Archives for 2012

Why The Savvy Shoppers Are All Online

It’s virtually impossible to avoid shopping. We all need to buy things, but there are ways to make each purchase more frugal and efficient. Purchasing things online can save you time and money. It offers convenience and helps you to avoid all the unnecessary extras that seem to end up in your shopping cart.

Like so many aspects of our lives, shopping experiences have been improved by the internet. Smart shoppers go online instead of heading to the mall.

Secrets Of A Savvy Online Shopper

Here are some secrets that savvy shoppers use when shopping or researching online.

Go online to conduct some quick research:

Check out weekly ads online to spot sales without needing to wait for the Sunday paper. To conserve your time, visit a site that has weekly ads for multiple stores or bookmark a site that you visit often.
If you plan to go to a store or restaurant, you can search for free printable shopping coupons and restaurant coupons.

Go for convenience:

If you’ve ever experienced the hassle of loading and unloading shopping bags from the cart to the car to the home in the rain and getting the kids or the dog in and out, you can appreciate having your purchases delivered straight to your home or office.
Have you ever driven to a store and realized it wasn’t open? Imagine stores being open when you want them to be. You can buy online any time of day, even when the retail stores are closed.

Experience less pressure to buy what you don’t need:

You are in control when you shop online. You can avoid the pushy sales staff’s influence to buy complimentary items and prevent yourself from loading up on impulse buys.
Viewing your electronic shopping cart and seeing the total bill before checkout allows you to modify your order without the embarrassment of deciding to put items back while at the cash register.

The opportunity for more savings:

You can find free coupon codes to save money at nearly any store. A quick search on a coupon website can uncover multiple offers at the each store for free shipping, a percentage off or free items with purchase.
You can earn cash back for free when you shop through a savings website. In addition to using coupons, you can actually earn a percentage of your transaction in a free account. When you are ready to collect, you simply request a check.
You can use a rewards credit card to earn points or more cash back. In addition to coupons and cash back, you can rack up rewards on a credit card when you use that to pay. When used correctly, a credit card can actually help you save. Consider any fees when you select your card and be sure you know how and when to redeem your rewards.

Give yourself gift cards:

For stores you frequently shop at, consider purchasing discounted gift cards online. You’ll pay a fraction of the price.

Become a free member of group buying sites:

For more savings on top of the already great discounts, you can purchase Groupons through a savings site to earn cash back on top of your savings. The rate today (3/13/2012) at BeFrugal.com is up to 8%.

Jon Lal is founder of BeFrugal.com, which offers free money-saving resources including coupons, Cash Back, tools, advice, weekly ads and more. For a limited time there is a $10 bonus offered when you sign up for a free account.

Do You Really Need Coupons To Be Frugal?

By Miranda Marquit 7 Comments

One of the popular ways that many frugal people save money is with the use of coupons. I, however, could never get into penny pinching or clipping coupons. I've tried, at different points in my life to use coupons, but I'm not a coupon maven, and I wasn't willing to put in the time or effort. But I'm not sure that you even need coupons to be frugal. In my mind, frugality isn't just about completing a laundry list of items like clipping coupons, and buying the cheapest thing you can find.

Frugal is more of a state of mind — and a lifestyle.

coupons and frugality

Best Value For The Money

To me, one of the essentials of frugal living is getting good value. A frugal lifestyle doesn't have to be about getting the cheapest thing imaginable (and using coupons to do it). Instead, it's more about getting the best value. Sometimes, the best value isn't the cheapest thing out there. My favorite example is shoes. I buy high quality shoes that cost more — but they last longer. Instead of replacing shoes every six to eight months, I can keep them for years. I still have the hiking boots I bought 10 years ago. They've held up much better than the cheap pair I bought less than a year before I spent the money for a better product.

Whether it's food, clothing, tools, or other items, sometimes the cheapest thing you can get is not the best value for the long term. It is worth it to carefully evaluate what your buying. In some cases, the truly frugal choice is to buy the higher quality item without the coupon. Saving $2 now isn't going to be a big deal if you have to spend another $15 in a few months to replace a low quality item.

Do You Even Need (Or Want) That?

The savviest couponers, I know, only clip coupons for what they need/really want. However, there are many more who are convinced that they are being frugal because they bought something with a coupon — even though they had no intention of buying that item in the first place. Using a coupon to buy something you don't want or need isn't true frugality. Instead, you are still spending money, no matter how much you think you are “saving” with the coupon.

A problem with using extreme couponing to stockpile food is that it can go bad before you use it. If you have to throw away items in your stockpile, what's the point? Another problem is that many of the foods you can buy with coupons are pre-packaged and outright junk food items. This isn't healthy, and can cost you more in the long run as health care costs go up. Pay attention to the types of things that coupons encourage you to buy, and be wary of them.

In the end, coupons work well for some people. They enjoy the challenge, and don't mind spending the time. However, I would rather use the time to make more money, and not worry so much about saving a few dollars at the store.

What do you think? Can you still be frugal even if you don't use coupons?

Retiring Wealthy On An Average Salary: The Story Of The Charitable Cook And Contractor

By Mr. Money 7 Comments

I've had a continuing series on this site over the past couple of years that I like to call “Retiring Wealthy On An Average Salary”. It looks at the inspiring stories of men and women who made what might be called average salaries during their working years, but in the end retired wealthy, with plenty of money to spend and give. How did they do it? By being good with their money, spending lower than their means and saving regularly while they still made an income. I've also found that to a fault most of them were very generous. You almost wouldn't think that would make sense, but it seems to be true.

Today I found another story, that once again speaks to just how powerful saving your money and being conscientious about your spending can be. It can lead to a big nest egg that in the end can help a lot of people.

The Story Of The Charitable Cook And Contractor

Elinor Sauerwein didn't seem like someone who had money according to a lot of folks that knew her. In fact, a lot of people thought that she was poor because she had few outward signs of wealth – choosing instead to live frugally and save as much as she could to be able to leave a large amount of money to the Salvation Army. In the end she left them almost 2 million dollars.

She was taught by her mother to never waste a thing. She never purchased a dryer, hanging her laundry on a clothesline in the backyard. She painted her home when it needed a touch-up and mowed her lawn until her early 90s. She refused to go to restaurants, the movies or pay for cable TV.

It could be said she took frugality to a whole new level.

Needless to say, it was a shock when a check for $1,731,533.91 from the estate of Elinor Sauerwein was presented to a California branch of the Salvation Army last Christmas Eve.

“It was a surprise and a blessing,” Capt. Michael Paugh of the Salvation Army in Modesto told ABC News.

Paugh was getting ready to head home for the holidays when he got a call from John Bullock, Sauerwein’s longtime friend and financial adviser, who had power of attorney over her affairs. Bullock was on his way over to present the freshly printed check to the charity.

“She said every dollar I save is another dollar that could go to the Salvation Army. Her goal for years and years was to amass as much as she could so it would go to the Salvation Army,” Bullock told ABC News. “She did an excellent job at it.”

She was able to save a large amount of money over the years through some pretty extreme frugality by some accounts. I'm not sure most of us would be able to duplicate her level of frugality, but it's still an object lesson on how someone with a smaller salary can amass a fortune.

By all accounts, the scrimping started early. In the late 1930s, after she’d graduated from college, she taught in a one-room schoolhouse in Crookston, Neb., traveling to her job on horseback. When she arrived, she’d light a fire to warm the room for the schoolchildren, teach, clean the room and hop back on her horse for the ride home.

She soon met her husband, Harold, and they married in 1945 and moved to California, settling in Modesto, where Sauerwein cooked for ranch hands on the ranch where her husband landed a job. She later worked at LM Morris business machines, according to the Modesto Bee.

Harold Sauerwein became a contractor and built their two-bedroom home with his own hands, said Bullock. Harold, said Bullock, was just as conservative as his wife when it came to spending money. When Harold Sauerwein died in 1994, Bullock promised him he would “look after Elinor.”

When Elinor Sauerwein died on Oct. 30, 2010, Bullock started compiling her funds for the big donation that she’d planned for “years and years.” By December 2011, everything was in order. The only restriction on the money was that the Salvation Army had to use it in the Modesto community. This posed no problem, said Paugh, and the charity was happy to comply.

“The money will stay in the community. The neat thing is we stick it in an endowment, and her gift will be helping people 50 years from now, even 70 years from now,” Paugh told ABC News.

“Her gift will keep on giving for years to come.”

While we may not be able to duplicate her extreme frugality, I think Elinor had a positive goal in mind and a reason for doing what she did. She wanted to make a positive impact for others and improve others lives by denying herself a few pleasures.

Does this story of living on an average salary and retiring wealthy help you realize just how powerful frugality can be? Tell us your thoughts in the comments!

Money Matters: Avoid Being Cheated

By Contributor 2 Comments

We all get scammed at one time or another, sometimes we just don't know it.

Life has become so hectic, that we don't always have time to think things through before we buy. We can do our weekly food shop, only to realise later on that we've paid more than usual. We can go to a mechanic, and get charged for a service our car doesn't even need.

Unless you have time to check on lovemoney.com or other useful financial sites, you won't always know a scam when you see one. Luckily there are simple measures you can take to ensure you are not cheated out of more money than a product is worth.

Double Check Receipts

Always check your receipts after every purchase. It isn't unusual for an additional charge to be added on. For example I once bought a DVD, only to discover when I got home that I was charged for it twice. Check for discrepancies.

Consult An Expert

Sometimes we do not have the knowledge required to know exactly how much a service should cost. Take someone with you who does. Many contractors will bump the price up, if they think you won't know the difference. Another set of eyes is handy to flag up any problems on your behalf.

Price Comparison

It is extremely irritating when you buy from a store, and discover the same product is selling for half the price elsewhere. Check around. This is easier to do via the web of course, because you can just jump from site to site, but don't avoid it at the mall, just because it takes longer.

Use Common Sense

To not be cheated, you often have to use your common sense. Especially when a store is giving you a deal. Be wary of ‘buy one get one free', ‘three for two' and other offers. Very often a store will bump up the price to make up the difference for the free item. Do the math before you buy in order to make sure that you're actually getting a good deal.

Watch Out For Overdraft Fees. They Can Cost You Big

By Miranda Marquit 1 Comment

One of the ways that you might be leaking money is through overdraft fees. Bank fees have been the subject of much debate recently. Lately, Richard Cordray, the head of the new Consumer Financial Protection Bureau, has been taking aim at overdraft fees, looking at ways to better educate consumers on the costs of overdraft fees, and encouraging banks to share better information about how fees are incurred.

A main issue associated with overdraft fees is the way they are processed. In some cases, banks will process larger purchases first. This results in the account being overdrawn faster, and then smaller purchases end up triggering overdrafts — and their fees. The new bureau is considering the idea of requiring banks to change the order in which they process transactions, in order to reduce fees.

overdraft fees

Educating Consumers About Overdraft Fees

Right now, banks offer “standard” overdraft protection services. These services allow consumers to overdraw their accounts by a certain amount. Purchases are allowed to go through, rather than being denied at the register and causing embarrassment. As a result, a fee is charged. This fee can be anywhere between $15 and $45 (or more) for overdrafts. This means that a $2 overage can cost much, much more.

Cordray is considering whether or not to require banks to add disclosures to statements. These disclosures would clearly show the fee, as well as what triggered the fee. The hope is that requiring a disclosure would educate consumers to keep them from overdrawing their accounts as much.

But would showing consumers what they're paying in fees really help?

The Convenience Of Overdraft Fees

The fact of the matter is that many consumers would probably still overdraw their accounts — even if they had a clear idea of how much money is leaking from their accounts as a result of overdraft fees. This type of overdraft protection is highly convenient. Instead of worrying that you don't have quite enough money to complete a purchase, your transaction is simply allowed through. Many consumers are willing to pay the fee if it means the convenience of not being denied at the checkout counter, or if it means they can still make a few purchases even though they don't have the money in their checking accounts.

Some consumers likely use overdraft protection as part of their regular banking habits, factoring it into how they make decisions about purchases. Unfortunately, these fees can add up, leading to the payment of hundreds of dollars a year. For some, though, the convenience outweighs the cost. Instead of worrying about tracking spending and budgeting, it is easier to just spend money, and pay the fees when there are overdrafts.

Once in the cycle, though, it is difficult to break it. It's easy to fall behind, since you have to pay the fees to get back in the black with your account. So, that's money that comes out of your account, and that you don't have to use for other necessities. It can easily become a regular monthly cycle. Instead, you're better off breaking the cycle, and making efforts to track your spending and budgeting to live within your means.

Ready To Refinance? Here’s What You’ll Need

By Miranda Marquit 1 Comment

Mortgage rates are low right now. Really low. Indeed, for many homeowners, now is the perfect time to refinance.

Credit requirements have loosened up a bit (compared to what they were for a couple years after the financial crisis). As a result, many people are interested in refinancing their homes. Before you head to the bank to look for your refinance, though, you should be prepared.

Refinance Checklist

First: Check Your Credit

Before you apply for a mortgage refinance, you need to know your credit situation. Do you have a good credit score, or is it a bit low? In order to get the best terms on your refinance, you need to have excellent credit. Check your credit report to make sure that there aren't unpleasant surprises, such as fraudulent or duplicate accounts.

You should also be aware of how your credit utilization looks to lenders. If you are planning to refinance, it might be wise to stop using credit cards for awhile — even if you pay them off every month. Consider the information in your credit report, and get errors fixed. You can check your credit report for free once a year by visiting AnnualCreditReport.com.

Refinancing Checklist

Now that you have done what you can to get your credit squared away, it's time to prepare to refinance. Look at your loan-to-value (LTV) ratio. In some cases, you might not have the 80% or less LTV that many lenders require. If this is the case, check to see if you qualify for a government program to help you refinance. Once you have established that you are likely able to refinance, you need to gather your paperwork. Some of the items that you will probably need to complete your refinance include:

Proof of income and employment: You need to show that you can handle the new mortgage payments. This means proof of income and employment. Usually, this means pay stubs for the last 30 to 60 days, and a W-2. You might also need your tax returns. If you are self-employed, some lenders might require you to complete an income audit.
Asset information: Many lenders want to see what assets you have available to you right now. This means you will need to bring documentation related to your bank accounts (checking and savings), retirement accounts, and investment accounts.
Homeowners insurance policy: Lenders want to know that your home is adequately protected. Your homeowners policy is proof of that.
Title insurance: Additionally, your title insurance provides a description of the property, as well as the verifying you as the legal owner of the property. It will also serve to provide information about the taxes on the property.
Appraisal: Your home will probably need to be appraised before a lender approves your refinance. You can either have the appraisal done ahead of time, or you can wait until the lender asks for the appraisal. If you do the appraisal on your own, make sure that the lender will accept it, and be sure that the appraisal is relatively recent, within the last 30 to 60 days.

Lender requirements vary, so it's a good idea to call ahead of time and ask for what documentation the lender wants as part of the refinance process.

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