard tube off and hang it up.
  5. Longer cardboard tubes, like those that come wrapped with aluminum foil or plastic wrap, make great toy logs for the kids. Save them until you have several before presenting them. Cut small "notches" to help them stack together, or let them use tacky glue.
  6. Glued to a base, cardboard tubes can hold pencils or knitting needles or chopsticks...
  7. An old one: Cut into one inch slices and decorated, they make napkin rings. Cover them with foil or decorative paper to camouflage them.
  8. Cover with Christmas wrapping paper to make Christmas crackers. Cut them a couple of inches longer than each end and tie with ribbon.
  9. Use them as gift containers for small items like jewelry, pens or gloves and hair accessories. Tape pieces of paper over the ends and wrap with gift paper or use markers to decorate.

Do you have a good use that I haven't listed here?

Tuesday, January 26, 2016

Low Gas Prices Are Not Good for Everyone

Sure, it's good that gas prices are low, especially if you have to drive to work every day or you are planning a driving vacation. It's true, also, that eventually, low gas prices should drive down other prices because of the lower cost of transportation. (Isn't that what they told us when food and other things got so expensive when gas prices went high?)

So, what's the kick?

Small oil companies have already gone under. Large oil companies are cutting back and laying off people - again.

Manufacturers, distributors and all the supporting services that oil companies require... what happens to them?

A lot of people are (were) employed by the oil business in the US, either directly or indirectly. A lot of people who were employed bought houses. They bought cars and trucks and clothing. They ate out, went to concerts and ball games. Money kept changing hands because it was there to change.

Monday, January 18, 2016

Real Money Versus the Other Kind

I remember 'way back when, as the cashier would ring up my purchases, she (few men were cashiers then) would ask "Cash or check?"

Remember that?

Now, it's "Debit or credit?" Meaning "Which kind of plastic are you using?"

I paid for some groceries with cash the other day and the cashier did a double take. He had to try twice to get the right change, although the cash registers do it for them now.

When I was a teenager, I worked in a drugstore "fountain," where we offered sandwiches and fries along with Cokes and malteds. We rang up sales on the cash register, which opened when we hit the right button. That's all it did. It expected us to supply it with cash and to take out and count back the correct change. To be sure that we did, it would often close of itself as soon as we got the change back. Reopening it without a cash transaction wasn't hard - all you had to do was hit that button again, but it was embarrassing to not get it right the first time.

Those were the days. We used our heads for more than earbud holders. 'Long time ago.... '

It only stands to reason that the more we use technology, the more dependent we become on it and the less we pay attention to the details that can make a difference in how we handle money.

Push your cart up to the grocery store check out, stare at the magazines and gum and candy while the cashier empties your cart, put your debit card in the slot  and you're done.

Have you noticed how few people are in line at the bank any more? Or maybe you're one of those who never go to the bank but do everything electronically.

The trouble with all of this is the way our brains process things. When we don't actually see the money (or shells, or salt, or whatever), the idea of exchanging it for something moves from a concrete experience to an abstract one. An abstract idea, by definition, is not one that truly affects us. We don't see it.

It takes determination and self control to see abstract money the same way we see concrete money.  If you offer a child an intangible reward versus tangible reward, which will the child choose? Tangible, of course. That's the way our brains are wired, so beware when you pull out the plastic, whether it's debit or credit. You're in dangerous territory.

Thursday, January 7, 2016

Owe it to Savings

If one of your New Year's Resolutions was to save more money this year, you may be wondering how you're going to stretch your money far enough to do it.

Sometimes, mind games work very well, so here you go:

Treat your savings account as if it were a debt. Whatever savings goal you want to meet is the amount you "owe."

Do whatever you have to do to keep your mind working that way. Make up a pad of payment coupons, or make a spot for it in your list of bills or write a note to yourself every month, reminding you that a payment is due. Put it in your budget.

Then follow through, no matter what. If something happens and you need extra money, find another way to get it, but make that payment to the savings account.

If you have to buy another car or something breaks down and you have to use the credit card or borrow money otherwise, you will have to make payments... so why not make them to yourself?

The best thing about building a savings account this way is that we get to set the payment amount. (No changing it after, though, barring a serious change in finances). Whatever your goal for the year is, divide it by 12 for months or 52 for weeks and that's the payment you should be making.

A little bonus is that you'll actually have more than you saved in a year because of the interest gained.

Thursday, December 31, 2015

Ten Ways to a Frugal New Year

Start the new year off on the right foot! Now's the time to review, revise, revisit and rework, whether it's yourself or your financial picture. Get going on the track that will put you in more frugal (read: prosperous) condition for this year and the year after and the year after...

Review all of your insurance
Home owner's insurance,  vehicle insurance, health insurance, life insurance, whatever you have. The beginning of the year is a perfect time to be sure you're paying the least amount possible for the amount of coverage you need. Raise your deductible if you can, revamp values, revisit needs. Go over everything first by yourself, then with your insurance agents. Tell them you need to lower your premiums, but don't cut yourself short if you need to use the insurance.

Get a grip on your taxes
Don't overpay the government. If you did this year, make some changes right away so that you won't next year. They don't pay interest and a bank does. Enough said? If you're afraid you'll blow any extra money, the frugal thing to do is have it automatically sent to savings before you get your check. Don't underpay, either, because the government will charge you a penalty. (Usually, it's not too high, so count your pennies and decide which is better for you.) It's probably impossible to get it just right, so if you overpay by just a little, that's safest.

Don't be too good for your own good

Not everything has to be top quality. For instance, children's clothing is usually outgrown long before it's worn out, so it's frugal to buy them inexpensive clothes. Other things that you won't use often before they're outdated, can be of lower quality since they don't have to last. Weigh your options carefully before buying anything.

Shake hands with Second Hand Rose
Not everything has to be new. Second hand cars, clothes and household items can save you a bundle. Do your homework before buying appliances or mechanical items (including cars and lawn mowers) second hand, though. Know what to look for to spot problems. Never be shy about asking why the owner is selling. It's not frugal to buy someone else's problems.

 Get your hands dirty
Learn to do your own maintenance on the car and the lawn mower. You can save a few dollars by doing it yourself and it's not as hard as it may seem. The internet is filled with information on just about everything. Before you buy another, or pay someone else to fix yours, do some research to see if you can fix that microwave or CD player or vacuum cleaner yourself. You might be surprised at how much you can do to save.

Turned on? Turn off

TV's, computers and other entertainment electronics may not take a lot of electricity to operate, but if they're on for hours with no one watching, listening or using them, they're wasting it. Most electronics have "instant on" features, which sit idly by, sipping up electricity 24/7 whether the component is being used or not. It's worth a few dollars for a power strip with a switch. Turn them off at this switch and they won't keep sipping all day and night.

Ignore the masses
"They" say you should do this and "they" say this is good, and "they" say you shouldn't be without this. They might be right sometimes, but don't believe them just because they say so. Take your own situation into account, look at it and pretend like you never heard anyone talk about it. Do you really need it? Want it? Take your time and make a list of pros and cons if you need to, but make your own decision based on what you want and need. Be your own person, not an echo of someone else.

Send your big balance credit card to Never-Never Land
If your credit card balance took on a life of its own and is out of control, you need to close the account. You'll have to pay the account off, of course, but you don't have to pay it off to close it. Only after you've closed it, cut up the card. Don't destroy everything that has the card number on it, though, as you might need it when you deal with the issuing company. They will continue to send you monthly statements until it's paid off.

Get on friendly terms with a good bank

One that will give you free checking and allow you a savings account with no or very low minimum balance required. (Never go under that balance, whatever it is.) Then use the savings account. It's good for short term savings for certain wants or needs - anything from a new furnace to a set of tires. Be religious about putting money into it, even if you can only afford five or ten dollars at a time. It's much more frugal to pay for something before you get it rather than after. Savings accounts pay you interest. You pay lenders interest. Which would you rather do?

Stay healthy!
I know it's easier said than done, but if your health is good, do everything you can to keep it that way and if it's not, do everything you can to get it that way. Get the exercise you need, get the rest you need and watch what you eat. Doctors are adding a new rule to healthy living now: Keep a positive attitude. Doctors, drugs and hospitals cost more than you need to pay, even with insurance.

If you find this list a challenge, let me ease your mind somewhat. You don't have to do all of them right away. Work your way into it and tackle the things that seem most interesting or easiest first. When you see the progress you've made toward a more frugal lifestyle, you'll be motivated to do more.

Some of you do some of these already, but if you don't do them all, now's the time to tackle the rest. And if you do all of them now, more power (and savings) to you!

Monday, December 21, 2015

Last Minute Gifts You Don't Have to Buy

Oops... you thought you had all your shopping done for the holidays? And then... well, you got a gift from someone you had forgotten about. Or a coworker suddenly decided you were worth a plate of homemade goodies. One of the kids got invited to a Christmas party that requires a gift.

And there you are, turning your credit card over and over, contemplating yet one more shopping trip.


There is time to create quick and frugal gifts even if it's the day before Christmas.

For kids:

Get one of those cardboard boxes that you keep tossing back in the garage or basement and fill it with those clothes and shoes you keep intending to give to Goodwill or the Salvation Army. A dress up box encourages imaginative play and will fill many hours of happiness for your children.

Create an art box with any smaller box you have on hand. You probably have an assortment of paper on hand. Graph paper, note paper, colored paper, wrapping paper, plain white printer paper... Look around for stickers, stamps, pencils, pens, paper punches, glue, tape, templates of various kinds. You might be surprised at what you can find. Then go to the internet and look up "coloring pages." Choose a few that are appropriate for your kids and print them.

For women:

Baskets, baskets, baskets. You probably have one or two, but if you don't decorate a box. Fill it with whatever she likes, from food to yarn to stories printed from the internet. Add a pouch of instant cocoa or coffee and a mug, or look in your own stash for things you haven't used that she would like.

Start a slip from one of your own houseplants. If it has to be rooted, present it tied in a plastic bag of water and set in a cup or pretty little planter. Add a pouch of potting mix if you have it on hand.

For men:

For a single man, homemade bread with butter and jelly included in fancy containers; 'instant soup'  - your own homemade dehydrated vegetables mixed with bouillon. Tear jerky into small bits and add to the mixture if you have it.

A handmade gift certificate for whatever he now pays for - washing the car, mowing the lawn, shoveling the sidewalk. Make sure it's something you can carry through on!

For everyone:
You don't have to buy a gift brand new for it to be appreciated. Look around. A 'first edition' of a favorite book or an old picture of a special place or person can mean more than a gift you spent a fortune on.

Save your money and your sanity.