Friday, April 07, 2006

Try Getting it for Free First: Freecycle Network

Looking for a twin mattress, fence posts, or a cider press? Before you run out and buy it new, take advantage of the Freecycle Network and find someone who's giving the item away. The network allows only gifts, barter or trade. If you're looking to get rid of the old kitchen sink, you can use the service to find someone who will take if off your hands.

Here are the details from the site:

The Freecycle Network™ is made up of many individual groups across the globe. It's a grassroots and entirely nonprofit movement of people who are giving (& getting) stuff for free in their own towns. Each local group is moderated by a local volunteer (them's good people). Membership is free. To sign up, find your community by clicking on the region on the left. You may then go directly to your local group by clicking on "Go To" or you may immediately joining by clicking on "Join." It will generate an automatic e-mail which, when sent, will sign you up for the local group and send you a response with instructions on how it works. Can't find a group near you? You might want to consider starting one (click on "Start a Group" for instructions). Have fun!

The Freecycle Network was started in May 2003 to promote waste reduction in Tucson's downtown and help save desert landscape from being taken over by landfills. The Network provides individuals and non-profits an electronic forum to "recycle" unwanted items. One person's trash can truly be another's treasure!

Thursday, April 06, 2006

Online Loan Auctions?

I was checking out the online loan auction site, Prosper, and noticed how many of the potential borrowers were seeking loans to "get out of debt." That struck me as quite the paradox. Oxymoron? Many of the postings were seeking loans to pay off high-interest credit card debt, but because of their credit rating, were still in the 20+% interest range.

Reading some of the loan requests is a true motivator for maintaining a healthy emergency fund, diligently saving, and spending carefully. Lenders bid on providing the loans. I don't know what I think about this whole thing yet but it's oddly mesmerizing.

On the site today were 711 listings found with credit grade at least HR (high risk) including borrowers with no credit including high debt/income (>20%). Some examples of borrower postings (no edits from me):

"1. Please help. I have 2 tax leins on my credit report thats driving down my scores. I need to take care of this. I am on a payment plan with IRS but the interest rate and penalty rate are horrible. Please help me get this burden off my back. Help me get my good credit back.

2. I'm very excited about the possibilities offered by this great website and the Borrowers allowing this idea work. In the last 8 months, I not only have gotten married but also started a real estate business that is just starting to move forward. These events were both a blessing but also caused me to accumulate a large amount of debt on credit cards that have unfavorable interest rates. I am very fortunate to have a steady day job which pays great, and is also helpful in relieving this uncomfortable situation. I take this plea for a loan very seriously while realizing that it is my credit life preserver. My goal is to pay off all my high interest credit cards with the loans provided by your services. Once my loan is approved, I look forward to aggressively paying back the loan while getting my credit score back on track.

3. Taylor, my 7 month old daughter, is asking you to Lend me some money to fix up my rental property. The tenant failed to pay rent for 6 months, stole the refridgerator, and trashed the place.I am married, live in Orange County, CA, and work in the real estate and mortgage industry. I am looking for some quick money to fix my property so I can put it on the market for sale.Here are repairs needed.-New Interior Paint-New Carpet and Tile for floors-Exterior LandscapingMy credit score is a 625. In the mortgage and real estate world, this 625 is sufficient to obtain 100% financing for the purchase of a new home. My score has dropped 50 points becuase I used a BankAmerica credit card, and recently purchased a new car and vaction home. I have NO late payments, and NO Bankruptcies or other defaults on any loans.My reason for Prosper is simple.I need money now.I dont want to use my own money to repair the property.I am trying out the system so I might refer friends, family, and colleagues in the future.The rate is not really an issue as the difference in payment between 10% and 25% is only 150 bucks a month."

From the Prosper site:
How it Works - Borrowing money through Prosper is fast and easy, and because you're borrowing from people, the rates may be lower than you'd expect!
1. Register with Prosper
Registration is quick and easy. And free!
2. Join a Group
Build lender trust by joining a trusted group.
3. Create a Loan Listing
Say how much you want to borrow, and what your maximum interest rate is.
4. Watch the Bidding
Lenders start bidding immediately - watch the funding go up and the interest rate come down!
5. You Win!
If your terms are met, your loan will be funded directly to your bank account.
6. Easy monthly payments
Your monthly loan payments are withdrawn automatically from your bank account.

Buying Points: Prepaid Interest is Tax Deductible

The points we paid on our mortgage loan last year cost $3200. Paying the same points now would cost $10,000!

When you buy a home, you might pay points (discount points) to the lender to lower the overall interest rate on the mortgage. Since these points are considered pre-payment of the interest on your mortgage, they are tax-deductible: since a home loan typically includes 1 to 3 points, this can add up to a sizeable tax deduction. It helped us a lot on our taxes this year.

However, when deciding whether or not to pay points a loan, you'll need to calculate the "break even" point during the life of the loan. As a general rule of thumb, the longer you own the property and the loan, the greater the benefit of paying points up-front.

We were also able to deduct some of our closing costs. Closing costs can add up to a chunk of change: title insurance, escrow, attorney fees, processing fees, every one seems to get a cut. They include all kinds of costs for processing your loan and transferring property ownership. Check the closing statement carefully and question any and all line items: for example why and what are the courier fees if the documents were transferred electronically?

Wednesday, April 05, 2006

When do you Give $$$ to Panhandlers?

Working downtown, I get asked for money a lot--panhandled. I don't know a better word than "begging" although the connotations conjure someone in rags pleading for a few scraps of food. Some requests for money are assertive to point of aggression. Most well-traveled street corners have people stationed with hand-lettered cardboard signs that request money. When do you hand over the spare change, the dollar, the five, or more?

I have a few personal guidelines that I've never taken the time to formalize, but thought I'd share those and get others' thoughts.

When I don't give:

1. Remember the "regulars" and don't play: if they still haven't gotten that money together for a gallon of gas to get home, another buck isn't going to do it either.

2. Kids with really nice sport shoes (new Nikes or New Balance.) If they really needed money for the bus, they'd use that sweet little Samsung camera phone to call home. They're doing it as a hobby or a social event.

3. People with cardboard signs. They're frequently #1 regulars but there are exceptions.

When I consider it:

1. Hungry, dirty and tired. My town gets lots of kids coming through in the summer with big backpacks and not enough funds for the festival routes in the West. I've bought 10 tacos for a couple and sometimes give money.

2. It might just be an unexpected angel: there's just something that makes you want to help.

When I give:

1. Every payday money is deducted from my check to support my local community charities. Although I give regularly to other causes, this is my way of making sure that if I passed someone up in error, there is some sort of safety net.

2. I organize a food drive every fall at work. This year we finished up in early December in time for the holiday rush at the local food bank. This years' food and cash donations equaled about seven tons of food.

3. Street Performers: If someone wants to put out a hat and play the saxaphone, I'll drop a coin in.

Cashing in Dividends: Free $$$$

I'm a member of REI, an outdoor equipment store, that has brick-n-mortar stores as well as online shopping.

The benefits of being a member?

"While non-members are welcome to shop at REI, only members enjoy special benefits, including an annual member refund on eligible purchases. REI's business success allowed the co-op to return member refunds to its active members in 2005 totaling more than $50 million, and provide $2.5 million in donations in support of the outdoors and outdoor recreation. "

Every year you receive a dividend and I usually spend mine at their spring sale (20% off the price of one item) to buy my brother's birthday present. I was able to get him a great hemp shirt with bamboo buttons (sustainable but practical for an engineer who's outside a lot) as well as a gift card for some cycling items. Using my dividend was more free money!

Also, they're a great place to work (from what I hear). They've been one of the top 100 companies to work for each of the past nine years. So if you're looking for hourly retail check out REI.

Options in Health Care: An Expensive Horizon

Two news stories today take on the issue of paying for health care.

President Bush talked about Health Savings Accounts (HSA) today in Bridgeport, Connecticut, so you can expect to keep hearing more about this option:

"I urge the Congress to look at ways to strengthen health savings accounts," Bush said in a state with 400,000 residents who have no health insurance. "I'm looking forward to continuing to have a consumer-driven system to be the heart of American health care," he said.

HSA are useful by allowing pre-tax dollars to meet your deductible before your insurance coverage kicks in. Even cough drops and over-the-counter pain medications may qualify for reimbursement. However, I take some exception with the idea that a "consumer-driven system" of health care will somehow solve the problems of insuring more Americans and keeping costs down. Health care is not equivalent to buying a winter coat, shopping around until you find the best fit and cost.

Last week we were in urgent care three times for Bo's serious ankle infection. On the first visit, the doctor wanted an x-ray to determine whether there was a fracture. I confess: I didn't ask how much the x-ray would cost, if there was a discount coupon, or whether the emergency room across town might have a lower price. By price comparison, would we have driven around town on a Sunday looking for low-cost x-rays? I don't think so. Consumer-driven health care might work for more elective or optional treatment, not for the reasons that drive you to Urgent Care on weekends or evenings.

Contrast with today's story about the State of Massachusetts: Lawmakers have approved a sweeping health care reform package that dramatically expands coverage for the state's uninsured, a bill that backers hope will become a model for the rest of the nation. The plan would use a combination of financial incentives and penalties to expand access to health care over the next three years and extend coverage to the state's estimated 500,000 uninsured.

Tuesday, April 04, 2006

Job Applications: What you Need to Know

I've been a job applicant plenty of times; now I've done a good deal of screening job applications and selecting the interview pool, interviewing and hiring.

Bo's resume drop on Monday resulted in the receipt of one job application and invitation to submit it.

That leads to meeting our first goal: How to fill out a job application? Answer: Carefully and completely. Use your resume as a guide not a replacement.

Here's a sad story about not being careful and complete: a friend of mine had a sweet temporary job: Laura was the alternative transportation coordinator. She arranged events around bicycling, busing and walking. Laura loved to ride, talk to people and encourage sustainable transportation. She loved it and wanted to get on as a full-time regular employee and, sure enough, that position arrived. The job was posted. She filled out the application and sent it in on the deadline. She didn't even get an interview. What happened?

She wasn't careful. Laura forgot to sign the application certifying that all the information was true. She didn't fill in some of the required fields. Laura blew it. She was devastated. HR wouldn't budge. She lost the temporary job she loved and the permanent job she dreamed of.

Be careful, be complete, and honest when completing job applications. The rest will follow.

Pre-Tax Savings and Health Savings Accounts (HSA)

Pre-tax Piggy
Flexible Spending Accounts (FSA) let you use pre-tax dollars to pay for certain dependent care, health care, and transportation expenses that normally are paid for with after-tax dollars. This adds up to significant tax savings on qualified expenses. The important thing is: the expenses must qualify, so check out guidelines AND what qualifies as "supporting documentation."

Through my employer, my bus pass is a benefit and my parking permit can be paid for with pre-tax dollars, as long as I have a payroll deduction made for the monthly permit payment. Enrollment in the health care savings plan is an annual election and the tough thing is always deciding how much to contribute. (If you don't use all the dollars with the time specified by the plan, you lose them.) Contributions are made pre-tax out of each paycheck and reimbursements are submitted to a third-party plan administrator.

This year I signed up for the dollar amount equal to our family deductible. I'm glad I did because last week Bo had three visits to urgent care for a sprained ankle (not broken---we had x-rays) that developed into a serious staph infection. Even though I haven't contributed the full deductible into my HSA, I can claim that amount when the bill comes because I'll have to pay it through payroll deductions anyway.

Details available from IRS:

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 created a new, tax-advantaged way for certain people to save for health care expenses. You must be covered by a high-deductible health plan to open and contribute to a Health Savings Account (HSA). IRS and Treasury have provided guidance on how HSAs work. Related items and publications at the IRS site:,,id=97322,00.html .

Save $10 on a $50 Grocery Purchase

$10 off $50 Grocery Purchase
Not all coupons are worth clipping---.35 cents off two boxes of snack crackers doesn't make it worth the effort to clip the coupon, track it in my purse, read the fine print, and make sure I use it before it expires. Some coupons are too good to pass up! The Safeway store coupon in NW newspapers today is a great way to save 20% on groceries---I watch for these coupons to show up and grab it. Here are the details:

The coupon is good for $10 off a grocery purchase of $50 or more (although if you spend over $50, you're not getting a full 20% off because your savings percentage diminishes) And you must have and use your Safeway club card. It's not good for alcohol, tobacco, stamps, bus passes, money orders, etc. And itt expires 4/9/06. Other than those restrictions (read the fine print) it's as good as a $10 bill.

I love these coupons because I use them to stock up on dog kibble and pantry items if we don't need fresh groceries like milk, eggs, fruit and vegetables.

Are Kids of Boomers a Generation of Boomerangers?

It's a fine thing that we're starting our mission now, to share the discipline of managing personal finances to gain independence, because lately I've been seeing the phrase "boomerang generation" surface in more places. MP Dunleavey -- personal finance columnist for MSN Money, has an article titled "Why so Many Grads 'Fail to Launch'." Bo is still in high school so this is the time to start training for the ultimate indie mission.

Many 20-somethings find themselves moving home to live with Mom and Dad, just like the movie 'Failure to Launch.' Blame it on the inertia -- and some very real challenges…a darker side of the boomerangers, many of whom graduate unprepared for the daunting financial realities that await them -- whether it's dealing with massive debt, a dicey job market, the high cost of living or, D, all of the above.

Monday, April 03, 2006

Failure to Launch: This is Comedy? This is Why I'm Blogging!

Failure to Launch: This is Comedy? This is Why I'm Blogging!

This site is supposed to help prepare Bo for independent responsible adult-boy living. Maybe there's an epidemic out there of boomerang boys (is this "Clueless" of the 0-digits decade?)

I haven't seen the movie yet. But the premise and the mainstreaming of this entire topic (Mission: Independence. Move out Dammit. We want to redecorate your room!) has me worried. The film's official site features the following:

Tag line:
To leave the nest, some men just need a little push. (pushing.)

Synopsis: Tripp (Matthew Mcconaughey) has never been able to leave the nest. He's always had some reason or other, but now, his desperate parents have had enough. They hire the gorgeous and talented girl of his dreams (Sarah Jessica Parker) to get him to move our of the house.

A Fun Quiz!

How to Tell if He Still Lives at home:

1. Check his threads. Are his whites white and his colors bright?
2. He always insists on spending the night at YOUR place.
3. He never has parties. Ever.
4. When he's sick, he has to stay in bed, by order of "Dr. Mom."
5. He can't go to the X-Games with his friends because his father wants help setting up a new computer.

If you've seen the movie already, let me know if Sarah Jessica lures him out. I wonder what she charges...?

More Details: Win $100 for Frugal Living Tip

Win $100 with a Frugal Living Tip
Today's previous post gave the link and last month's winning Frugal Living tip , but I thought it would be good to give a little more information about winning strategies for the Frugal U $100 contest.

From their site, How to Win:

HOW TO WIN: On or around the end of each month, Bankrate, Inc. Representatives will choose a list of finalists from among all the Frugal tips submitted during that month. Bankrate representatives will choose finalists based on the most useful or creative submissions. The list of finalists will then be posted and readers will be asked to rate each tip based on the degree to which they find the tip useful and/or creative. The reader who has submitted the tip that receives the highest ranking will receive the $100 prize for that month. In the event of a tie, a Bankrate representative will choose the winning tip from the top two entries. Limit one (1) $100 prize per user per 12-month period. In the event that one user receives the highest-ranked tip more than once in a 12-month period, the 2nd place tip will be chosen as that month's winner.

As always, make sure you read all the rules and the fine print.

No Late Fees

No Late Fees

The late fees from rentals at our local video rental store were killing me. Last year I paid $40 at the end of the year to dig us out of the hole. Bo rented games or movies and they seemed to disappear under mounds of dirty clothes for weeks at a time. He was supposed to return the rented items AND pay his own late fees; of course, he never had the money. Eventually, I paid up and blocked him from the account.

We signed up for NetFlix, the online DVD rental service that delivers through the postal service, about five months ago. We selected the two-out-at-a-time service and have been pleased with it since we started. The best part: no late fees! Ever!

Assets: Your Personal Loot

The cold hard stuff Assets: Your Personal Loot

Your personal loot adds up to your "assets": personal, monetary, or real property. You need to care for and guard it.

The lesson of the toilet overflow, and Bo not knowing what to do about it, got me thinking about many facets of "assets." He would have turned off the water if he knew how and thought about it. A house, automobile, investment funds are the things most people think of when using the term "assets." I don't see many balance sheets that list "keys, social security number or a good reputation" as assets, but they are all part of your personal loot and deserve the same attention and respect as your stock portfolio.

The take-away here: Pay attention to and take care of your personal booty. Everybody wants it.

Doing it All on Your Own

This article about the personal finances of a single parent in April's Kiplinger struck a cord with me:

Single women, by far the majority of single-parent households, earn an average of $26,500 a year. Child support, for the 45% of custodial parents who receive the full amount, averages about $5,800 a year.

I was a single parent for most of Bo's life when child care cost more than our rent.

Win $100 for Best Frugal Living Tip

Frugal U: Win $100 for Best Frugal Living Tip

Bankrate's Frugal U runs a monthly frugal living tip contest. This month's contest (March) closes today. You enter a tip and others vote on the usefulness. The top tip wins the monthly $100. Send your tip in tomorrow for a chance to win the next $100!

The winning tip? Here it is:

Winning tip: End dropped calls! Experiencing dropped calls on your cell phone? There's no need to get a new phone -- even if your phone is a few years old. Take your phone to your service provider and request a software upgrade. Typically, the service is free. Dropped calls can occur when the software version is upgraded on the cell phone towers but not on your cell phone.

A Job Search is Not a Team Sport

Update on the job hunt:

School is still out today and Bo was going to go out and pass out a few resumes. However, he wanted to enlist his friend Cameron (also looking for a job) to go along and look for a job together.

Here's a tip: job hunting is not a team sport. Some things you need to do alone.

Updated Resume Drop Results: Five handed out, one application received.


Where's the plunger?
Today's events have inspired me to include an entire section on "Household Maintenance" to ensure when one lives independently, one knows how to shut off the water to an overflowing toilet.

There's water every where: linen closet, clothes closet, hallway, seeping up the walls.

I left for work this morning and after turning on the Parkway, my cell phone rang. ( I don't usually answer the cell when I'm driving because I drive a manual transmission and that's just vehicular hari-kari trying to talk & shift.) I answered. It was Bo. He reported the toilet in "his" bathroom was overflowing. I told him to shut the wWe're going to need a whole lot more absorbancyater off to the toilet. He'd never heard of such a thing.

I pulled over, called back and talked him through it. Unfortunately, I could hear him splashing through the water as I waited for him to report back. He shut off the water. He laid down every towel in the closet. And there was still water everywhere.

When I got to work I called DD. He went home and started the damage control of wet vac'ing and ventilation. The pad is probably shot. We might be able to dry and salvage the carpet. Homeowner's Insurance? I don't know.

An important part of managing personal finances is caring for the assets, like the carpet, walls and plumbing. Therefore, we'll have future posts on interesting household projects like:

--Um, where's the fire extinguisher?
--If the smoke detector goes off, don't unplug the battery just because you burned the bacon
--This is the circuit box. Don't mess with it.
--I can shut off water to the toilet, what about the sink, Mom?
--Why we don't mow the lawn barefoot

And many more useful and interesting topics in store.

Sunday, April 02, 2006

Roth IRA for Minors - You lucky Dog!

Roth IRAs are great deals and we set goals to fully fund ours each and every year (preferrably EARLY in the year to maximize growth.)

Bo, that lucky dog, is a minor. But he did have earned income in 2005. That allowed me to open up a custodial Roth IRA for him and deposit $1,000 in it. (He earned $1,200 last year.) We could have contributed up to the limit of his earned income. So why is he so lucky?

Even if nothing else is contributed, and the money earns $10% (more below), he'll have close to $3,000 in ten years. If he kept it invested for 40 years, that would be a nice little package.

I chose to go with T. Rowe Price to open the custodial Roth IRA. Not every broker will handle these types of accounts. I went with TRP for several reasons:

1. I own TREMX which was been the #1 diversified emerging market fund for the past three years; I've made 130% since I bought this fund two years ago.
2. They allow an initial $1K investment, and $100 monthly contributions.
3. The fund can be rolled over into a brokerage account when Bo is 18.
4. The same fund manager that manages #1 also manages the fund I selected: PRMSX.

This has made Bo more interested in saving. If he doesn't let it ride until retirement, he also has options for a first-time home purchase or qualified education expenses. One more stretch for other parents of teens out there, but if you have the means, and your teen earned income last year (or this year)---the Roth IRA for minors could make more lucky teen dogs.

Resume Writing 101

Will you hire me?
Bo and I are sitting down to work on his resume. If you don't have a lot of work experience, you'll need to emphasize other skills and experience that will make you a good employee. Bo wants to work with other people---no packing boxes in a warehouse for him. There are a couple leads at a popular bottle bar and microbrew house/restaurant that he'll follow up on tomorrow when he has resume in hand.

Here's a good hint: If you have software like Microsoft Word, use the resume templates to give you a structure. That's what we're doing next!

Update: We used the Word Resume Wizard to select the categories to include on the resume. Once finished we printed five copies on good-quality bond paper. After consulting Craigslist for our town, we found an entry-level barista position and send an electronic resume.

Here's a look at the generic resume (formatting lost in html translation):

Bo Job-Hunter
Address Street
City, State ZipP
Phone (xxx) xxx-xxx

Objective: Seeking an increasingly responsible entry-level position in a dynamic work environment that emphasizes teamwork and cooperation and values superior customer service.

Work experience June 2005 – January 2006 Law Offices City, Oregon
Reception and Clerical Assistance
• Provided reception services for five attorneys and clerical support including preparing documents, mailings, billings, and scanning documents for archive. Skilled in use of computers, office equipment and keyboard (50 wpm).

Various Dates and Clients General Assistance and Labor
• Provide roofing, carpet cleaning, furniture and household moving, yard work and landscaping services to various clients. Strong,
responsible and diligent.

Volunteer experience Summers 2002-2004 City Family YMCA City, Oregon
Youth Counselor-in-Training• Responsible for supervising youth summer camp programs in conjunction with adult counselor during day-long and overnight
sessions. Duties included organizing outings, activities, camping and sporting equipment and overseeing youth to ensure fun, health and
safety while in the “Y” programs.

Education Currently Attending South City High School City, Oregon Seeking High School Diploma
• Currently enrolled at South City High School seeking diploma in 2006.

Interests and activities:
South City High School Varsity Football
South City High School Varsity Wrestling
City Boys Rugby Team Captain
South City Concert Choir
Music Composition and Performance (song-writing)
Stained glass work, carpentry, sculpture