All 12 winners of the Moonjar Money Boxes have been notified, but I’ve only heard back from 8 of you. If I don’t hear back from the other four, the prizes will be awarded to other entrants. So: SUZY, JENNIFER S., EMILY B. and KATHY L., check your email (and your spam filter) and get back to me soonest!
March 19, 2012 By
Moonjar winners: check your email!
March 16, 2012 By
Friday Follows: What’s interesting out there
Here are some recent, thought-provoking articles that are worth a look:
“Get ready: inflation may hit 15%” from Kathy Kristof on MoneyWatch. Alarmist? Maybe, but there’s a lot of cheap money sloshing around in the economy right now. Once the economy heats up, that fuel could catch fire. If you don’t remember the 1970s, this is a good primer in what to do when prices skyrocket.
“Daily coupon deals may not work for buyers, sellers” from USA Today. I’ve gotten some great deals–and some real stinkers. Some businesses benefit, others don’t. What do you think?
“Bouncing back” from another friend, Melissa Balmain, on Success. How people find the strength to go on in tough times, and how to develop your own “resistance muscle.”
“Bulls, bears and bailouts” from ProPublica captures the highlights of a Reddit chat with Wall Street reporter Jesse Eisinger. Jesse’s answer to why more of the architects of the financial collapse aren’t in jail? “Prosecutors have been overly risk-averse.”
March 15, 2012 By
5 debit card don’ts
ShopSmart, the excellent magazine from the publishers of Consumer Reports, just came out with a list of ways you shouldn’t use your debit card. Among them:
1. Don’t use your debit card for big purchases or when you shop online. Credit cards can serve as a middleman in disputes, so you’re typically not out any money if there’s a problem.
2. Don’t take your debit card on trips. Credit cards often have travel insurance; debit cards don’t.
3. Don’t use a debit card if you’re worried about getting ripped off. You have more protections under federal law with a credit card. You’re only responsible for up to $50 in unauthorized purchases, and credit cards typically waive that small amount. “With a debit card, you can be out $500 if you don’t report the theft or loss of your card or PIN within two business days of discovering the problem,” the magazine noted.
4. Don’t rely on a debit card if you want to raise your credit score. Debit cards don’t build credit history. Credit cards do.
5. Don’t use your debit card if you want to earn money on purchases. Banks have eliminated or reduced most debit card reward programs, while many credit card issuers have enhanced theirs.
March 14, 2012 By
New giveaway: Moonjars!
I’m giving away twelve (12!) Moonjar Moneyboxes. If there’s a child in your life who needs to learn about money, this is a great tool. The three-part cardboard bank allows kids to divvy their cash among three categories: save, spend and share.
To enter to win, leave a comment here on my blog (not my Facebook page).
Click on the tab above this post that says “comments.” Make sure to include your email address, which won’t show up with your comment, but I’ll be able to see it.
If you haven’t commented before, it may take a little while for your comment to show up since comments are moderated. But rest assured, it will.
The winners will be chosen at random Friday night. Over the weekend, please check your email (including your spam filter). If I don’t hear from a winner by noon Pacific time on Monday, his or her prize will be forfeited and I’ll pick another winner.
Also, check back here often for other giveaways.
The deadline to enter is midnight Pacific time on Friday. So–comment away!
March 13, 2012 By
Saving for college: what parents need to know
I’m giving a talk this morning to fellow parents about saving for college. I’ll be covering three important topics: why you need to save, how much you need to save and where you should put the money you’re saving.
Why you need to save
A college degree, or at least some post-high school training, is already important if you want your kids to remain in the middle class. That’s only going to become more true in coming years. Read “Should your kid skip college?” for more.
If you can save, you probably should. Financial aid formulas will expect you to have put aside at least something if you’re middle income or above. The idea that saving will hurt your kid’s chances for financial aid is the #1 myth I address is “3 college myths that will cost you.” (You also should read the second part of this series, “Costly college myths part 2.”)
To learn more about financial aid, visit FinAid.org and try out its estimated family contribution calculator. Another good site: TheCollegeSolution.com.
How much you need to save
The answer: A horrifyingly large amount if you expect to pay the whole tab. Even if you start when your child is born, you’d need to save:
- Nearly $500 a month to pay for a public college
- Nearly $1,000 a month to pay for a typical private college that currently costs $40,000 a year
- Nearly $1,500 a month to pay for an elite private school such as Harvard or USC.
If you don’t start saving until your child is older, you’d need to put aside even more to cover the entire bill for tuition, books, room, board and living costs.
(A note: Harvard, like other Ivy League colleges, has committed to capping the cost for education. Families earning $65,000 pay no tuition. Families with incomes between $65,000 and $150,000 will contribute from 0 to 10 percent of income, depending on individual circumstances. Significant financial aid also is available for families above those income ranges.)
Most families can’t save enough to pay the whole tab. But anything you can save likely will reduce your child’s need to take on debt. You can play with the numbers using SavingForCollege.com’s college savings calculator.
One thing you need to keep in mind: retirement savings must come first. Nobody will loan you the money you need to retire. But try to put aside at least $25 to $50 a month for college, and increase it as you can. Encourage grandparents and relatives to chip in as they can.
Where you should save
Three key points:
- If your child stands any chance of getting financial aid, don’t put money in UTMAs, UGMAs or other custodial accounts, which are counted as the student’s assets and dramatically reduce financial aid.
- Savings bonds have very poor returns and aren’t a great way for most to save for college.
- State-run 529 plans are a good option for many families. The plans have limited impact on student aid awards. The money grows tax-free for college and the contributor retains control. There are estate-planning benefits as well. For more on which plan to use, read “The best and worst 529 plans.”
UPDATE: In my speech, I mentioned how Coverdells (Education Savings Accounts) were changing–I should have been clear that those changes haven’t happened yet. At the end of 2010, Coverdells were scheduled to revert back to their old version, where the limit on contributions was $500 (down from $2,000) and the money could be used only for college (instead of for K-12 as well). Congress actually extended the more favorable rules through 2012, so Coverdells aren’t scheduled to revert to their old form until the end of this year. Congress may extend the rules again, so anyone with a Coverdell may want to wait before they transfer the money to a different type of account.
March 12, 2012 By
Want to save money on gas? Check out these cards
Credit card comparison site NerdWallet took a close look at gas cards offered by Gulf, BP, Chevron, ExxonMobil and Shell and compared them to 10 cards that offered rewards at any gas stations. Nerdwallet’s conclusion: it doesn’t pay to be loyal to one brand of gas.
NerdWallet found the station-branded cards offered lower rewards and higher interest rates, plus they rarely had sign-up bonuses.
From the study:
There’s a popular misconception that station-branded gas cards will give you better rewards in exchange for limiting your fill-up options. But when you step back and actually compare, the numbers just don’t add up.
So what should consumers do who want gas credit cards?
Consider these no-fee, non-branded gas cards:
- Pentagon Federal Platinum Rewards: unlimited 5 points per $1 on gas and $250 signup bonus
- Chase Freedom: 5% cash back on gas for half the year and $200 signup bonus
March 10, 2012 By
Try, try again
One of the most frustrating things about money is that progress may not be permanent.
But it’s still progress—if you keep going.
Here’s what I mean. Say you make a goal to boost your emergency fund. You manage to save a few hundred bucks—and then your car breaks down, or you get a speeding ticket, or you need dental work. There goes the extra money.
That’s where a lot of people give up. Looked at another way, though, the emergency fund did exactly what it was supposed to: it was there when you needed it, and kept you from putting another few hundred bucks on your credit cards. If you keep saving, this small start can turn into something bigger.
In my MSN column, “Why you need $500 in the bank,” I told the story of Wendi Pendleton. Here’s the email she sent me a couple of years ago:
“I just wanted to thank you. During April 2008 I read a column about having a $500 emergency fund. I decided it was solid advice and trimmed my spending that month and saved $500. Realizing how much money I wasted I saved another $500 the next month and so on (and some months more than $500). Even after what would have been a crisis with dental work needed, and a car repair that would have stressed me before, I now have $12,000 in savings I am using as a down payment on my first house, something I never thought would be possible for me on my own. Thank you, you changed the way I looked at my money and spending and improved the quality of my life.”
My challenge right now isn’t saving money—we’re on track with that. My goals involve getting more exercise. The days I don’t get in a full hour’s workout can be discouraging, but my experience with achieving other goals has taught me that any exercise is better than none. When I hit a setback, like my recent bout with the flu, the important thing is not to throw my hands up in despair and retreat to the couch. The important thing is to get back out there, and try again.
I hope you’re making progress on your goals for 2012, including your goals with money. If not, well, maybe it’s time to get off the couch.
This post is a part of Women’s Money Week 2012. For more posts about goals and taking action, see Women’s Money Week.