Stash some cash for emergencies

As I mentioned in my last post, I knew the personal finance books I received for Christmas would yield some good fodder this blog. Here's the first interesting tidbit to share.

In The Wall Street Journal Complete Personal Finance Guidebook, Jeff Opdyke recommends stashing a few hundred dollars cash in a very secure spot in your home, just in case the power goes out in your area for an extended period of time. Though M and I have started using cash on a more regular basis, we get that cash from an electronic ATM. Plus, we're still pretty tied to using our debit card to pay for things.

Other than big snowstorms or the occasional flooding, natural disasters are rare in South Jersey, but having some cash around to pay for groceries in an emergency isn't a bad idea. Now I just have to find a secure place in my home to keep it (something I won't be writing about here).

By the way, the Carnival of Personal Finance is up at My Personal Finance Blog. Check it out if you have a chance.

Personal finance books under my Christmas tree

In our house, celebrating Christmas has become a month-long affair. With in-laws and siblings down south, a daughter attending college in Boston, and a blended family in general, M and I have been involved in family gift exchanges the last two weekends. We have three exchanges to go before the year is through (counting Christmas morning).

All the early exchanging makes the holidays a little more hectic , but it has perks. For instance, I've already gotten two things on my gift list: Jane Bryant Quinn's Make the Most of Your Money, and The Wall Street Journal Complete Personal Finance Guidebook, by Jeff Opdyke.

Author, author
Both books are tremendous resources for just about everything personal finance-related, from excellent writers. Jane Bryant Quinn is one of the most well-known personal finance experts around. I interviewed her once for my job, and she's as classy as she is money-smart. (Interesting notes I didn't know about her until now: She helped develop Quicken, the personal finance software I use, and her stepdaughter is Martha Quinn, one of the original MTV video jocks. Source: Wikipedia)

Jeff Opdyke is The WSJ's Love & Money columnist. He doesn't have the long list of credentials of Jane Bryant Quinn, but he has been covering personal finance and investing for The WSJ for more than a decade and has a real knack for clear, non-intimidating finance writing. (Interesting note about him I didn't know: He works for The WSJ but lives in Baton Rouge, Louisiana.)

Everything personal finance
I'm already halfway through the guidebook. It's a "lighter" read than JBQ's book, both in tone and weight. Mr. Opdyke covers all the basics of personal finance, from banking to investing to insurance, in less than 250 pages. My daughter Jess got it for me (because she "admires my passion for finance"), an irony because I think it's ideal for someone like her--young, busy, and just starting out in life. It also has a companion workbook (sold separately).

Ms. Quinn's book has been staring at me from the top of dresser the past two weeks. It covers the same ground as the guidebook and much, much, more, and in greater detail. It's more than two inches thick and 1,000 pages, including appendixes. However, it's well-organized and easy to navigate. Just don't try to stuff it in your special someone's stocking.

For me, perhaps the greatest gift from both of these books: Fodder for an abundance of personal finance ideas and thoughts to share with you here at The Coin Jar in the months ahead.

Good personal finance advice for your ears

I love my iPod. Listening to podcasts of radio shows from Dave Ramsey, Crown Financial Ministries, and Charles Stanley make my hour-long commute to and from work an education rather than just a grind. (In fact, I rarely listen to music.)

I'm going to add another show to my podcast favorites: "The Color of Money" from National Public Radio (NPR). It airs every week on NPR's "Day to Day" show. Michelle Singletary, the personal finance columnist for the Washington Post, is the primary contributor. The segment covers the usual range of topics, from saving for retirement, college, etc. to tips on starting a business.

Maybe the best part about it: It's informative and short, about four minutes long. Plus, with the podcast, no endless NPR fundraising segments to sit through in the fall and spring.

A Penny Saved hosts Carnival
The list of submissions to the weekly Carnival of Personal Finance seems to get longer and longer. This week's carnival is at A Penny Saved, and since there are so many choices, here are a few from the bottom of the list you otherwise may not have seen:

• The pursuit of the perfect savings rate at "My financial journey."
• 13 ways to save on gasoline, at "How to save money" (though you need to live near an Indian reservation for one tip).
• How persistence will make you rich someday, on "Money Smart Life."

Red storm rising for many homeowners

The predictions are coming true. And faster than many financial experts expected.

People are losing their homes. In droves.

"Americans who have stretched themselves financially to buy a home or refinance a mortgage have been falling behind on their loan payments at an unexpectedly rapid pace," The Wall Street Journal recently reported. "The surge in mortgage delinquencies in the past few months is squeezing lenders and unsettling investors world-wide in the $10 trillion U.S. mortgage market.

The article notes that most of the defaults stem from people that had a questionable ability to pay from the start. However, it appears that the trend is spreading to other parts of the mortgage market as well.

A report on ABC's Good Morning America said that more than a million families have lost their homes to foreclosure in the first 11 months of this year. That's up a whopping 43% from the same period a year ago. In the state of Georgia alone, foreclosures have increased 100%.

An early increase
The apparent culprits of much of the foreclosure activity: non-traditional loans, such as interest-only and adjustable rate mortgages. As housing prices soared through 2005, millions of homebuyers took out these mortgages--which have low monthly payments in the beginning, but that can jump substantially after a few years--to keep their home purchase "affordable."

I remember watching a news report about a year ago that cautioned about the risks of all these homebuyers taking out non-traditional loans. The reporter brought up the possibility that, when homeowners' payments increased in three, or four, or five years, we could see many people losing their homes because of an inability to pay.

Well, the increase has come early. For instance, $1.2 trillion in adjustable rate mortgages will adjust upward in the coming months, the Good Morning America report said. The impact on already stretched homeowners is proving to be pretty big.

Evaluate other options
If you've been able to make your monthly payments on an adjustable rate or interest-only mortgage, now's the time to evaluate other options. Consider refinancing to a 30-year fixed-rate mortgage, which currently runs at about a 6% interest rate per year--historically, still a very good deal. You'll surely face some upfront refinancing costs--and make sure there isn't a pricey prepayment penalty in your mortgage contract--but those costs can be worth it over the long run.

However, you may find that going to a fixed-rate loan--even a 30-year one--means you can no longer afford your house. Generally, housing costs (mortgage, interest, taxes, and insurance) should be 25%-35% of your household's monthly net income. If refinancing causes your mortgage payment to eat up 40% or 50% of your net income, you've bitten off more than you can chew.

In that case, it may be time to call your realtor. Which is better than dodging calls from creditors and eventually seeing your family's home auctioned off in a sheriff's sale.

Not too early to think of 2007 personal finance goals

2006 is almost in the books. So what are your personal finance goals for 2007?

More than one-third (37%) of American workers said they plan to pay off credit card debt next year, and a third plan to put a set amount of money into savings each month. That's according to latest Principal Financial Well-Being Index, a survey of U.S. working adults at businesses with 10 to 1,000 employees and sponsored by the Principal Financial Group®.

Those are great goals to have. Add to those starting an emergency cash reserve, or increasing your reserve amount to six months of living expenses. Or keeping better track of how you spend your money. Or making sure you and your family have enough life insurance.

For my wife M and me, I'd like to see us get better at setting and living within our monthly cash budget. We did great our first month in October, but weren't as disciplined in November and through this month so far. Next year, I'd like to shoot to stay within our monthly budget for at least six consecutive months.

I also want to finalize our wills. This was a 2006 goal that I set just a few weeks ago , and I made a good start using my company's online estate planning document service. But I ran into a couple snags, so completing it will have to wait a little longer (sorry, M my sweet!).

Two other big objectives: Paying off the last of our student loans and a personal loan we took when we had CJ Jr. If we reach those goals--a good possibility--then we could start up our kids' college savings contributions again and making extra payments on the mortgage--two things we cut back on when we went to one income last June.

Last, but not least: Buying a highly used but reliable van (with cash, of course). This goal is heavily dependent on whether our family size shows signs of increasing in the next couple months, Lord willing.

Yes, I should have plenty of personal finance experiences to blog about in 2007.

Research: Thinking about money increases selfishness

I didn't have to go far to find an intriguing post in this week's Carnival of Personal Finance, hosted by Money and Values. Just the second one listed, actually.

Laura Young, host of "The Dragon Slayer's Guide to Life" blog, highlights some interesting research featured in the November Science magazine on "The Psychological Consequences of Money." A study conducted by a team from the University of Minnesota shows that just the thought of money tends to make folks more self-centered, selfish, and less willing to help others.

I feel like I've known this fact for years, especially being a sports fan. As the contracts for professional athletes and televising events have gotten bigger, so have the egos and self-centeredness of the players and league executives, across all sports. It's nice to see some solid scientific data to back it up.

A holiday gift for your kids that will last a lifetime

I'm probably missing a marketing opportunity here somewhere.

Occasionally I notice that people find my blog by googling "coin jars." Which got me to thinking, if you're looking for one last small gift to round out your child's holiday goodies, why not consider giving him or her a coin jar?

A search of Amazon.com produces a choice of four kid-friendly coin jars, ranging in price from $12.99 to $49.95. (I'm not counting the Qing porcelain coin vase included in the search results as fit for children. Also, note that two of the jars are virtually identical; one just costs $2 more because it's endorsed by Discovery Channel.) All are electronic, counting the coins as your child puts them in and displaying the total amount saved. One even counts and wraps the change for you.

I like the idea of motivating kids to save by showing them immediately how much their quarters and pennies have added up to. But I also think you get a big bang for the buck with children by dumping a bunch of coins out on the floor and helping them patiently count up their loot (reinforcing their math and money skills along the way). Either way, you're sure to get a "Whoa!" or an "Awright!" when they see the total in the end, which will leave a good impression of the value of saving on their minds.

Granted, an electronic coin jar isn't as fun as TMX Elmo or Nintendo Gameboy Advance. But those gifts will last from maybe a couple weeks to a year. The benefits of being a good saver will have the shelf-life of a lifetime.

Kids and money, loose change, and turkey leftovers

Carnival of Personal Finance #76 is up at My Financial Journey, with 47 entries. My personal highlights:

Finance-4-Kids gives some tips on how to teach your kids about money. One or two seem a little pie-in-the-sky--I'm not sure how you can "Eliminate fear and greed" in anyone, let alone children--but generally his points are well-taken.

(Incidentally, I've started CJ Jr. putting money in his piggy bank. At two-and-a-half years old, he is more interested in the loud "clunk!" sound from dropping the coins into the pig's belly than the value of saving today for something tomorrow. Hopefully, someday that will change.)

Jenna Coffee at Moneybucks Coffee writes about something dear to my heart, given the name of my blog: what she calls "nuisance money," or the coins at the bottom of her purse and in a jar on the counter. I didn't know Coinstar charged 8.9% for their automated machine to count your pennies (it's also free if you use the money to buy a gift card). Nice work if you can get it.

Finally, here's a post in the spirit of the season that I wish I wrote: What can you learn about money from a turkey dinner? at Money Smart Life. You'll be looking at your Thanksgiving leftovers in a new way.

Calculator gives you the basics for creating a budget

The thought of creating a family budget stops many people dead in their tracks. They look at the stack of bills and receipts on their desk, and suddenly cleaning out the garage is more appealing.

Often the reason is because folks don't know where or how to begin. But when it comes to setting up a budget, you don't have to recreate the wheel--there are any number of tools out there to get you started.

Take the "Ideal Budget" calculator on CNNMoney.com, part of its Money 101 series on the basics of personal finances. The "Ideal Budget" doesn't quite live up to its name in my book, but it's a quick and easy way to give you the basic framework for your own budget.

A broad financial picture
With the Ideal Budget calculator, you first input the amount of your income. Then you enter your expenses, in five broad categories: Housing & Debt, Taxes, Insurance, Savings and Investment, and Living Expenses. The calculator shows the percentage of your income going to each specific category, and provides an "ideal" budget allocation to see if you're spending too much or too little in one area.

It took me all of about 10 minutes to enter my family's information, though admittedly I have most of that information available at my fingertips. If you don't keep track of your expenses regularly or can't remember what you did with your last paystub, it will take you a bit longer.

I liked the fact that the budget was organized into just five expense categories. If you're just starting out making your first budget, simplicity is key. You need to have enough categories to make the personal financial "data" you're gathering and tracking helpful, but not so many that it's an administrative headache.

Not perfect categories
But I question a couple of the specific categories the Ideal Budget uses. For instance, I don't see a whole lot of value in budgeting your taxes. True, taxes are a big expense, but they are what they are. Most people with a steady paycheck or mortgage payment pay the same amount each month. If you're overspending in one category, you wouldn't be reducing your taxes to make up the difference. M and I base our monthly spending plan on after-tax income, which is truer to the actual income we have to spend.

I also don't like grouping Housing & Debt together. Yes, your home mortgage (if you have one) is debt, but it's also an investment--much different than the credit card balance you have for that plasma screen TV, or your new car loan. It's much more revealing to give your consumer (i.e., non-mortgage) debt its own place in your budget, and see just how much of your monthly income it's consuming.

Percentages can be questionable, too
The "Ideal budget allocation" percentages provided with the calculator are helpful. Some of the most common questions folks have about their finances are, "How much should I be spending per month on my house? On groceries? On entertainment? etc.," and the calculator gives a basic idea.

But like the categories themselves, the percentages come with some caveats. The calculator lists 25% as the ideal amount that should go for taxes, an amount which realistically could vary by the individual. It lists just 26% of income going for living expenses, but includes everything from food and clothing to gasoline and utilities. I don't know where the folks from CNNMoney live, but in New Jersey, the cost of living is probably higher than 26 cents of every dollar.

One "Ideal budget allocation" I agree with: 15% for Savings and Investment. That's truly an ideal figure, based on the fact that the U.S. savings rate has been negative for the past year, but one well worth striving for.

A first step worth taking
Judging by the "Ideal Budget," my family's in pretty good shape. We have little debt, so we're well below the 30% ideal allocation in that category. Our living expenses are running about more than a third of our income, which makes me question the cost of my 105-mile roundtrip daily commute--but since I love where I work and where I live, that's probably not changing.

If you've never created a budget before, the Ideal Budget calculator is worth a try. At least you'll get to say, "So that's what a budget looks like...!" But keep its limitations in perspective and think about how you could tailor it to your own needs. Hopefully, it will encourage you to put off cleaning the garage for another week.

How to save $1,000,000 and have your own jet, too

My friend Tim, hero of my recent "Shopping tips from a savvy online bargain hunter" post, proved again that he really knows how to find good deals online. Check out this one he found advertised a couple weeks ago on Dealnews.com for a Cessna Citation Mustang Light Jet from Sam's Club.

Sure, the $2.7 million pricetag might seem a bit steep. But consider that it's $1 million off the list price and comes with a Sam's Club lifetime membership. Chances to be a wise spender like that just don't come around every day. No wonder Sam's Club is already showing the jet as "sold."

High taxes may be the least of your problems

The politicians here in New Jersey are at it again--trying to figure out a way to lower the highest state taxes in the country. Few Jersey residents believe they'll make much headway, as this Philadelphia Inquirer article points out, and I, too, will believe it when I see it.

But if you think that lower taxes will make a big difference in your personal finances, think again. If you're complaining that taxes are too high and are a big reason you don't have enough money to live, you just might be looking at the wrong side of the equation.

It's not the taxes that are killing you

I was struck by this quote at the end of the Inquirer article linked to above:

"I just spent $200 on beauty products and makeup and had to pay $14 in sales tax," said Elisa, a woman shopping in Atlantic County. "I think that's ridiculous. They better start giving us something back or people are going to start moving to states where they have to pay out less money in taxes."

Now I'm trying hard not to rush to judgment. I've been with my wife M when she's bought makeup and I know it can cost a pretty penny (even at our local drugstore). Plus, I know that M wears makeup to look nice, mostly for me, and so I can be held responsible for the lipsticks and eyeliners in her purse. Guilty as charged. (Though she looks beautiful naturally, too--seriously.)

But $200? For makeup? And then complaining about $14 from a 7% state sales tax?

I can't make that kind of logic add up.

Taxes are a good, not great, deal
No one likes a big tax bill. And I've done my share of griping about the big chunk of our family income that goes to our federal and state governments.

But taxes are a fact of life. They pay for things our country and states couldn't do without, like roads, schools, and the protection of our homes and families. In the big scheme of things they might not be a bargain, but they could be considered a pretty good deal.

Being money-wise is less taxing
I don't know if Elisa is rich or poor. I don't know if that $200 in makeup will last her a year or a month. I don't know if she carefully included the expense in her monthly spending plan.

But if she's in a financial mess, I know one thing: Paying $14 less in taxes--or moving to another state with no sales or income tax--isn't going to get her out. Her best chance at financial redemption is to change how she thinks about her money, and how she behaves in regards to it. Save more, spend less, know where every dollar goes. That's taking a wise approach to managing your money.

It's good advice for every person to follow. And come to think of it, for every legislator too.

We've been "crammed!"

That's right, crammed. And I didn't even know it.

"Cramming" is the practice of unethical companies burying charges in the pages of your phone bill for services you never authorized or even used. The charges can range from a few dollars to double-digit amounts--but often not large enough for you to notice and question the total amount of your bill.

My family was fortunate because the charge was small, we picked up on it right away, and it took just one call to get it removed. But others haven't been as lucky. Cramming can mean shelling out quite a few bucks, wasting a lot of time on the phone, and dealing with a big headache.

Getting a name pays off
I discovered we'd been crammed thanks to writing this blog--specifically the "To get better service, get a name" post a few weeks back. I was going to write about my experience following up on a $7.64 "miscellaneous charge" included in our August phone bill from a company named OAN Services, Inc. The charge was for a call from our home phone line to a strange-looking, 9-digit number, one that neither I nor my wife M could recall making.

I called the 800-number provided on the bill for OAN and told their representative that the charge was either a mistake or bogus, and we wouldn't be paying it. The OAN woman briefly tried to explain what it was for--which I still don't know, but it was something having to do with the Internet--but I stood my ground. When she finally said she'd have the charge removed, I dutifully wrote down her first and last name--just like I advise in my post--and confirmed that it had been done a few days later by checking my bill online.

I couldn't recall the woman's name, so I couldn't use the experience for my "Get a name" post. But in looking up OAN on the Internet to try and jog my memory, I discovered that the company's business is scamming people through unauthorized phone charges.

Rip-off reports galore
According to posts on www.ripoffreport.com, OAN billed one person in Illinois $53 for "non-basic service charges." "After calling the numbers provided on the Verizon Bill...we were placed on hold for a period of time, then when we disputed the call they said we had said yes to this service. Verizon would not address this issue, only tell us to call the numbers provided," the Illinois resident said.

"This company is charging me for Directory assistance in Nevada that I never used. My phone Company...said that there was nothing they could do...My charge was $7.14. Imagine multiplying that by all the phones and cell phones in the United States and you have a MULTI_MILLION dollar business," wrote Patti from Missouri.

And blogger Brian Patton had to make five calls and spend a couple hours on the phone to get a $50 charge removed from his bill.

If you're a victim, too
The Federal Trade Commission (FTC) and Federal Communications Commission (FCC) are well aware of cramming. Here are a few tips from the FCC to protect yourself:

• Review your phone bill every month (as you should do with every bill and account statement you receive). Keep an eye out for calls to unfamiliar numbers, or for services that you don't recall ordering or using.


• Make sure you know what service was provided, even for small charges such as $2.00 or $3.00.


• If you can't explain what a charge is for, call your phone company or other service number provided and question its authenticity.


• Keep a record of the telephone services you have authorized and used – including calls to 900-numbers and other types of telephone information services.


• Read the fine print in promotional materials before signing up for telephone or other services to be billed on your phone bill.

If you have been crammed, immediately call the company that charged you and request to have the charges removed. If that doesn't work, you have several options: contact your state Attorney General's office, enlist the help of your local Better Business Bureau, or escalate your complaint to the FTC or FCC. The FTC, in fact, has a special cramming hotline at 202-326-3134.

One theme consistent in "cramming resolution" success stories: Be persistent. It may take several calls and some time, but you should be able to stop it and even have your money refunded.

And if OAN is the one you're after, here's where I reached them: 800-731-7777.

Visit this week's carnival of personal finance
Everybody loves the carnival, and Everybody Loves Your Money is the host of Carnival of Personal Finance #75. The list of personal finance articles seems to grow every week. Here are my favorites:

• It's Just Money: "How much do I say?" The LAMoney Guy struggles to decide whether he should speak up to help his sister and brother-in-law avoid a financial train wreck.
• Art of Money: "Micro-lending and the art of poverty" Jon profiles Muhammad Yunus, who will receive the Nobel Peace Prize in December for making loans to the poor.
• FIRE Finance: "All is well if our HEART is well" Here's an interesting and creative way to think about the things that make for a good retirement.

New cars may be more affordable, but still don't buy one

Cnnmoney.com ran an article recently that cars are at their most affordable levels since 1980. According to Comerica Bank's "Auto Affordability Index," better productivity in the auto industry combined with intense competition has driven the cost of a new car downward since its high in 1994. Meanwhile, the average family income has risen five percent over the same period.

"It's a pretty happy story for the consumer," Dana Johnson, chief economist at Comerica, is quoted as saying.

Not this consumer. Including finance charges, Comerica estimates the cost of the average passenger vehicle sold in the third quarter of 2006 at $26,500. That's about five percent less than the same period a year before, but still an awful lot of money to pay for something that's going to be worth about half that amount in a year or two.

If you are trying to get your finances on track--working to pay off debt, amass funds for your retirement or your kids' college, build up an emergency cash reserve--then a new car is a sure way to run yourself off the road. Just say no to buying one.

Used cars are a lot better deals than they used to be. I saved a few thousand dollars buying a 1998 Nissan Sentra with 12,000 miles on it eight years ago. It just passed the 170,000-mile mark. Best of all, it's completely paid for, giving M and I the freedom to work on our other financial goals--like trying to move up to a single-family home without mortgaging our life away.

How much does your morning coffee REALLY cost?

I recently wrote that I switched from buying donut-store coffee to grocery-store coffee to squeeze as much savings as I can out of my 1-cup morning habit. I self-brew and don't bother to invest the few dollars that buying coffee in a can saves me, so the switch isn't helping M and I pay off the house any quicker. But if you buy a $3 cup of gourmet coffee every morning before work, a cool little online calculator can show you how much it's potentially costing you over the long haul.

Hugh Chou isn't a financial planner. He isn't even in the financial services industry; he's a system administrator at Washington University in St. Louis, and self-proclaimed "geek." But he is a geek that makes great financial calculators.

Among the many--and I mean many--calculators you can find on his no-frills calculator webpage is the "Stop buying coffee and save" calculator. Just plug in the daily cost of your coffee (don't forget tax and any extra treats to go along with it) and see how much you could save by drinking a 25-cent cup from the office coffee machine. What's more, Hugh's calculator will show you how much those savings could potentially turn into if you invested them for a few years or decades or so.

You'll have to decide what's harder to stomach--the office coffee, or the smaller bank account.

Thanks to My 1st Million at 33, Frugal Duchess, and pfblogs.org for highlighting Hugh and his work. And thank you, Hugh!

A year-end goal: Get a will

It's "open enrollment" time for my employer's benefit plan. While making the selections for my family, I discovered a nice benefit I didn't know I had: As a participant in my provider's life insurance plan, I have access to a free service that will create basic estate planning documents, such as a simple will and healthcare power of attorney.

M has been after me for some time to have our will drawn up. I like to climb mountains occasionally as a hobby, and it makes her nervous. I point out that statistically a greater percentage of people die on the nation's highways than climbing up the likes of California's Mount Whitney or Granite Peak in Montana. But that gives her little solace since I have a two-hour roundtrip daily commute that includes the Pennsylvania Turnpike.

"Get a will" was going to be one of my New Year's resolutions for 2007. But since this service looks like it could be a pretty easy task, I'm going to try and get it done in 2006. I'll write a post on the whole experience a little later.

A handy checklist
Related to estate planning, I came across a handy tool on SaveAndInvest.org, a personal finance website for military personnel. The Family Financial Checklist puts on one page all the major financial areas you need to consider (e.g., Where does the mortgage payment get mailed to? How much is our life insurance?, etc.) in preparing your spouse and family financially for the time you may no longer be able to take care of them.

The list is very broad and basic, and doesn't provide explanations for terms it uses, such as a living will. However, it can serve as a good starting point for a heart-to-heart discussion with your spouse or family about a difficult topic. Plus, as you gather and document the information, you can check off each item upon completion (something I personally find very satisfying).

Having just celebrated M's and my third wedding anniversary, I'm about two years late in completing this extremely important aspect of family financial planning. But hopefully before New Year's Day, 2007, I'll be able to check it off.

Shopping tips from a savvy online bargain hunter

You couldn't drag my friend Tim to the mall for an all-day shopping trip. But he admits it can be tough to drag himself away from shopping online.

"I kind of like it just for the sport of it," he says.

Tim has a knack for finding good deals via the Internet, particularly electronics and technology. For example, he got all the components of his surround-sound home theater system--six speakers, one subwoofer, and a 7-channel receiver--online for less than $1000. "I was surprised at how good they sounded," he says.

Here's how Tim does it.

An informed consumer
Tim starts out by doing his homework. His first stop is usually Cnet.com, which provides product reviews and price comparisons for everything from camcorders to web hosting. "It's like an online 'Consumer Reports,' " he says. (He also subscribes to Consumer Reports, the magazine.)

He uses Cnet to check out a product's specifications and find out which ones offer the features he wants. For instance, he recently was shopping for a digital camera with ultralong, "12x optical zoom" and was able to quickly narrow down his choices to the few models that had that capability.

(One thing I like about Cnet is their video reviews, where an editor gives you a brief video tour of a product. When I was shopping for a digital camera, a video review helped me decide against one model because I could see that the buttons weren't placed very well on the body.)

Tim also browses through other sites to gather information. "Amazon has a lot more people using it, so you get a much broader number of reviews," he said.

On a price-hunt
Once Tim has a specific product in his crosshairs, he'll hunt for the best price. He prefers dealnews.com, a site which provides daily reports on the best product deals from established stores (It's slogan: 'How to go broke saving money'). "I'll search for prices by product or subscribe to e-mail alerts," says Tim.

Dealnews emphasizes that the deals it reports come from "reputable stores," because not all deals out there are as good as advertised, Tim cautions. You can get gypped by purchasing "grey market goods"--those not intended for use outside the United States and marketed by unauthorized resellers. While these products can be steeply discounted, you often can't get technical support or make a warranty claim if something goes wrong.

On the occasions when Tim questions a reseller's authenticity, he heads to resellerratings.com, where other users rate vendors they've used on a scale of 1 to 10.

Using loyalty as an advantage
Once Tim's found the right product at what he thinks is a good price, he pays a visit to JR.com, the website for J&R Electronics a brick-and-mortar store in New York City. If JR.com has the product he wants but at a higher price, he'll give the store a call.

"They have a price-match policy, and more often than not, they'll match a lower price somewhere else if it's within reason," he says. He's become a fairly regular J&R customer, though he's never set foot inside their unique structure at Park Row and Broadway.

"I have a comfort level with them, because they're reputable, they've always given me great service, and they have good prices," he says.

Weigh benefits versus costs
Shopping online, for all its conveniences, can take a lot of time and effort, which can outweigh the benefits of saving a few bucks on a printer. Despite the satisfaction he feels at getting a great product at a low price, Tim also knows that the point of shopping online isn't just to get the cheapest price out there.

"What's important is, are you happy with what bought, and the price you paid?" he says. "My brother could care less how much something costs, so he doesn't shop around much at all. I'm more frugal, so I'll do the legwork. But some people don't care and that's fine."

Perhaps his biggest tip: "Don't buy stuff you don't need," he says. "I saw these plastic freezer molds to make ice cube shot glasses for about $6. I thought, 'What a deal!' Then I caught myself; what the heck did I need them for? Fortunately, they were sold out."

Overspending? Maybe you need a smaller "bowl"

Life is like a box of chocolates. And a credit card is like an open bag of potato chips.

I love chips. Potato chips, nacho chips, corn chips. It doesn't matter. Like the ad says, I can't stop at eating just one.

And I've learned something about the way I inhale chips that also can apply to spending money: We need boundaries. In fact, boundaries can be very good.

Eating more than my fill
Here's what I mean. In the past--more often than I care to admit--I've sat down in front of the TV with a half or full bag of chips at my side. I'll begin munching, and before I know it, I'm shoveling the shards at the bottom of the bag into my mouth and feeling a little queasy to my stomach.

However, on occasion, I've caught myself heading to the couch with a chip bag tucked under my arm and stopped dead in my tracks. I then go over to the kitchen cabinet, pull out a medium-sized bowl, fill it to the rim with chips, and put the bag safely back in the pantry. Usually after the bowl is empty, I've satisfied my chip craving, I have a pleasant feeling in my stomach, and have no desire for a refill. (Besides, the kitchen is waaayyy over there...)

Cash surplus
What does this have to do with money? In October, M and I stopped using a credit card to pay for everything. My theory (supported by academic research and financial experts a lot smarter than me) was that making purchases with cash--especially for discretionary expenses, like videos, household stuff, even groceries--would help us stay within our spending plan and manage our money better.

I haven't tallied the final numbers yet but it looks like the theory held true. M and I went over our spending plan at the beginning of the month, paid cash (or used our debit card) for the majority of our non-fixed expenses, and ended up with a modest surplus. We were even able to pay an unexpected $127 for my stepdaughter's tumbling lessons that I forgot to account for in our plan.

Behavior change
What was the difference? Our behavior. With an $18,000 limit, our credit card was the equivalent of a huge, seemingly bottomless bag of potato chips. We never came close to using all of that credit each month, but with such a large boundary, we naturally tended to "consume" more than was really good for us.

Spending within the boundaries of our cash limit--which really, by comparison with our credit limit, is equivalent to a small bowl of chips--made us more focused on how we spent our dollars and used what we purchased. For example, when we ran out of ice cream--another food which, for me, is best served in a bowl--M made up the brownie mix in the cupboard instead of adding it to the weekly grocery list. Thus, we stayed within our shopping budget but still had a tasty dessert.

Many people argue that boundaries are bad. And they can be, if they are unreasonable or too stringent. But use them well and they can save you from feeling a lot of discomfort.

Now, if you'll excuse me, it's November 1. There's a bowl of ice cream with my name on it.

To get better service, get a name

Getting good customer service from a company, especially by telephone, can be a challenge these days. But here's a piece of advice, courtesy of my father, that can literally pay off:

Always get a name.

A name isn't typically the first thing I'm thinking about if I have to call some place like the phone company or my bank. It's usually because I'm unhappy about some incorrect charge or item on my statement and I want it fixed, and pronto. As soon as I can get a live voice on the other end of the phone--after punching "0" as many times as necessary to get around the automated service menu--I jump right into what's been done to me, and what the company should do to make it right.

Sometimes the first service representative I talk to can fix the problem, sometimes he can't. But here's why pausing my monologue long enough to get that person's name is important.

Establishes a relationship
Starting your call with "Hi, I'm NAME...who am I speaking with?" takes away some of the anonymity on both ends of the phone. A name helps the service rep (and you) remember that you're dealing with a real person, not just some faceless voice that you'll quickly forget as soon as you hang up.

Provides accountability
Information is only as good as its source. Getting the service rep's name makes him accountable to the information he's providing. If he's promised to remove the fee you're questioning, look into your issue further, etc., a name is essential to follow up on the conversation for a status report or if you're not satisfied with the result.

What's more, talking to different people can mean getting different information. If you call back about a specific problem and speak with a second or third service representative, you may get two or three differing perspectives on how it should be resolved. With a name to refer to, you won't be as vulnerable to the "You must have been mistaken" or "We'd never tell you that" defenses that bad-service companies employ.

Saves time and frustration
Having to explain your problem over and over again to multiple service people is time-consuming and frustrating. Working with the same person builds a history of what the issue is, what's been tried to fix it, and what else needs to be done. If you've ever called for technical support on your computer, you know what I mean.

Introducing yourself and getting a person's name isn't just good manners. It can be good business, and wise consumerism.

"It's Just Money" hosts this week's Carnival
Hungry to learn more tips and ideas to help you manage your personal finances better? Then check out this week's Carnival of Personal Finance at the blog, It's Just Money. A blog "carnival" is an easy way to discover other personal finance blogs that you might find helpful; it's essentially a compilation of dozens of recent blog articles all in one place. Check it out when you get a chance.

Three ways to balance your income and your expenses

You've been tracking your spending and what you once suspected is now backed by cold, hard fact:

You shell out more than you bring in.

So what do you do next? Well, the hard truth is that you have only three options when expenses exceed income.

The best option: Spend less
I can hear you now: "Gee thanks, CJ, why didn't I think of that?" And I'm sure you did think of it, but let's take it to the next level: "Spend less on what?"

First, start small. Evaluate every item you purchase and bill you pay for ways to cut back. You'll likely be surprised at what you'll find, and at how far you can go.

For example, I used to pat myself on the back for making my morning coffee at home instead of buying it. But I also was paying $11 for two pounds of Dunkin' Donuts coffee grounds (on sale, even!). When I bought a $2 can of Folgers (also on sale) I found that, to my unsophisticated palatte at least, it tasted no different. Over the course of a year, Folgers and Maxwell House have probably saved my family $50. Sounds small, but when applied over lots of different purchases, it quickly adds up.

Next, think bigger. Are your monthly transportation expenses (car payment, gas, maintenance) more than 15% of your household net income? Do your credit card payments exceed 10%? Are your housing costs (mortgage, taxes, electric, phone, cable TV) more than 40%?

If so, you're likely living beyond your means. To get on track, you may need to take radical steps, like moving to a less expensive home or selling your car. In the short run, such steps are difficult and emotionally painful. In the long run, though, they'll pay off in more peace of mind and less stress.

A good option: Sell stuff
Yard sales, consignment shops, ebay , and craigslist. There is no shortage of marketplaces to convert the kitchen table and chairs stored in your basement or the clothes cluttering up your closet into cash, which can go to eliminating those pesky monthly credit card payments.

You probably walk by something you own everyday that you or your family don't use or need anymore. Make a point to go through every room in your house every month or so with the specific purpose of finding items you can sell. M and I just recently received $100 from our consignment dealer for clothes our kids never wore and toys they never played with.

A costly option: Make more
I've listed this option last for a reason: It's usually first in people's minds.

The fact is, earning more doesn't solve overspending. When you bring in more, the tendency is to spend more--often resulting in more financial trouble, not less.

Plus, consider the costs. A higher income may require working longer hours at your current job, or in a second job. Time away from things you enjoy, or your personal and family relationships, is a steep price to pay for not being a little more disciplined in managing your money.

That said, it doesn't hurt to find out if you are making less than you are worth, an easy task at a website like www.salary.com. It pays to invest time in your education or job training to increase your income-earning skills. And if you can turn a pleasurable hobby into a money-making venture, all the better. But weigh the costs and benefits before you make a change.

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Pay off the house or have another child? No contest

Not everything comes down to money. At least it shouldn't.

Many times the people I counsel through my church's financial ministry face hard, but fairly clear-cut, choices regarding their finances. Serious about getting rid of that $40,000 in credit card debt? Then consider selling the brand new car with the $400 monthly loan payment, I might say.

But not all decisions come down to just money. Some things in life aren't meant to be about money very much at all.

Family decisions
Terri Cullen, the "Fiscally Fit" columnist for The Wall Street Journal, wrote in the October 5 edition about the process she and her husband undertook to decide on having another child. Both approaching the age of 40--their mutually agreed upon cutoff for having more children--they felt time was running out for the chance to give their eight-year old son a brother or sister.

Together, they made a list of pros and cons to help them decide. The pros list was "short, but powerful," Terri wrote, starting with giving their son (hopefully) a lifelong companion. The list of cons was longer, not surprisingly, and largely money-related. Another child, Terri pointed out, would cut into their ability to save for retirement and pay off the mortgage early. Plus, there were the added costs of things like formula, diapers, and day care to consider again.

Sure, having kids costs a lot, as Terri says. But I was surprised at their ultimate decision. "I'd love to have one more child, but it doesn't make sense for our family," she wrote. "So it's official: Gerald will be an only child."

Kids not worth the cost?
M and I are both approaching 40. We have a 2-year-old son together, in addition to one daughter each from first marriages. For the last several months, we've been weighing the decision to add to our family, so I took special interest in Terri's viewpoint.

And I can't disagree with her and her husband more. When it comes to deciding whether to have a child, money and financial goals are fair considerations--but keep them in perspective.

My father is fond of saying that M and me are the kind of folks who should be having more kids. His point--aside from the fact that he'd love more grandchildren--is that today's world needs as many children with stable homes and loving parents as it can get. Instead, like Terri and her husband, many couples with dual careers and good incomes are deciding that the "cost" of kids is just too high.

Let your heart be your guide
Having a child, whether your first or fifth, is a very personal decision. No one--last of all me--has the right to judge the choice anyone makes. But I would encourage that it's a choice to be made mostly from the heart.

If you would love to experience the joys--and honestly, the many, many trials--of parenthood once again, go for it. Learn to manage your money well and your mortgage will get paid. You will find a way to finance their college somehow. You will retire someday, maybe with the financial means to live out more dreams than you thought possible.

Apples-to-oranges comparison
M and I will be fairly close to retirement age by the time our son graduates high school. We've adjusted to living on one income, but don't have much money to spare. We can't afford a single-family home in our area, and we might never be able to. And we'll need to replace our Honda Civic with a van if our family gets any bigger.

We don't relish these thoughts. Still, are they good enough reasons to hold us back from creating another child for our family to love, and be loved by?

Money is money. A child is a child. You can't make a more apples-to-oranges comparison.

So it's official: M and I are going for it. We're not expecting yet, but God willing, we hope to have to buy that van very soon.

Paying cash leads to an early clash

It's Day 4 of paying with cash instead of credit card in my household, and it's already caused a "fight."

In my September 22 post, "Three months on one income prompts a change," I told how M and I would no longer use a credit card to buy things like groceries, gifts, and household purchases, and use a cash-based approach instead. Even though we've always we paid off our credit card each month, I expect (and hope) that using the monthly cash we have—which is far less than our credit limit—will help us stay within our spending plan boundaries, and even spend less overall.

Last Sunday, October 1, I withdrew a modest amount of cash for this week's purchases. The approach tripped M and me up right from the start, but I've already learned a few things, and can see how it has the potential to have a positive impact on our spending behavior down the road.

A week’s spending in two days
We had been waiting for October 1 to arrive so M could do some grocery shopping. Our freezer had gotten so empty that it looked like we just moved into our home.

M left for the Acme immediately after church and loaded up the shopping basket from the list she'd carefully prepared. But when she got to the checkout counter, she discovered something: She'd left the cash at home. So she did what we've always done—pulled out our credit card.

She used the card again at Shop Rite for some more groceries. Later, she paid cash at Target for several other items in our monthly budget, such as socks, diapers, and toiletries. Not surprisingly, the combined total of the credit card and cash purchases exceeded the money I'd expected us to spend for the week. Let the finger-pointing and raised voices begin.

Communication is key
I thought I had told M that the cash I’d withdrawn wouldn't cover everything we wanted that week and she'd have to prioritize what to buy and when. At the time, she said she understood—but later admitted she really didn't know what I meant, or how this whole process was going to work, because I really hadn't explained it.

I'm guilty as charged. I'd spent a lot of time figuring out how we were going to do this, but not nearly enough discussing it with M. Good communication is critical to making this approach work, otherwise we risk spending too much of our cash before we have everything we need (a worry the credit card “conveniently” removed). So going forward, I think having money discussions will be more of a priority for us. We know they have to be.

More planning is required
M and I think ahead as much as we can already, but the cash approach makes it that much more important. For instance, as M found out, we have to get in the habit of making sure we have the money we need in our pocket—or at least have access to it—when we’re out.

We also have to account for every purchase we want to make as best as possible, or it has real consequences. For example, we’re going to a wedding this Friday and still need to buy the gift (which we did include in our monthly spending plan). Since we surpassed this week’s spending boundary, we’ll be paying for it out of next week’s allotment—not an ideal solution, but still better than putting it on the credit card and paying for it next month.

But a wiser way of thinking
I take two positives out of our troubles so far. First, M and I actually handled the trip-ups together pretty well. Our tensions rose quickly when discussing the shopping receipts, but we managed to walk away before things got ugly. When we revisited the topic later, the discussion started with apologies for mistakes on both sides. By the end, we felt a lot more on the same page.

Second, I see signs that this approach is going to help us be wiser, more disciplined spenders. We’re thinking a lot more about whether we really can, or need to, purchase an item before follow through. We know there is a very real limit to what we have, which always has been the case—but using a credit card, it just didn’t seem like it.

Carnival of Personal Finance is in town
Punny Money has "hit the trail"--creatively speaking--for the 68th edition of the Carnival of Personal Finance. Take a trip back through history and check it out. (At posting, it appeared Punny Money's site was down. Hopefully the situation will be corrected soon.)

SNL and a "lighter" side of accumulating debt

If you missed it, Jason commented that my last article, "One question that leads to financial wisdom," reminded him of an old "Saturday Night Live" skit about buying stuff that you can't afford. Check it out. And many thanks for the chuckle, Jason.

One question that leads to financial wisdom

Want to get better at avoiding financial trouble? Make a habit of asking yourself a simple question:

Where’s the money coming from?

That may seem like an obvious question to ask whenever you buy anything, from groceries to a car. But it’s one people tend to avoid because they don’t know—or don’t like—the answer. Being financially wise means knowing exactly how you’re going to pay for something before you buy it—besides putting it on your credit card.

No vacation from financial stress
A couple I once counseled had committed to going on a family vacation they could no longer afford. The husband had unexpectedly been unable to work and they were struggling to make ends meet on the wife’s schoolteacher income alone. However, they had made plans months before to spend a week at a friend’s North Carolina beach house, rent-free, with several other families.

Canceling the trip was not an option, the couple had firmly decided. They’d already told their two kids they were going and were reluctant to disappoint them. With the free lodging, they actually considered the vacation “a good deal.” They also were embarrassed at the thought of backing out on their friends, especially for financial reasons.

With the trip just weeks away, the couple had not estimated the other potential costs, such as food, gas, tolls, and activities. They also had no idea how they would actually pay for the trip, other than knowing what credit card they’d use.

A change in thinking
Their perspective began to change when I asked point-blank: “Where is the money for your vacation coming from?”

Once they admitted to me—and themselves—that they didn’t know, the wheels were in motion to find an answer. With a little help, they came up with an overall budget for the trip that included every possible expense they could think of. We totaled up the driving distance and divided it by their van’s miles-per-gallon to get a decent estimate of the travel costs. They set a limit for their recreational spending money—miniature golf was fine, but jet skiing was out.

Scraping up the cash
With a rough idea of the vacation’s cost, the couple turned their attention to finding the cash to pay for it. The wife, who managed the household bills, determined to tighten the family’s belt over the next few weeks and scrape together some surplus dollars. The husband agreed to sell his barely used racing bike that was gathering dust in their garage. They’d also pay for a portion with their modest amount of savings—though not enough to deplete their entire account.

When they returned from the trip, the couple said that sticking to their budget wasn’t easy, but they’d managed. Knowing that the vacation was paid for freed them from worry, if only for a while, and helped them enjoy a little family fun during a difficult time.

“Where’s the money coming from?” It’s a simple question that may require a hard answer. But asking it before you head to that beach house will help keep you out of the poor house.

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Carnival of Personal Finance at Canadian Capitalist

Check out the articles in the 67th edition of the Carnival of Personal Finance, hosted this week at Canadian Capitalist. There are 53 entries, but here are a few that I liked to help you narrow them down:

• The Ideal Budget, at www.bargaineering.com, provides a breakdown of budget categories from the Money 101 classes at www.cnnmoney.com.
• The Life Training Blog shares some principles of being financially secure that are true no matter what the situation of the economy or your income may be.
• A blogger called 2million found a creative way to "save money the MacGyver way" and fix his car using a roll of duct tape and some pliers.

My recent article, "Three ways to help achieve your savings goals" was also among the entries.

The next Carnival will be held at Punny Money, on October 2.

Three months on one income prompts a change

This week marks a notable anniversary in M’s and my household: three months living on one income. All in all we’ve managed well, but I can see things getting more difficult in the months ahead. So we are planning to take steps now to avoid trouble later.

Living smaller
While it hasn’t been easy, living from my income alone hasn’t been too difficult since M left her teaching job last June. The bills are paid. The pantry is stocked, though the shelves get a little more bare before the next trip to the Stop ‘n Shop. We’re surviving without cable television (though disappointed to discover that there’s just as much junk on regular TV from which to shield my teenage stepdaughter as there is on digital TV).

We’ve also achieved a couple goals. We used savings to pay off all of M’s remaining undergraduate school loans. That put us in position to apply for a special federal grant that M qualifies for, which will pay for her recent grad school classes—thus freeing us completely from student loan debt. M also tapped into some of the last cash we received from our wedding (three years ago) to have our kitchen finally painted a color she likes, rather than despises.

Worth the sacrifice
The best part of our one-income life has been seeing M happy and enjoying her new job as full-time mom, which has benefited us all. For example, the start of the school year usually brings a lot of stress, with frantic shopping trips for school supplies in crowded stores and stacks of school forms going unsigned days past their deadlines. This year, my stepdaughter had all her supplies before her first day in seventh grade, and the forms she dumped in a pile on our dining room table were returned the very next day.

It’s all been well worth not being able to watch my beloved Phillies on TV every night—even though they are in the hunt for their first baseball postseason appearance in 13 years.

Drain on savings
Still, I can see clouds on the financial horizon. M and I continue to create a spending plan prior to the start of each month—as we have for the last year—but have yet to stay within the plan’s boundaries. We haven’t overspent by much, mostly on things that have “just popped up,” but to compensate we’ve dipped more heavily into our cash reserves than we should be doing at this point.

Those reserves have been further drained by our house and cars. In July the dishwasher died, followed quickly by the basement dehumidifier, and a sporadically leaking toilet. Both vehicles stopped working at different points this summer. Apparently, these material things don’t understand the limits of our resources.

And needless to say, we have ceased saving—for college, the kids’ clothes, Christmas. I still contribute to my retirement plan, though only to the amount my employer matches. In retirement, M and I should actually be in very good financial shape—when we get there in 25 years.

Kickin’ things up a notch
So what to do? In October, we’re taking an Emeril Lagasse approach with our finances and “kickin’ it up a notch.”

Today, we purchase almost everything by credit card. We pay off the entire card balance each month and get rewards points have that helped us save a good amount of money on plane tickets and on our recent Disneyworld trip.

Next month, we’re moving to a cash-based system. We won’t be keeping envelopes stuffed with twenty-dollar bills around the house, but we will be using old-fashioned hard currency for things like groceries, gifts, entertainment, and household purchases.

I expect the move will help us stay within our spending plan’s boundaries—if something “pops up,” we’ll have to decide where the money is coming from to pay for it, or run out before the next payday. But it should also help us spend less. Research says that credit card users spend approximately 30% more than those who make cash purchases. It will be interesting to see if that bit of data holds true for us.

I’ll let you know how our experiment is going, and whether it’s worth trading off the savings from our reward points. In the meantime, keep us in your prayers.

Check out the latest Carnival of Personal Finance

If you're looking for a quick way to get more personal finance tips and helps, take a trip to the carnival.

The blog Free Money Finance is the host of Carnival of Personal Finance #66, elevated earlier this week. If you've never heard of a blog carnival, it's essentially a list of recent postings from a variety of blogs on a specific topic (in this case Personal Finance, but blogs host carnivals on many other topics). The blogger hosting the Carnival vets submissions and posts those selected posts on his or her blog. Free Money Finance was kind enough to include in this Carnival my post from last week, "Money does contribute to happiness, but..."

A blog carnival is a great way to find other blogs on a topic you're interested in. (The whole purpose of a carnival is to help readers find blogs of interest, and to help blogs find readers.) For instance, I visited the blog My Wealth Builder for the first time through this week's Carnival to read his (or her) post, "Getting motivated to save."

So check out the weekly Carnival of Personal Finance when you get a chance. You can find out when and where the next one will be held at www.carnivalofpersonalfinance.com. Best of all, you don't have to bring the kids and it won't cost you an arm and a leg for some cheesy carnival ride.

Three ways to help achieve your savings goals

Building up savings, whether for a short-term goal like a car or holiday shopping, or a long-term one like retirement, is hard. So how can you make it easier? A conversation with my friend Alex, while picking up our kids at church last Sunday, brought to mind these three tips.

Aim to save a specific amount
The YMCA I belong to is in the midst of a massive reconstruction. Walking past the bulldozers into the Y's main building, it's hard to miss the big sign showing the organization's goal for contributions to fund the project: $11 million.

While you don't have to put a big sign by your front door, you should state your own savings goal just as clearly as the Y. Just having an exact figure in mind will help motivate you to take the necessary steps to start and maintain your savings program.

For instance, when Alex started a savings program several years ago (back when he was single), he fixed in his mind to contribute the maximum annual amount allowed to a Roth IRA. At the time, he recalled, that translated into a goal of $2,000 per year. (In 2006, the IRA contribution limit is $4,000 if you're under age 50, or $5,000 if you're age 50 or over.)

Make it automatic
Knowing just how much he had to save, Alex made his IRA contribution a part of his monthly budget. He then took the wise step of having the money withdrawn from his bank account and deposited into his Roth IRA automatically.

If you’re not a disciplined saver, automatic deposits can be huge in moving you toward your savings goal. When you’re making deposits yourself, it’s all too easy to skip one because things are a little tight in a particular month.

Setting up an automatic withdrawal service takes little effort through most financial institutions. You usually get a variety of options—weekly, bi-weekly, or monthly withdrawals, at amounts that can be as little as $25 or $50. You can also usually choose the day in the month you want the withdrawal to occur (to correspond with when you get paid, for instance). And once the service is in place, you’ll be surprised at how quickly you’ll learn to live from your remaining income.

Don’t stop
Because he was contributing to his IRA monthly, Alex divided his $2,000 goal by 12, which comes out to roughly $167 per month. But rather than withdraw a rather odd amount from his account, he saw an opportunity to reach two goals with one plan.

Alex started making his IRA contributions at the beginning of the year, so he bumped up his monthly savings to $200. When he reached the IRA annual contribution limit in October, he didn’t stop saving. He continued to make his “contributions” for November and December—except this time into an account for his Christmas gift budget. The following January, instead of paying off a credit card loaded with holiday shopping bills, he went right back to funding his IRA each month.

Saving for the future takes vision and discipline. As Alex found, whatever you can do to build each into your own savings program will pay off in the long run.

Money does contribute to happiness, but...

"If I only had more money...."

It's a common wish. People often feel that the answer to personal and financial problems is having more money. (I include myself in this category, mostly when I'm checking out the prices of single family homes in my area these days.)

But is it true? Would our problems be solved--would we be happier--with more money? Well, yes...and no. Studies show that money does, in fact, contribute to happiness. But I believe being happy takes being money-wise as well.

The wealthy still have bad days
The Wall Street Journal recently explored the money/happiness connection in a couple articles. Columnist Jonathan Clements concluded that money alone can't buy happiness, while "happiness blogger" Gretchen Rubin wrote that "money, spent wisely, can contribute greatly" to being a happier person.

Clements and Rubin used some academic research as the basis for their conclusions. One study found that people with relatively high incomes were twice as likely to say they were "very happy" with their life situations as those with fairly low incomes. No shock there. It's hard to feel happy if you are struggling to pay the rent and put food on the table.

Another study, however, showed that wealth didn't translate into prolonged states of euphoria. People with lots of money were just as susceptible to being in a bad mood or feeling sad during the day as people who have less wealth. A boatload of money, evidently, doesn't insulate you from getting frustrated at a traffic jam or angry with your spouse or kids.

It's not just having money...
But money can contribute to happiness overall, both authors noted. Having money removes the worry of not having money, Rubin said. It also allows us to afford trips to the doctor and hire a housekeeper, thus keeping us healthier and buying us time. If we spend our money on experiences rather than just things--a good vacation with friends or family, rather than a shiny new car, for instance--we are more likely to get more enjoyment out of life, Clements pointed out.

Clements and Rubin are both right, in my view. However, they don't mention an important point: No matter how much money you have, you won't be happy unless you know how to steward it well.

...it's how you manage it
In the financial counseling ministry I serve in, we have "red" cases and "green" cases. "Red" cases are people in dire financial straits, who have little income and can't pay their bills. "Green" cases are those who have plenty of income...but through poor management and financial decisions, still can't pay their bills.

"Green" clients are no happier than "red" clients when they come for counseling. They aren't free from financial worries or much enjoying the life and resources they've been blessed with.

Neither are big-money lottery winners. There has been more than one story of lottery winners who have ended up in divorce, in rehabilitation centers, or bankruptcy court after being showered with more money than they ever imagined having.

That's why it's so important to learn, and apply, basic principles of financial wisdom. Without them, chances are you won't find much happiness, no matter how much money you have.

So strive to avoid or pay off debt. Take steps to save regularly. And make a commitment to give generously. Chances are, you'll be happy that you did.

How to create a household budget

Summer's over, and you've decided you really need to get on a budget. You're serious this time. You're really going to do it. But just how do you go about creating one?

Setting up a household budget is easier than you think. Here are three basic steps to getting started.

Track your expenses
To get a handle on your money, you need to know where it's going. So for 30 days, write down every transaction you (and your spouse, if applicable) make and bill you pay. That will provide a realistic idea of just how you are spending your money.

You can use any method you choose. Jot the transactions down in a pocket notebook you carry with you, keep receipts and list them in a spiral notebook or accounting ledger at the end of the day, or use a computer program or spreadsheet. A friend of mine uses his Daytimer. The key is to find something that is easy to do and makes expense-tracking a habit. (To find some expense-tracking tools, Google "track expenses.")

I use Quicken, which is great for totalling up the amounts and sorting purchases into categories (the next step). But because it's not as accessible as a notebook or sheet of paper, receipts I need to enter can quickly pile up. I think it's better to start out using plain old pencil and paper.

Categorize your spending
As you track your money, begin thinking about how to sort the different transactions into categories. Obvious ones are Mortgage/Rent, Utilities, Food, Clothing, Entertainment, and Debt (credit cards, car payments, student loans, home equity payments, etc.). However, also be sure to include a Savings bucket that covers money set aside for emergencies, holiday shopping, vacation, etc. Every transaction you make should fall into an appropriate category.

You can create as many categories as you need, and even break them down into subcategories. For instance, you might put DVD rentals, pizza take-out, and tickets to the ball game under the single heading of Entertainment. Or you could put them in separate categories of Videos, Dining Out, and Events. It all depends on what you want to track. M and I bundle things we purchase from the grocery store into a Grocery/Personal Items category, but have a separate bucket for Baby Items (just because I'm interested to know how much diapers, wipes, and the like increase our monthly spending).

Bear in mind that the more categories and subcategories you have, the more complicated your system gets. If it gets too hard to maintain, simplify it. Sticking to your system is more important than determining how much you spent on Starbucks coffee every month.

Set spending goals
Once you've tracked real monthly expenditures and sorted them into your spending categories, total up the separate amounts. You now have a clear picture of your basic monthly budget, and are ready to set goals for how much you can spend in each category each month.

Goals for fixed expenses, like rent or gym memberships, are easy to determine because they are the same each month. Much harder are areas like Groceries, Clothing, and Entertainment, which are almost completely determined by how much you choose to spend each month. Use your expense-tracking record as the basis for these amounts.

Remember, though, that your monthly expenses shouldn't exceed your net monthly income (the amount you have left after taxes). If your budget shows that's the case, you are overspending and you're going to have to make some adjustments to avoid further trouble.

The good news is that you've taken the first step to getting on the road to financial stability. Once you adjust your spending, keep tracking your expenses, and compare them regularly to your budget. In a matter of time, you'll have things under much better control.

Do you use a budget?
How about you? Do you use a budget for your personal finances? If not, how come? How many times have you tried to start one? Why do you think it didn't work?

Credit card deals from the King and more

What do Elvis and Yankees' great Don Mattingly have in common?

They both have their own namebrand credit cards.

That's just one of the interesting things I found at indexcreditcards.com, a website devoted to being a resource for just about every credit card deal that's currently out there. Tim M. of indexcreditcards.com emailed me recently and asked me to take a look.

They're trying to spread the word about the site through personal finance bloggers, interestingly enough. (And, in the interest of full disclosure, the blog that sends them the most traffic in the next couple weeks wins an Ipod Nano or Amazon gift certificate.)

Pretty comprehensive list
Tim's email said that indexcreditcards.com is the "most comprehensive online source for credit card information, including extensive lists of apples-to-apples comparisons of credit cards, helping consumers and small businesses find the best deals for their needs." And it is a comprehensive list, with more than 1,000 cards represented, including those for the King of Rock n' Roll and "Donny Baseball" Mattingly.

But how many people are in the market for a credit card like the one for Ducks Unlimited, which uses money from purchases to preserve wetlands? Or a "Wizard of Oz" card, which uses purchases to support the expansion of the Wizard of Oz museum in Wamego, Kansas? So while it's comprehensive, all that information isn't necessarily useful.

All types of cards
Indexcreditcards.com does include a wealth of information on more traditional cards from the big-name banks and card providers--low-interest cards, rewards cards, 0%-balance transfer cards, and a bunch of others. The site provides interest-rate, annual fee, transfer restrictions, and other details in a few lines for each card that are easy to scan and digest.

But unlike other sites, it doesn't offer a "compare" feature that allows you to look side-by-side at two offers. It also doesn't have a search engine that enables you to look for a specific card.

Easy to navigate
What I do like about the site: It's has a plain, easy-to-navigate home page; you can get wherever you need to go on the site from there. And it doesn't have any annoying advertisements. Though the site does get paid for card signups that originate from their listings, it doesn't try to draw your attention to one card or another.

The site also features credit card news and facts. One disturbing fact: Based on the site's estimates this year, U.S. credit card debt on average tops $3,500 per adult and $7,200 per household.

If you're in the market for a credit card, indexcreditcards.com is worth a look. Then again, if you are have as much credit card debt as the average American, it's a wise idea to consider taking yourself out of the market and paying off those you already have.

Michael Noer was only half-right about careers and marriage

Michael Noer of Forbes.com in a recent article advised men who wanted a stable marriage not to marry a career woman. Naturally, his position sparked a firestorm of outrage and protests from working women everywhere. But in all the controversy, don't miss a bigger point. Mr. Noer was actually only half-right. Man or woman, husband or wife: A person focused solely on his or her career spells trouble for a marriage.

The "Me" over the "Us"
Marriage, as M and my marriage counselor recently reminded us, is a partnership. To work, it requires following basic rules of teamwork and cooperation. It has to be grounded in values such as mutual trust and self-sacrifice. It necessitates that two people become one mind, one heart, in just about everything that they do.

Our careers, on the other hand, tend to focus on ourselves. We leave home each day for an environment where our own status and worth--financially, socially, psychologically--is typically elevated by those outside our family or marital relationship. When achieving higher and higher levels of status and worth become our focus, the career can easily become the priority. The "me" takes precedence over the "us," and the marriage suffers.

What we give up
Keeping the "us" at the top of the priority list isn't easy. Not long after we were married, M came to me with the new salary scale for her teaching job. "Look at how much I'll be making in a few years when I'm at the top of the guide [for those non-teachers, that means reaching the highest salary level]!" she exclaimed.

Before getting married, M and I had talked about how we would maintain careers and family and mutually decided--I thought--that M would stay home and I would continue working. So not surprisingly, my first thought was, "Who will be taking care of our kids?" But for M, seeing how much a person with her skills and experience would be worth to her school district--a value that M perhaps never imagined achieving--suddenly brought into stark relief how much she would be giving up by our decision.

My turn to give something up came shortly after we had our son. When M had to go back to full-time teaching for a year, we decided that I would approach my employer about working part-time so I could take primary responsibility for managing the household. While the move was arguably risky from a career standpoint, I am fortunate to work for an employer who was gracious enough to grant me the time and then take me back in my old position when M's work obligation ended.

A relatively sane life
Today, M is home full-time, redoing our kitchen, taking our two-year old son to the pool and my preteen stepdaughter clothes shopping. She attacks the household chores with the same intensity and focus that I saw her have creating lesson plans for her students. And a couple weeks ago, we found ourselves with a Saturday afternoon that didn't have to be crammed with running out for birthday gifts or doing the weekly food shopping.

It has, admittedly, been a rocky road getting here. There were no "easy" decisions that didn't produce arguments. But the relatively sane life we're experiencing today probably wouldn't be possible if either M or I had dug in our heels and fought relentlessly for what was best for our own careers and incomes, instead of jointly determining what's best for each other, and for our family.

Self-centeredness isn't a trait exclusive to either sex. Recognizing that quality in yourself, as well as in your choice of a spouse, gives you the best chance of achieving a marriage with long-term harmony and stability.

A surprising way to get better control of your money

Want to get a better handle on your money? Then give some of it away. Regularly.

In my last post on teaching kids about personal finances, I included "giving" as one of the four basic components they should learn about. Sure, generosity is an important trait to cultivate in children. But it's an important concept to apply in our lives as adults as well. Believe it or not, giving away your money can help you better manage it.

Break the hold
Why? Not only because it feels good to help others, or because you can get a tax deduction for gifts to qualified charities.

Regular giving helps break money's grip on our hearts and spirits. Let's face it, we give money a lot of control in our lives. Every major decision we make naturally involves some consideration of the monetary cost to ourselves versus the benefit we'll receive. The result usually dictates our actions.

Giving, by contrast, is very "unnatural." We exchange our money, which represents the sweat of our hard work or what we believe we deserve, for a benefit that may be intangible, or that we may never even see. It gets us in the habit of seeing how our resources can be used for much more than just meeting our own immediate needs and desires, which ultimately are the basis for money's stranglehold.

Monthly reminder
M and I give 10% of our gross income--that's before taxes--to our church. Our monthly tithe is the second-largest bill we have, after our mortgage.

I'll be honest, it isn't always the easiest payment to make, especially since going to one income. But it has changed my perspective. It's a regular reminder that many of life's blessings don't just come from what I own or can buy.

How to (gulp!) start
Here are three tips for using the act of giving to break money's grip:

• Give first. Make gifts the first "bills" that you pay, to avoid basing your decisions on what's left over after meeting your own needs.
• Give consistently. Give a set amount at regular intervals--weekly, monthly, bi-monthly-- to make it a habit.
• Give so it hurts (at least a little). Does the amount of your gift pass the "gulp" test? If you find yourself going "Gulp!", when you think about just how much you're giving away, you're on the right track.