January 10, 2013
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It’s no secret that Americans are in debt up to their eyeballs. And to what can we attribute this colossal “living beyond our means” phenomenon? I don’t think it’s because we’ve had so many emergencies. It’s because we don’t ever want to feel poor.
Dear Mary: What do you think about settling a debt with a creditor? I recently agreed to one for a credit card, and the bank did notify me that the forgiven debt will be considered income by the IRS. I will have to file taxes on this amount using form 1099C. The bank will report the zero balance to the credit agencies, my credit report will read “settled, zero balance” and the account closed. Was this a bad move on my part? — Cindy, California
With food prices going up faster than you can get through one grocery shopping trip, it’s more important to your wallet now than ever to prolong the life of your food. Unfortunately, freezing food doesn’t always guarantee a tasty preservation, so I was thrilled to read Natalie’s tip.
For decades, I’ve pleaded with you to not use debit cards because they are not safe. And for years, I warned my sons about the dangers of riding motorcycles because they are not safe.
Bill Smith sits down to his most dreaded chore — paying bills. Every month, it’s the same story: Pay the most urgent, and leave the rest. There’s never enough money, no matter how hard he works.
Many things that we buy are simply not negotiable. The salesperson at Macy’s won’t negotiate with you over the price of that newly arrived collection. The supermarket checker won’t haggle with you over the price of eggs. But a ring at your local jeweler or produce at the farmer’s market? Well, that’s a different story. And once you read today’s first great reader tip, you can add magazine renewals to the list.
I enjoy discovering secret information — stuff most people don’t know about. And I love spreading the word. Here’s an example: My supermarket, like most, offers a “rain check” if it runs out of a product that is on sale. This is really great, in my opinion, because my store’s rain checks have no set expiration date.
All of us have quitting points in our lives — those times or situations that become so overwhelming or challenging that we simply quit. No matter what you call them — brick walls, insurmountable obstacles, predictable or complete surprises, financial crises — things will never change if you don’t acknowledge they’re real. A key to overcoming the desire to quit is to identify those “brick walls” and then figure out how to crash through them.
Dear Mary: I’ve read your books and am a member of DebtProofLiving.com. My husband and I were excited to start our Rapid Debt-Repayment Plan and did well the first month. Now we have fallen off the wagon and are behind on payments again. We haven’t used our credit cards, but we feel discouraged. Now what? — Teresa, California
Every Wednesday on my blog at EverydayCheapskate.com, EC readers share their favorite tips. Some weeks there’s a theme — like kitchen tips or winter tips — and every week I know I’m going to learn something new, something clever. Here’s just a sampling of recent tips that readers posted. If you have a favorite tip that will save your fellow EC readers time or money, share it with me using the address below. Then watch for your tip to show up in a future column.
I’m sure you’ve noticed by now that last minute congressional decisions in 2012 resulted in a 2 percent cut in everyone’s take-home pay beginning 2013. That hurts! I immediately began thinking where ordinary households could cut the cost of goods and services they’re paying for now to make up for the loss of income. You may already know what I’m thinking: laundry detergent. No, really. Laundry detergent! By reducing your per-load cost for detergent from $.35 or more to just $.03, you’ll have made a good start in recovering the lost income.
I’ll admit I used to think frugality was a distasteful lifestyle forced upon the poor. I believed “frugal” was synonymous with never buying new clothes and dumpster diving under the cover of night. Boy, did I have a lot to learn. And learn I did — and continue to learn — that the frugal lifestyle is the path to building wealth on any income.
Dear Mary: I am 24 and will be a senior in college next year. I plan to apply for my first credit card to start building credit. I am also planning on traveling, so I would like a card that can be used abroad.
When Swiffer WetJet hit the market several years ago, consumers went wild for it. I loved my Swiffer, but I did not like the price of the cleaning pads. And my readers didn’t like it, either. They sent me their tips on what they used instead. Some were clever, some too complicated, and some I just can’t repeat.
You’ve seen the ads, received emails and perhaps even visited the website, but do you know who Angie is and why she has a list?
Are you more apt to overspend at the mall or online? Can’t decide? While you’re thinking, I’ll go first. I am more likely to overspend in a store. Without a doubt.
If you’ve been reading this column for long, you know that I am passionate on the subject of kids and money. In addition to the many articles I’ve written, my book, “Raising Financially Confident Kids,” has been revised and updated several times. This subject is obviously important to my readers, too.
Imagine for a moment that I’m standing in front of a gigantic chart that tracks the movement of the stock market from almost the beginning of the last century. You see a series of peaks and valleys corresponding to various historic events. There is a serious downdraft during the Depression of the 1930s. But look. It goes back up. It invariably goes up.
Dear Mary: I am trying to find recipe substitutes for the popular creamed soups, like cream of celery, cream of mushroom, etc. These condensed soups are killing my budget. I don’t even want to pay a buck a can for the generic option at Walmart! — Nikki, Colorado
Each week, I rummage through the mailbag at DPL Central and find all kinds of things from my dear readers. You’d never believe some of the letters and messages I find in there. Some are silly, others mind-boggling but always I find great new ideas, tips and tricks that will either save me time or money
So, how are those summer vacation plans coming? If things aren’t looking so good for you to get away from home this year, it’s probably not because you don’t have the time. According to a survey by Harris Interactive Inc., the American worker left an average of 9.2 days of vacation unused in 2012. That’s up from 6.2 unused days in 2011.
Pop quiz! Is there a difference between borrowing and financing? No need to stress — I’ll tell you. There is, and understanding the difference is very important to your financial health.
Everyday Cheapskate: Dear Mary: My credit card company raised my minimum payment from 2 to 5 percent of my outstanding balance each month and added a $10 monthly administration fee on top of interest.
Dear Mary: My credit card company raised my minimum payment from 2 to 5 percent of my outstanding balance each month and added a $10 monthly administration fee on top of interest. I complained. They offered to let me keep my lower minimum payment, but they would raise my interest rate from 5.5 percent APR to 7.99. I used the calculators at your website at DebtProofLiving.com to see what interest I would pay with each scenario.
If I could magically recover all the money I’ve wasted on skin care products in my life, I’d be a wealthy woman. Who knew that one of the best moisturizers is likely sitting on my pantry shelf? That’s just one of the great tips submitted by Everyday Cheapskate readers.
Some of the strangest looks I get are from people who just don’t get why I would make my own laundry detergent. I’ve written about this before on my blog at EverydayCheapskate.com, but for those of you who aren’t convinced, I’d like another chance to change your mind.
If the word budget is like nails on a chalkboard, you’ve got a friend in me. I know the feeling.
Dear Mary: My husband and I have really gotten ourselves in deep this time. At the time, we thought starting a franchise using our personal credit cards was a good idea. The manager we hired was inept and untrustworthy. Now we are in credit-card debt to the tune of $250,000. We are trying to crawl out from under this problem and are out of working capital to keep things going. We can’t find anyone who will make us a consolidation loan. We are sinking fast! — Name withheld, Texas Dear Nameless: I wish you’d written before you headed down such a dangerous path. Instead, you violated nearly every rule of self-employment: You went into business with borrowed funds. You hired employees before you were profitable. You thought of credit as “working capital.” Need I go on?
As the story goes, the local inventor invited the town’s pastry-makers to observe his latest invention: an automated pastry-making machine. To his dismay, the bakers deemed it unfit because it could not consistently turn out perfect pastries. Not one to give up easily, the inventor took one of the chefs aside and asked, “What do YOU do when you make a mistake?”
It is strangely ironic that the freedoms and affluence we enjoy in our society are the very things that stand to ruin our children if not addressed early and effectively.
Dear Mary: I read your column all the time and can’t thank you enough for all the helpful money-saving hints you print. My mom bought 20-year term life insurance policies for my two sons when they were young in the 1970s. I know she finished paying on them, and I know she didn’t cash them out. When my kids were in their late 20s, Mom told me she was going to give the policies to them so they could put whatever beneficiary they wanted on them. After she passed away, I found that neither of my sons even knew these policies existed. Now what do I do? — Judith, email
I’m very excited about the recent release of my book, “Cheaper, Better, Faster: Over 2,000 Tips and Tricks to Save You Time and Money Every Day.” I love tips, and having them in one place sure is handy. Here are some of my favorites:
Is coming up with a consistent monthly food budget making you crazy? Or guilty? Or hungry? Jane DeLaney, the founder of eMeals.com and a friend of this column, puts things in perspective by sharing her experience with food budgets: “People often ask how much I spend on groceries each month. As you can imagine, my food budget has changed over the years. But one thing that hasn’t is the fact that if I don’t stick to a fixed amount for groceries, my good intentions will quickly fade away.
It’s hard to remember a time when YouTube wasn’t a part of our lives. It seems like every day I receive a link from a friend or family member sharing something fun, poignant or thrilling on YouTube. My friend Lou at NokOut.com is a YouTube star. She has a series of videos that show her demonstrating the uses of her amazing product, Nok-Out. Looks like Lou is on to something.