The problem with bargain hunting

KONICA MINOLTA DIGITAL CAMERADeal sites. Garage sales. Thrift stores. All can be a part of a frugal lifestyle. Or they can just be substitutes for a more expensive shopping habit. The question to ask: Are these thrifty alternatives really thrifty for you? Or are they just feeding that lust for acquisition that leads to too much stuff and too little money?

In a terrific article for LearnVest titled “How I maxed out my retirement savings while making $28,000 a year,” writer Leah Manderson puts her finger on the problem:

I tried a stint at being frugal; shopping the sales and searching out deals on food, entertainment and other activities. What I discovered was that a lot of deal-hunting activities are attempts at “keeping up with the Joneses on less,” and, not surprisingly, they made me feel like a lesser version of the Joneses.

That feeling did not make me want to save money for my future—it made me want to spend more money on “deals”!

Manderson found more peace, and more savings, by unsubscribing from deal sites and making do with what she had: “I let my hair grow out, I made new outfits with clothes already in my closet, I rearranged my home decor to change my surroundings, I reread old books that I loved, and I got comfortable with living on less.”

Most of us have more than enough. Recognizing that can help tame the beast within that insists we “need” the new shiny thing that just captured our attention.

Or you can just remember something my grandmother said while laughing at retailer signs that promised big savings. “You’re not saving,” she said. “You’re spending!”

Wednesday’s need-to-know money news

Today’s top story: 8 tax breaks expiring at the end of 2013. Also in the news: How to monitor your credit after a data breach, when it makes sense to have credit card debt, and could cheaper insurance convince you to buy a self-driving car?

8 Tax Breaks Expiring at the End of 2013
Teachers aren’t going to like this.

How to Monitor Your Credit After a Data Breach
Vigilance is key.

When Does It Make Sense to Have Credit Card Debt?
Credit card debt isn’t always a bad thing.

Will cheaper insurance sway you toward a self-driving car?
Are you ready to let someone (or something) else do the driving?

10 ways to avoid car-buying gotchas
Be prepared to walk away.

Tuesday’s need-to-know money news

Today’s top story: 7 expenses that vanish when you retire. Also in the news: earning extra cash for the holidays, money mistakes to avoid in your 40’s and 7 questions to ask before you retire.

7 Expenses That Vanish During Retirement
Time to kiss commuting expenses goodbye!

7 Things Your Credit Score Doesn’t Reveal
The source of your debt is one of them.

Ready to Retire? Answer these 7 Questions First
Seven questions you need to answer before handing in your papers.

How to Earn Extra Cash for the Holidays
Legitimate ways to earn money from home for the holidays.

Money Mistakes You Can’t Make In Your 40s
Starting with having too much credit card debt.

At death, wills matter–promises don’t

Dear Liz: If your in-laws promised you and their son their house, and have for over 20 years, and the whole family is aware that was the plan — your mother-in-law even had a will and a deed made up — do you think the executor of the estate has the right to do away with the will and take matters into her own hands? Do you think the daughter-in-law and the son have a right to stick up for what the parents wanted?

Answer: There’s a big difference between drafting documents and executing them.

Presumably the deed wasn’t executed, or used to legally transfer the house into your names. Otherwise this dispute wouldn’t be happening. Is the same true of the will? In other words, did your mother-in-law sign it in the presence of disinterested witnesses (people who don’t inherit)?

If the will was properly executed, then in most states it must be filed with the probate court. The executor is supposed to follow the will’s dictates to the extent possible. (If your mother-in-law left more debts than assets, for example, there might not be enough left over to distribute according to a will.)

What seems likely is that your husband’s mother failed to follow through on her promise. If that’s the case, and there is no will, then the executor is obliged to follow state law to determine who gets what.

The results may not be what you hope. The home may need to be sold to pay creditors or to allow an equitable distribution of assets among all the legal heirs.

This assumes the executor is living up to her fiduciary duty. If she truly is taking matters into her own hands, however — deciding how the estate will be distributed without reference to a will or state law — then you and your husband should hire an attorney to file a lawsuit in probate court to get her removed and replaced with someone more responsible.

Will risky refi hurt credit scores?

Dear Liz: I need to refinance my home. My credit score has slipped a bit over the last year (still pretty good) and my wife has lost her job. I’m concerned that if we get denied, that will impact my credit score. Some have told me that inquiries from potential lenders can hurt the score but being denied doesn’t show up. What are the facts?

Answer: The credit scoring formula used by most mortgage lenders, the FICO, combines all mortgage-related inquiries made within a certain period and counts them as a single inquiry. (The period is generally 45 days.) Single inquiries typically knock less than 5 points off your scores. The scoring formula also ignores any inquiries made within the previous 30 days. That allows you to shop for a mortgage without unduly damaging your scores.

Being denied credit doesn’t knock any further points off your scores. Given your situation, though — lower income and lower scores — it would make sense to talk to a few lenders before submitting any applications so you’ll have a better idea of whether you’re wasting your time. Also, consider talking with a housing counselor approved by the Department of Housing and Urban Development. (You’ll find a link at http://www.hud.gov.) These counselors keep up with various refinancing programs and may be able to guide you to one that works in your situation.

Automatic payments for charity: pros and cons

Dear Liz: You recently suggested people consider putting their charitable donations on automatic. While I have automatic deductions for savings because I do not want to constantly remind myself to do it, I want to remind myself of all other expenses. For me, prudent money management requires attention to all expenses. Your thoughts?

Answer: Many people find that automatic payments make their lives easier. They’re able to meet their obligations (and avoid late fees, in the case of bill payments) while minimizing time spent in repetitive tasks each month.

But none of your expenses should be “out of sight, out of mind.” Automatic payments don’t eliminate the need to carefully review your credit card and bank transactions each month. Reviewing your bills periodically, and making adjustments as necessary, is an important part of responsible money management regardless of whether you take advantage of automatic transfers.

Settling student loan debt: not exactly the easy way out

Education savingsCredit card debts can be settled for pennies on the dollar. Not so student loan debt. Borrowers usually can’t threaten bankruptcy to get a settlement, and the federal government has extraordinary powers to force borrowers to pay. (The feds collect between $1.11 and $1.22 for every $1 owed.)

But in the right circumstances, student loan debt can be settled. My latest column for Reuters explains who might be in a good position to try: those who have a lump sum to offer, and whose prospects for paying up otherwise are dim.

Also, in case you missed it, check out “Saving for college? 529 plans aren’t as safe as you think.” These tax-advantaged plans are still the best way for most families to save, but you need to keep a close eye on your mix of stocks, bonds and cash as your kids approach college age. Bond-heavy portfolios are common in the final years of age-based plans, but those could be in for some shocks if interest rates rise.

 

Help your local food bank

eating breakfastFood stamp benefits to 47 million people were cut Nov. 1–and further cuts may lie ahead.

Food banks already depleted by the lousy economy are now bracing for an influx of new patrons. So if you’re not among the one in seven Americans currently receiving food stamps, please consider a donation to your local food bank to help meet this growing need.

The best donation is cash (or checks, or payment by credit card). Food banks have relationships with food makers and distributors that allow them to get much better deals on bulk purchases than what you can get at the retail level. The Los Angeles Regional Food Bank, which my family supports with a monthly donation, can provide four meals for every $1 donated.

If what you can offer is food, though, or your skills in organizing a food drive–that’s good, too.

You can find your local food bank through the Feeding America site.

Monday’s need-to-know money news

Today’s top story: Preparing your home for the winter months. Also in the news: Common credit card myths, how to save on your Thanksgiving travel, and what you shouldn’t buy on Black Friday.

Seven Essential Home Maintenance Tips for Winter
Preparing your home for the cold months ahead.

5 Common Credit Card Myths
Time for some mythbusting.

Money Saving Tips For Thanksgiving Travel 2013
Going over the river and through the woods doesn’t have to cost a fortune.

How to prepare your ‘retirement landing’
Avoiding turbulence as you approach the runway.

13 Things Not to Buy on Black Friday
Just because it’s on sale doesn’t mean it’s a bargain.

Friday’s need-to-know money news

Old Woman Hand on CaneToday’s top story: How to manage your elderly parents’ money and protect them from identity theft. Also in the news: Changes to health savings accounts, open enrollment season, and personal finance tips from evil millionaires.

How to Manage Your Elderly Parent’s Money
Protecting elderly parents from identity theft.

The Best Personal Finance Tips from Evil Millionaires
Who better to learn from?

How to Make Smart Benefits Choices for 2014
How to approach open enrollment season for 2014.

7 Tips to Cut Flight Costs During the Holidays
How to arrive at your holiday destination for less.

Treasury Loosens Rules on Health Spending Accounts
Up to $500 can be rolled over to the next year IF your company offers the option.