Spring is springing in my neck of the woods. I hope you see the light at the end of the winter tunnel where you live. Here are some articles that I recommend this week:

The second installment of my time saving articles was featured at the 246th Edition of the Carnival of Personal Finance.

An article about making money online, written by my boss was featured at the Carnival of Money Stories.

Dough Roller asked if renter’s insurance is worth the cost. My policy is eleven bucks a month. I think it is worth it.

Lynnae talks about the tension between quality and price.

Do you ever find yourself fascinated by things that you do not really understand? I did as I read an article about short selling stocks at Moolanomy. Whew! I will never do it, that is a pretty tension-filled way to live.

Another article about home insurance, Mrs. Micah encourages us to document our possessions for insurance purposes. Yep, I need to do that.

Do you block all that extra stuff on Facebook? Yeah, me too, but Mighty Bargain Hunter profiled the Buddy Bailout . . . I might be interested in that one.

That’s it, that’s the list! Hope you have a great weekend. Find a good church on Sunday and remember, do not just spend money, spend time with family.

Article by Stew

Photo by spisharam-AWAY

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A while ago, I hosted a contest for “IN Cheap We Trust”. I thought of gathering some of those great frugal tips in one post so you can use them for 2010! I have selected my favorites among them:

#1 Eat less meat (from the market) (this is not only good for the size of your wallet but for the size of your belly too!):

Reduce by half the meat you normally eat and replace with vegetables.

Establish a once a week meatless meal.

#2 Shop with a calculator:

This will help you keep up with your budget and make sure you don’t overspend.

#3 Compare prices and sizes of products:

Sometimes, companies package bigger sizes with a similar price to the smaller package.

#4 Justify any purchases over $50:

By justifying more important purchases, you will reduce impulse spending since you have think twice about the reason you have to spend money.

#5 Review insurance premiums once a year:

Chances are that with a little bit of shopping, you will find better deals and pay cheaper rates for your home and auto insurance.

#6 Double check your Grocery bill:

Since grocery stores always changing their rebates, it happens often that prices are not right on your register. Therefore, you can go to the courtesy counter and get the item for free.

#7 Start your fitness routine at home:

Instead of paying $600 a year for a gym, you can start your own fitness routine. You will probably have to pay the same amount during the first year to build your equipment, but you will save for the years to come.

#8 Clothes Swap with your friends and family:

Did you know that most clothes that are being thrown away are only used for 30% of their lifespan? Most people drop their clothes because they are bored of wearing them. Why not swap your clothes with friends and family? The only downside is that you need to find people of your height and weight.

#9 Pay cash, don’t spend change:

If you pay everything cash and save all the change your receive, you will be able to increase your savings account on a weekly basis while maintaining a balanced budget.

#10 Go public about your spending:

For those who maintain a blog or are not shy to share with your friends and family, you can publicly establish savings goals and stick to them. The fact that you go public with goals will enforce your motivation to achieve them.

#11 Crock pot power:

The crock pot is a marvellous invention since you can prepare your meal in advance and it cooks while you are not at home. You will eat healthier food and save money on eating out for the days you don’t feel like cooking. Once you are home, you only have to serve and enjoy! If you never had ribs from a crock pot, you are missing something!

Author: Mike.

Image source: alancleaver_2000

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This is kind of a traditional post for this time of year, you know, with new year’s resolutions and all. My philosophy is that most life changes work best when they are started at any point during the year. For spiritual, physical, relationship resolutions there is no better time than the present. One time I got a bad report from my doctor and as I walked to my car, I committed myself to a healthier lifestyle. And I made up my mind to start right after I had one last Spicy Chicken sandwich value meal from Wendy’s . . . that particular decision never stuck . . . When it comes to changes in financial goals, the start of a new calendar year provides a nice clean slate.

Here are the financial habits and goals that I hope will characterize the 2010 financial year in the Stew household:

• Continue to limit the amount of money that I spend on going out to eat for lunch. I think that it is reasonable for me to spend $10 one day a week. Another way to take care of our out-to-eat money is for me to help Mrs. Stew around the kitchen a little more. Sometimes we go out to eat in order to give her a break, but maybe I could be better about giving her a break by working a little harder in the kitchen myself.
• Pay off my college loans. I have around $1,600 remaining on my school loans, I hope to use our federal tax refund for that purpose. This will save us the $70 payment every month. Then we can turn our attention to Mrs. Stew’s college loans.
• Put a big hurt on our car loan. We have around $11,000 remaining on this loan, but currently the APR is around 9%. Since selling our house, our credit score has soared and our income to debt ratio has improved a great deal. I hope to refinance at a significantly lower rate, but still make the same payment that we have been making for the last three years.
• Start saving for retirement again. I do not know where the money will come from, but I hope that by the end of the summer, I can find a way to contribute to my company’s 401K match.
• Set up a regular allowance for my children. I do not have a lot of money to give them, but I need to teach them good financial habits and they cannot learn without some kind of regular income.
• Fine tune our budget. It has been some time since we have gone over our budget with purpose and I know there is $50 or $100 in there that can be taken from the spending side and placed on the saving side.

What are your financial goals for 2010?

Article by Stew

Photo by nDeviltv

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Sometimes I felt a lot like a tightrope walker this year and not an especially good one . . .

I had a lot of ideas for this post, but I could not decide on just one, so I thought I would keep it simple. I always like to end the year by looking at the things for which I am thankful. Here is the financial part of that list:

• I am thankful that our house finally sold. We came out approximately $14,000 in the red, but we avoided foreclosure, a short sale or anything else detrimental to our financial future . . . other than the debt itself.
• I am thankful that glblguy gave me the chance to write for this blog and that Mike increased my opportunity to write and with it, my alternate income. I have grown to appreciate this blog and its readers a great deal.
• I am thankful that our family vehicle still seems to be running well.
• I am thankful that our family managed to avoid any major health problems or expenses in 2009.

I will be sharing more of our financial goals next week, but I am thankful that God showed Himself faithful in 2009 and I am confident that He will meet our needs in 2010!

Article by Stew

Photo by Rhett Sutphin

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And a lawyer stood up and put Him to the test, saying, “Teacher, what shall I do to inherit eternal life?” And He said to him, “What is written in the Law? How does it read to you?” And he answered, “YOU SHALL LOVE THE LORD YOUR GOD WITH ALL YOUR HEART, AND WITH ALL YOUR SOUL, AND WITH ALL YOUR STRENGTH, AND WITH ALL YOUR MIND; AND YOUR NEIGHBOR AS YOURSELF.” And He said to him, “You have answered correctly; DO THIS AND YOU WILL LIVE.” But wishing to justify himself, he said to Jesus, “And who is my neighbor?” Jesus replied and said, “A man was going down from Jerusalem to Jericho, and fell among robbers, and they stripped him and beat him, and went away leaving him half dead. “And by chance a priest was going down on that road, and when he saw him, he passed by on the other side. “Likewise a Levite also, when he came to the place and saw him, passed by on the other side. “But a Samaritan, who was on a journey, came upon him; and when he saw him, he felt compassion,and came to him and bandaged up his wounds, pouring oil and wine on them; and he put him on his own beast, and brought him to an inn and took care of him. “On the next day he took out two [a]denarii and gave them to the innkeeper and said, ‘Take care of him; and whatever more you spend, when I return I will repay you.’ “Which of these three do you think proved to be a neighbor to the man who fell into the robbers’ hands?” And he said, “The one who showed mercy toward him.” Then Jesus said to him, “Go and do the same.”  - Luke 10

This is one of the most famous stories in Scripture. The account of the Good Samaritan, given by Jesus Christ is both a heavenly story with practical meaning as well as a satire against the religious elite of his day. The mugged traveler lay dying by the side of the road while two men who were supposed to be ministers of God, a Levite and a Pharisee, passed him by. They did not want to get dirty, they did not want to get involved and they probably did not have time because they had to get to some important event of worship.

Christ makes it clear that to ignore the hurting people around us is a violation of the Christian ethic.

But how about the Samaritan? The Samaritans were considered a half-breed, lower race than the Jews. They hated the Samaritans to the point that any self-respecting Jew would not even cross through the land of Samaria even if it meant walking a day’s journey out of the way! As Christ told this story, the Jewish people standing around must have been flabbergasted – a Samaritan did this?! Imagine what the Levites and the Pharisees thought as they were portrayed in an unfavorable light.

Christ was introducing a new type of religion. A faith where the last would be first, where the least will be the greatest in the kingdom and where leaders were “servants”. It was revolutionary.

The thing about this story that always gets to me is the unrestrained generosity of the Samaritan. He did not just physically care for this man – he did not just take him to safety and bind his wounds – he also gave of his wealth. And according to the story, there seemed to be no limit to his generosity. I can easily see myself helping the man to safety, but giving money and giving what amounted to a blank check is beyond my comprehension. The Samaritan was not concerned for himself, he was not worried about his rights. His only concern was the safety and well-being of this man who was his “neighbor” that day.

How often to we give in order to get something in return? How often do we give with no thought of our own comfort? Do we use our earthly blessing to meet the needs of others? I hope to do a better job in this area. - Article by Stew

Photo by sblhand

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Here are some articles that I enjoyed this week. I hope you enjoy them as well.

I wrote about the Christian’s approach to the black market. Several readers weighed in with some really good thoughts.

Mrs. Micah celebrated a birthday – I think she might be younger than you think.

Mighty Bargain Hunter wrote about stockpiling food . . . are things really that bad?

If you are a first time home buyer who is considering purchasing a house, you need to read this post at Green Panda Treehouse. Home ownership can be a great thing, but make sure you know what you are doing.

There is a guest post up at Bible Money Matters that you need to read if you want a real challenge on how you view money. Outstanding.

Have a great weekend! Remember: Do not just spend money, spend time with family. - Article by Stew

Photo by adam*b

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Lehman Brothers’ lessons on managing credit

#1 Do not leverage when you can’t afford it

I am actually a big fan of leveraging. It has been proven many times over that making money with other people’s money (in a respectful and legal way) is the fastest method to increase your net worth. When you think about it, just about everybody leverages: you leverage when you buy a house (mortgage) and you leverage on the fact that you will get a pay check in 2 weeks or at the end of the  month when you lease/buy a car or financially engage in any other type of contract. However, while leverage may be useful, borrowing more than you can pay back is very dangerous. Lehman Brothers’ definitely used leverage beyond its financial capacity and paid the highest price; bankruptcy. This is why you should not use leverage at large… and if you leverage, make sure you know what you are doing.

#2 Do not depend on others to pay your debts

Another important fact that pushed Lehman over the cliff was the loss of confidence by most investors. Once the rumors started, several investors took all their investments out creating a humongous gap between Lehman Brothers’ financial obligations (i.e. debts) and their assets (i.e. investments). If you count on the money someone owes you or on the promise to of a pay check to settle your debts, you may be late or face the sad truth of not receiving the money at all and not being able to pay your debts. Make sure to borrow only as much as you can afford to pay back!

Lehman Brothers’ lesson on managing your investments

#1 Do not invest in something you don’t understand

This piece of wisdom actually comes from Warren Buffett himself. He never invested money in credit default swaps or other derivative investment products he didn’t understand. Wall Street came up with these highly complex investment products that no one (not even the manufacturers) were able to understand. They were selling something with a good expected rate of return without even reading an investment guide. So when you are looking at your stock portfolio, maybe you should consider simple investment products without being fooled by unreal yield promises. I can never say it enough: There is no free lunch in finance!

#2 When you start losing money, do not swing for a homerun to get your money back

The panic had reached a summit on Wall Street upon the big announcement and many traders tried “get their money back” by taking on more risk. They pretty much looked like gamblers in a Casino at 2AM: they keep betting their wild card in the hope of finding the Ace at the last minute. Result: they lost even more money. If you have investments, you will see devaluation from time to time. It is normal to see your stock portfolio drop once in a while. But chances are you won’t recover from your losses through riskier trades. By keeping your original investment strategy, you should get your money back at some point. Time is your best ally!

Lehman Brothers’ lesson for personal finance in general:

#1Wishful thinking doesn’t work

Traders at Lehman Brothers’ knew it was only a matter of time before they would see their exotic investment products blow up in their faces. They were holding a time bomb in their hands and were simply wishing:

“The markets will go back up and it will all settle down”.

“We just have to hold out for a few more weeks and we will be all right”.

Unfortunately, wishful thinking doesn’t work in finance. This is a personal growth concept; not an asset building strategy. If you are spending more than you are earning, you can’t keep doing it by thinking “I’ll be fine, I’ll find more money before it’s required”. The truth is that if you don’t have a plan to get out of debt, you probably won’t!

In the end, I guess that Lehman Brothers’ and the other big guns from Wall Street always thought they were untouchable. The fact they were holding billions in their hands created a false bubble of protection. They even pushed their arrogance to think the US Government would save all of them as a bankruptcy would not be a viable option for Wall Street. So here’s the last lesson and THE most important one to learn from the Lehman Brothers’ failure:

Never assume.

Author: Mike.

Image source: Christopher S. Penn.

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Last week, Mike wrote about some ways to use a day-to-day credit card. Most Gather Little by Little readers might have been a little surprised by the topic and the point of view because glblguy has always been completely averse to credit cards – and for good reason.

While I share all of glbl’s reservations about using plastic, we find it almost impossible to avoid “swiping” for at least some of our purchases. It is true that we had to learn our lesson the hard way. Credit cards allowed Mrs. Stew and I to spend far more than we could afford in our early years of marriage and we are still suffering some of the effects today. There was also a time period where we did not use our credit cards at all. Shortly after that, we had almost three dozen active cards between us . . . but that’s a story for another day.

We now use only one credit card and only for specific purchases. It is a rewards card, in fact, the rewards are so good that the company has since stopped issuing this particular card, even though they honor our original agreement. We typically earn $300 to $400 in cash back per year and for the last three years, we have done a good job of controlling our spending so that our credit card has worked for us and not against us. FYI, due to where we live in relation to the rest of our family, we are considering a switch to a airline credit card in order to earn free flights.

We do not use credit cards for the following:

We learned early on that it was a bad idea to use our credit card for groceries – especially me. There is just something about a grocery store that convinces a person to spend more than necessary. I mean, who cannot use more food? The combination of stomach pressure and credit card enabling caused us to get into trouble. When we started using a credit card again, we made the decision that groceries were a “cash only” purchase.

Clothes, again, credit cards can be better salespeople than the actual salespeople. And store brand credit cards can be the worst because they always have such great deals for people who use the credit card backed by that company. Clothes are off-limits.

We do use our credit card for the following:

Gasoline is a necessity that there is no getting around and it so happens that our particular card offers the highest rewards for gasoline purchases. I do not believe that using cash would reduce our monthly fuel bill at all.

My job requires me to have a moblie phone and my wife also has her own phone. We do not have a household landline. Our wireless bill every month is charged to our credit card. This bill earns rewards and saves me from having to schedule another bill on time.

This last category might sound like a potential pitfall: we use our card when we go out to eat. There is great temptation to spend more than we can afford when using a card in this scenario. There is also greater pressure to go out to eat more often because of the card’s enabling. However, so far, it has not been a problem. My wife works a great deal and I like to give her at least one meal “off” a week. There are times when I give her a break by cooking a meal at home myself, but it turns out that there are only so many times that a family will endure scrambled eggs and Mrs. Stew can never find the cooking utensils after I use them.

There are other things that we put on the card, but most of these are incidental, though planned purchases, such as doctor visits, contacts/eyeglasses and airplane flights. I keep a sharp eye on our credit card purchases and there has never been a month where we did not pay off our balance in full. That said, I respect who do not use credit at all and encourage most people to avoid plastic as much as possible. - Article by Stew

Photo by Brave New Films

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Mrs. Stew and I are the proud parents of three children ages six and under. We love our kids, but we still look forward to those times when it is just the two of us. Date night can get expensive, however. By the time you add up the cost of a babysitter, a movie, dinner and gas . . . well, I don’t want to think about it. Here are a few ideas that we use to keep the monetary cost of investment in our marriage low.

Get a deal on dinner

Often, Mrs. Stew and I will eat supper at home before going out in order to save money, but sometimes it is really nice to sit and talk over a restaurant meal. If you must eat out, keep a stack out coupons handy. Always be on the lookout for reduced prices to restaurants where you like to go. We have also had some luck purchasing gift certificates from restaurants.com. Some of the establishments on the site are off the beaten path, but if you do your homework, you can get a real deal. We sometimes do other things to hold the line on spending – no drinks or we split an entree.

Low cost entertainment

Mrs. Stew and I like to go to movies, but lately there just does not seem to be anything playing that we like. I only spend money on a movie if I have read all the reviews and I am confident that it is worth the cash. Sometimes we go to the first-run theaters, but we also have a couple of movie complexes in our area that only charge one or two bucks.

Movies are great, but we also enjoy going on a long drive through the countryside together. I really like to check out new roads back in the hills to find out where they lead.

I know it does not sound exciting, but a walk through a nice park always ends up being a great evening for my bride and I. The other thing we like is to take a Friday or Saturday night and walk through downtown. We do not spend any money, we take our time and get a little exercise. There is no end of things to discuss as we pass all different kinds of people. We can spend hours in just about any downtown area and not spend money on anything except for maybe a coffee.

Sports

I am a big sports fan, so this might be a little self-serving, but Mrs. Stew and I really do enjoy attending low-key sporting events. Pro sports tickets are well out of our reach, to say nothing of parking and food. Pro sports just do not make any sense for us, but tickets to minor league or college athletics are usually pretty cheap. A minor league baseball game offers real entertainment value in the event itself and my wife can do all the people watching she wants. A game like this also offers a chance to talk and maybe even cuddle a little . . . Look around for sporting events in your area. Sometimes minor league and college sports are the best kept secrets in certain areas of the country. The other advantage is that smaller sporting venues can be closer to your house and getting out of the parking lot is easier.

Babysitting

This is a tough one for us, there is just no way to get around the cost of a babysitter. Sometimes people offer to do it for free, but we always pay because the safety of our children is important to us and we do not want to take advantage of family or friends. The best solution to this problem that we have found, is to “trade” babysitting with another couple who have children that are similar in age to ours. We watch their kids for an evening for free and they watch ours at the next opportunity. The nice thing about it is that the kids usually play together so well, that my wife and I do not really have to do much more than feed the little buggers and make sure that they do not wander away.

Got any more tips? Please share!  - Article by Stew

Photo by sneakerdog

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It is a good idea to know your credit score – it is an even better idea to know what is in your credit report. I typically check mine once a year and I checked it last month and found an error. Not a huge one, but on the list of names/aliases, there was a name by which I have never been known – same initials, but completely different name. I am working to get the error changed. You need to check your report for errors – unauthorized credit pulls, incorrect late penalties or missed payments, or even lines of credit that you did not take out.

I never used to think about my credit report, in fact, I am pretty sure that I applied for financing on several occasions before I even knew that I even had a credit card. Most of us are aware that we have a credit report, but some might think that if you don’t plan to apply for credit in the near future, your credit score is irrelevant. However, that is not quite the case. Many areas of our lives are affected by our credit scores, in fact, our credit report can be accessed by mobile phone providers, insurance companies, landlords, government departments and even potential employers.

How can I see my credit report?

Most people know that you can access your free credit report once a year at annualcreditreport.com. For the last couple of years, I have been obtaining a free monthly credit score via  a website called creditkarma.com. The score at Credit Karma is free, but no information beyond the numerical score is provided.

Changes

During the last year or so, banks and other lenders have been gradually raising the required credit scores for certain types of credit. Two years ago, consumers could easily get credit with a score above 680. Now, there are instances of credit cards being cancelled for folks with scores of 650 or even 660. In fact, the recent trend is that consumers are considered borderline until their score reaches 740!

Banks are watching your payments more tightly now than ever -even one late payment could get your cards canceled. Any sign of financial distress such as applying for cash advances can be a tip-off to lenders that you are under financial pressure. As a result, they might lower your credit limit or cancel your credit cards – thereby lowering your score even further. There have even been stories where using your credit card to pay for medical treatment can lower your score because it might reveal a lack of cash flow.

In light of the poor economy, most of us are starting to limit spending. Even a reduction in spending can lower your credit score because the credit card company could reduce your credit limit on the basis of low usage. I recently recieved a notice about one of my credit cards from American Express that had been cancelled due to the fact that I never used it. The following month, my credit score dropped twelve points. Seems upside-down in some ways . . . but my score should recover if I continue to be responsible with my use of credit and continue to pay off my debts.

The good news is that those of you with high credit scores – 750 and above – are probably getting preferential treatment from companies that offer financing.  Retailers and lenders are desperate to add customers who pay their bills, the problem is that no one who has good credit (or any sense) is adding debt in this economy.

Try Smart Credit (including Free Trial by clicking on the ad below!) for  a new way to view & use your credit report. Includes all your Scores! Fix Errors & Improve your Scores. Actions go directly to your creditors. Fast results! Protect your Credit & Identity. Easy Lock and unlock.

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