Setting aside the ethical implications to this scenario, I decided to delve deeper into his life and frugality. Come to find out, he does without a lot of things to cut costs — cable television, internet, phone service, and he even drives across town for cheaper gas.

There’s difference between being frugal and simply being cheap. Which side of the line is he on?

Believe it or not, you can take frugality too far, to the point of being miserly, unethical, antisocial, etc. While frugality is perhaps more socially acceptable than in the recent past, it still has its limits.

Aside from the social implications, being overly-frugal can wind up costing you money, too. Let me give you a few examples of how frugality may hurt your wallet.

Ditching cable actually kills my budget

I love having 200 cable television channels at home on my TV. I enjoy having seven different channels from providers like CNN, MTV, and others that cover the exact same things. But I will let you in on a little secret. Having 200 channels on my television actually saves me money too.

For me, it is totally worth the money I spend on having so many channels. It keeps me at home on the couch instead of out on the town looking for something to do and spending money. This isn’t true of everyone, but I know that I personally get bored and distracted easily.

I would quickly find myself inside the movie theater every weekend or buying DVDs each week if I didn’t have a lot of TV channels to choose from at home. The cost of those activities would quickly outpace the savings of not having a large cable television packages if I am not careful.

You miss out by not having internet

Do you need an internet connection at home? No, but in today’s digital age, it makes life more efficient and enjoyable. It also makes it easier to forego having 200 cable TV channels if you disagree with point #1, above. An internet connection opens up a world of possibilities with streaming content from Netflix, Hulu, Amazon, and YouTube.

While most of the premium sources charge a monthly fee, that cost pales in comparison with the cost of a premium cable or satellite packages. The primary downside is limited access to live sporting events.

Driving around wasting your savings

Have you ever driven past a gas station with a higher price at the pump in hopes of saving money on gas? Many of us get sticker shock when the price of gasoline starts to creep up in the summer, but you shouldn’t drive too far to find your next tank of gas.

You can do a simple cost-benefit analysis and determine the breakeven point to make it worth driving further down the road. At some point, you’ll find yourself eating away at any potential savings — not to mention wasting your valuable time. Eventually, the search itself becomes uneconomical, and you should just pay the few extra pennies for the higher priced gasoline.

Wasting your frugal savings

Another way that being too frugal can wind up costing you money is what you do with the savings. What is the end result that you are shooting for by saving so much money through your daily spending decisions? Are you investing that money? Are you saving the money for another financial goal like paying for a home with cash? These are all great endeavors if that is actually what you use the money for.

There is, however, a range that your frugality will enable lifestyle creep in other areas. Or maybe you’ll deprive yourself so much in one area that you’ll rebel and overspend in other areas.

Is it possible to be too frugal? I personally think that there’s a point where frugality becomes counterproductive and can wind up costing you money in the long run.

Are there ways that you can spend your free time enjoying life without spending a dime? Of course there are. But there are also times when knowing ourselves, how we behave, and knowing when to say enough is enough can actually save us money even though it involves spending a bit of money.

Have you ever taken frugality too far?

This is especially troubling given the ease with which checks can be printed, as well as the fact that bank accounts don’t typically have the same level of fraud protection as credit cards do.

Well, guess what? Now that more banks are accepting remote deposits using photos of checks, you have reason to worry even if the recipient isn’t a crook. Think about it… They receive the check, shoot a photo for the deposit, and then what? Rip it up and throw it in the trash?

As evidenced by a recent story out of California, tearing checks up — or even shredding them — isn’t particularly effective when it comes to preventing fraud. According to detectives in Santa Clarita, a couple managed to steal a total of $16k from 20 victims by dumpster diving at a local self-storage facility.

The couple apparently managed to piece together hundreds of “partially shredded” checks. Once they had the account and routing numbers from these checks, they were able to print and use counterfeit checks that were drawn on the victims accounts. Yikes!

I’m not sure about you, but I run everything like this through a cross-cut shredder that produces tiny particles, pretty much ensuring that nobody will be able to piece things back together. But what about the people that you write checks to? How sure are you that they’re doing something similar vs. just ripping them up (or using a strip shredder)?

As if you needed more things to worry about…

Source: CBS Los Angeles via The Consumerist

The only drawback has been that my employer’s HSA custodian has horrible investment options, so I’ve been waiting for the money to reach a critical mass before transferring it to another custodian for investing. The good news is that my employer is switching custodians on July 1, so hopefully the investment options will be better (they can’t be worse!) and I won’t have to deal with transferring it myself.

Anyway… Back to the issue of contribution limits. In 2012, individuals can contribute $3,100 and families can contribute $6,250. In 2013, those limits will increase to $3,250 and $6,450 — so individuals will be able to stash an extra $150 and families will be able to stash an extra $200.

As a reminder, you can only contribute to an HSA if you have a high-deductible health plan. The current definition of “high deductible” (which will remain unchanged in 2013) is $1,200 for an individual and $2,400 for a family.

I can’t speak for anyone else, but we’ve come out way ahead by switching to an HDHP (plus HSA) from a more traditional PPO plan. What about you? Do you have an HDHP? If so, are you happy with it vs. the alternatives?

Hat tip to The Finance Buff for digging up the limits.

Until now, however, much of that strategy was theoretical. Yes, I had bought the five year CDs to hold some of our short-term cash, but I hadn’t actually tried to break any of them early — until today.

The time has come to re-deploy some of the cash that was sitting in those CDs, so I contacted Ally via their online chat interface. For the record, you can close accounts via chat or on the phone, but not via e-mail.

After exchanging pleasantries, I explained what I wanted to do. The rep then asked for the account numbers, explained that I would be penalized 60 days worth of interest, and then stated the following:

We are experiencing a larger than expected delay in processing these types of requests. The request will be completed in 5-7 business days. I apologize for the delay, and we are working as quickly as possible to complete the request.

I’m not sure why that is, but I suspect it might be due to recent news about Ally’s troubled mortgage unit, Residential Capital. The latest word is that they’re preparing to package up ResCap and sell it off, which would help them pay off the emergency loans they took as part of the financial bailout.

Regardless, our money is FDIC insured so I’m not particularly worried. I did, however, ask if it was possible to expedite the request and was told that she would “escalate” it, but that it could still wind up taking 5-7 business days.

The delay doesn’t really affect us in this case, but you may want to allow some additional lead time if you anticipate needing your funds by a specific date.

Update: I just checked and was pleased to discover that my request has already been processed. What could have taken a week wound up taking just a few hours.

Most garage sales fail to produce the windfall the proprietors are seeking however, because they just wing the stuff out there in the lawn and hope for the best. Beat the odds by implementing some of these tips. Do things right and your garage sale will be the shopping destination of the day!

1. Planning pays off

No, don’t try to have a garage sale tomorrow if you just thought of it today! You’ll do much better if you think about your garage sale months in advance. That way you can start setting aside likely sale items — doing that is a lot easier than rummaging through the house the day before the sale, and you’ll be much more likely to have good, saleable items.

This raises another point: Don’t sell stuff that really belongs in the garbage can. Flat basketballs, clothing with holes, broken small appliances, etc. will not sell, and having them in your sale will sully the good stuff that you do have.

2. Band together

A neighborhood or church rummage sale attracts a lot more attention than a solo garage sale. If you can advertise a ten-family sale, for example, many more buyers will make the trip. Don’t worry about competition — everyone will have enough unique stuff that you won’t be losing sales to your neighbors. The big group sale allows you to spread the cost of advertising, too.

3. Location matters

You want people to see your sale, so set it up for maximum visibility from the street. Put good, interesting stuff up front to attract attention. If you’re doing a neighborhood sale, consider asking for permission to close the street. This may seem counterproductive, but you’ll find that buyers love the festival atmosphere of a big sale on a closed street with no auto traffic (obviously this only works if there’s enough parking on the cross streets).

4. Timing matters

Saturday is the day, and one day is usually enough. You’ll be sick of the sale by the end of the first day, and most buyers will assume the good stuff is gone if you try to stretch into a second day. Skip the holiday weekends, unless you live in a resort town that attracts lots of tourists on holidays. Start early in the morning — definitely by 8 a.m. — because serious shoppers like to roam the sales before the crowds arrive, and they’re usually prepared to buy.

5. Price it right

Everyone expects a deal at a garage sale, so put yourself in your buyers’ shoes when you’re pricing. No one cares that you paid $1,000 for that PC five years ago — it’s only worth a few bucks today, so price it that way. Obviously buyers will want to haggle — that’s part of the fun! — but that doesn’t mean you need to give your stuff away.

One strategy is to put up a sign that says everything is priced as marked (no haggling) from 8 a.m. to noon, but that offers will be entertained (or prices will be cut in half) later in the day. That way if someone really wants something, she’ll pay full price before noon rather than risk losing it altogether.

One more pricing tip: Put prices on everything. It makes it much easier on the buyer, and some people simply don’t want to get into conversations with sellers (especially if there’s a potential language barrier). If you have lots of similar items, such as books or CDs, you don’t need to price each one, but at least put a sign that says, “All Books $1″ or something.

6. Promote, promote, promote

The more people know about your sale, the more people will show up. If you can afford it, run a small ad in your local newspaper, and be sure to name a few of the choice items in the ad. Definitely take advantage of free advertising such as Craigslist and Mom Mail (or the like).

Signage is essential, too — put up lots of big, bold signs with clear directions to your sale location. Your kids can help make the signs, but make sure the results are readable! To test your signs drive past each one and imagine that you don’t know where you’re going — will the sign tell you what you need to know?

7. Refreshments make shoppers happy

You’ll be amazed how many people will cheerfully pay 50 cents for a cold drink but will haggle over the 50-cent price tag on that $25 Monopoly game still in its cellophane wrapper! Homemade cookies, lemonade, and soft drinks sell well and will keep your shoppers refreshed (meaning they may hang around longer and buy more).

You’re probably not going to get rich at your garage sale, but these tips should help make your sale worthwhile. And don’t overlook the non-financial benefits of a successful sale — you might meet some interesting people, and you’ll surely clear some of that clutter out of your basement!

According to FICO spokesman Barry Paperno, the answer is “no.” FICO credit scores range from 300-850, so the lowest possible score is actually 300.

To get that low, however, you’d have to do virtually everything wrong, and have no positive credit history whatsoever. As a quick example, Main Street highlighted a guy who had accumulated nearly $300k in debt due to a string of bad investments, experienced a foreclosure, gone on a debt management plan, and ultimately filed bankruptcy.

Guess what? His credit score never even got into the 300s. Rather, it bottomed out at 471. Of course, once you get down near 600 you’re pretty much screwed when it comes to securing credit, but still… It’s actually pretty hard to completely destroy your credit score.

As I’ve mentioned before, your credit score is based on five main factors, including your payment history, amounts owed relative to your available credit, length of your credit history, number of accounts, and types of credit used. In order to achieve a lowly 300, you’d have to bottom out in all five categories at once.

Thus, according Paperno, you’d have to be a new customer (so no history) and then do something like open a ton of new accounts (just one type), max them out in rapid succession, file bankruptcy, and then immediately apply for more accounts (of the same type). But you had better act fast, because having a credit history (even a negative one) is viewed as being at least slightly positive.

Interestingly, while you can’t actually reach zero (or even 300, for all practical purposes), you can fail to qualify for a credit score. More specifically, FICO requires that you’ve had (and used) an account within the past six months in order to assign a score.

Simply apply for the card, get approved, and spend $2,000 within the first four months to get the bonus. There’s no annual fee, and you’ll also receive 1 point per dollar spent on all purchases going forward.

So… The bonus structure isn’t nearly as good as something like the Citi Forward card, which offers 5% cash back (technically, 5 points per dollar spent) for purchases at bookstores (including Amazon!), record stores, restaurants, movie theaters, and video stores. But that bonus is pretty nice.

If you’re interested…

My husband and I both grew up in large families, and both of them were poor throughout our childhoods; my parents for beliefs (my dad was a Baptist missionary and a part-time minister for many years) and his because of a fractured family and substance abuse.

In both cases, most of the now-adult children have followed in the paths of their parents. Three of my siblings are engaged in Christian ministry work or some other kind of values-based careers that pay little. Three of his siblings have struggled to maintain a solid financial footing thanks to a fractured family structure or substance problems.

This means that our siblings have needed help, a lot. Sometimes that help is easy to give and pays both ways — I’ve hired my younger sisters to provide very capable and loving child care. We both win. Other times, one of my brothers-in-law comes up with a questionable business idea or one of our siblings runs out of good living arrangements and asks to stay with us “temporarily.” This has almost never worked out financially and has always been very hard to give.

If you haven’t ever had to consider whether or not to help out a family member or friend, you’re either a member of a very small family or so blessed with good people in your life, you’re probably not looking for advice on the internet. In other words: most of us get these questions. Thanks to a lot of my bad experience, I’m ready to help you navigate these questions.

Family financial help typically falls along one of three lines:

• I have a desperate terrible emergency and I need money now!
• I am kind of broke and I would like to live with you (borrow your car, have you give me a line on your cell plan, etc.)
• I need you to loan me money / invest in my venture / help me with school.

Rule 1. Don’t think of it as a loan.

For situation 1, my advice is very succinct: only help if you can afford to never get the money back. Those family members suffering desperate, terrible emergencies are often suffering such emergencies on a regular basis. I have no wish to impugn the character of such folk; they are often lovely people who make bad choices, or perhaps have been dealt a bad hand in life.

An in-law who I will refer to as “Eleanor” seems to have a habit of getting into close relationships (as landlord, employer, or both) with people who turn out to have been not entirely trustworthy, or mentally disturbed, or criminal, or all of them. I do not expect that she will somehow rid herself of this tendency and enter a period of financial stability.

Also, if your dear friend or sibling or parent is in such a deep problem — and especially if you think of it as a one-time problem — what a load off their stresses and your future relationship it will be for them not to owe you. Make it clear it’s one-time, and make it clear that you don’t expect it to be repaid.

Rule 2. There is no such thing as “free help” and there is also no such thing as “you’ll never know I was here”.

Let’s say your sibling moves in to your basement with his significant other. Let’s say you have been promised that they will help with babysitting and housecleaning and pay you a little rent. “You won’t even know we’re here!” they’ll say. Fantastic! But…

You’ll know they were here. And the babysitting will be free, so it will be on their terms (enter Rated R movies and trips around the block to pick flowers from your neighbor’s garden “for you”). The housecleaning will be up to their standards and, as you’re not married to them, you’ll feel less comfortable specifying that you NEVER want them to use bleach, because you’re allergic, or that you really don’t like the smell of their preferred air freshener.

Maybe you’re better at setting limits and having confrontations than I am. But trust me that either your budget or your relationship will suffer. Last time an in-law lived with us, the first month’s power bill was more than twice our normal bill (when theoretically our power needs hadn’t increased much). Even though I subsequently confronted them, I was torn between asking they pay back the $120 and preferring they save money to get into a new living arrangement ASAP.

Same thing goes for just about anything: a borrowed car may be returned without an accident, but with the stereo turned all the way up and the seat adjusted funny and the distinct smell of someone else’s hygiene decisions lingering in the air. Or maybe (as another family member discovered last month) you’ll have a red-light-camera ticket in the mail. Loan if you must, help if you can’t say ‘no,’ but loan with the knowledge that it will not be invisible and will never be easy.

Oh, and regarding cell phone plans: very dangerous.

Rule 3. Personal loans for businesses or education should be assessed like any other lending decision.

I have seen this work. I have seen parents or uncles give money to an adult child and seen the business thrive and the loan paid back. But I think we all know that this also a good way to lose money. As they say, “the best way to make a small fortune in the restaurant business is to start with a big fortune.”

If your family member wants to start a small business and doesn’t have credit to get a business loan (few do, with restrictions banks have these days), have them write a business plan.

If you don’t have the knowledge to assess their plan, have someone else you trust do so. Put severe restrictions on how the money can be used and make sure you trust the business partners involved. Don’t be the only funder if it’s a large amount of money — make sure others, too, have some stake in the business.

Every time I think of parent investment in business I think of my boss at a sweet little basement pub in my junior year at college. His dad financed it, and he did a lot right, but he hired an alcoholic chef and spent a bunch of his revenues on cocaine. My $23 wages check (with the early 90s $2.13-an-hour waitress wages and taxes) bounced. Twice. The sweet pub was something else my senior year.

Which brings me to my final point:

Rule 4. Give love and support but don’t send good money after bad.

Lots of us have friends and family members who struggle with addiction, or are simply the victims of criminally bad judgment, and we know this. And lots of us have probably already given money to these dear people. We’ve certainly been asked.

But once we’ve determined that our money is, indeed, going down the black hole of addiction or terrible decisions, don’t give more. If the choice is bankruptcy or more money, bankruptcy is probably the right choice. If the choice is foreclosure or more money, let it be foreclosure, and help them get set up in a very low-cost new apartment.

I am not advising to never help people who are alcoholic or predisposed to buying homes they can’t afford or who are perennially falling for people who swindle them. But do not help them again because you helped them the first time and they’re now in the same exact problem again and you don’t want your previous help to be a complete loss. You know what will happen.

Needless to say, we’re below average, having paid less than $30k for both cars (but not less than $30k total — do we get extra credit for having bought two cars?).

This overall price increase is being made possible, in part, by pent up demand. In fact, the average age of passenger vehicles in the United States has steadily crept up in recent years, reaching 10.8 years (overall; cars are 11.1 years old on average vs. light trucks & SUVs at 10.4 years) in 2011.

Another factor that is reportedly driving demand is high gas prices. Thanks to stringent federal standards, average fuel economy reached an all-time high in 2012. At the same time, gas prices have moved steadily upward (though they’ve dipped a bit over the past month or so), meaning that many people are in the market for more fuel-efficient vehicles.

Interestingly, used car prices have also increased as supplies of late model used cars have dwindled (thanks to drivers keeping their old cars longer; see above). I would imagine that higher new car prices have also (probably — I’m just speculating) helped to nudge used car prices up as more people are looking to the used car market to save a few bucks.

So I guess this is sort of a good news/bad news thing if you’re looking to buy a new car. While you’ll likely wind up paying more than in years past, your may be able to get a better than usual price for your old car.

The total amount recovered was mostly from a single loan, though I also picked up a few cents here and there from a dozen or so other loans. Clearly, they were only able to get back a small portion of the missing money in these cases, but it’s better than nothing.

As things currently stand, I’m trucking along with a net annualized return of a bit over 7.30%. What about you?

And I’m not just talking about people who use leverage to amplify the returns from their rental properties. I’m also talking about people who have mortgages, car loans, credit card debt, etc. but are still stashing money in an investment portfolio. In effect, they’re investing with borrowed money.

To be fair, these investments are often held in tax-advantaged retirement accounts, and mortgage loans likewise offer tax advantages (not to mention historically low rates), so perhaps this makes sense.

It’s also important to keep in mind that contributions to retirement accounts are subject to annual limits, and that many employers match 401(k) contributions. Thus, there are additional factors to consider when deciding whether to invest or pay down debt.

My point? Only that you should occasionally take a step back and look at the big picture. You might find that you’ve been fooling yourself and making investment decisions that you wouldn’t otherwise make.

On Monday, I received the following from the U.S. Treasury:

The earnings rate for Series I Savings Bonds is a combination of a fixed rate, which applies for the life of the bond, and the semiannual inflation rate. The 2.20% earnings rate for I bonds bought from May 2012 through October 2012 also will apply for the succeeding six months after the issue date. The earnings rate combines a 0.00% fixed rate of return with the 2.20% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). The CPI-U increased from 226.889 in September 2011 to 229.392 in March 2012, a six-month increase of 1.10%.

Drat! I was off by 0.01% in my prediction! I incorrectly waited until after annualizing the six month rate to round it off. That is, 1.103% x 2 = 2.206%, which rounds to 2.21%; instead, I should have rounded to 1.10% and then doubled it to 2.20%.

As expected, the fixed rate stayed at 0.0%, so if you buy now you’ll get the current annual rate of 2.20% followed by the new variable rate (to be announced in November 2012) for the next six months, and so on. Unfortunately, you’ll have to deal with that 0% fixed rate until you redeem your bonds.

“So how’s your screenplay coming along?”

As the reporter suspected, many of the average Joes questioned were not at all surprised by the query. “I’m a third of the way through,” or “I’ve finished and sent it to agents,” or “I’m starting my 17^th,” were among common replies.

Just as penning an Oscar-winning screenplay seems a near universal dream for Angelenos, opening one’s own eatery appears a leading vocational fantasy of the broader American populace. Pooh-poohing sky-high failure rates among start-up dining spots, many entrepreneurially-minded folks feel they not only have the perfect idea for a restaurant, but could handily make it a success.

To determine whether it really is a cinch to launch a successful bistro, I sought out respected restaurant consultant Jody Birnbaum, president of Buffalo Grove, Ill.-based Cater Consult, Inc., for her thoughts on the notion. I was willing to bet I could accomplish two goals with such an inquiry. Not only could I save many would-be restaurateurs some serious grief and financial losses, but I could probably make some points about the broader task of financial planning as well.

An idea with sex appeal

“The idea of owning a restaurant is very sexy to a lot of people,” says Birnbaum, who in her 30-plus years in the industry has handled tasks from washing dishes to managing her own event planning firm.

Thanks to The Food Network, the cult of celebrity chefdom has permeated the larger society, fueling fantasies of folks who believe they could be the next superstar restaurant owner, she says. While culinary innovation is at an all-time-high, Birnbaum cautions, “Don’t be seduced by the creative side. You’ve got to be able to dig in, know your numbers and the operational end.”

Succeeding in the restaurant game, she adds, is often a matter of “having the right concept, and having done your market research, which really allows you to validate your concept. You might think having a particular concept is a great idea. But you have to find out if there is demand for that concept. And you have to conduct a market research study, including some demographics, looking at the site selection, whether the site is right for that concept, if the space is the right size, and what area competitors are doing.”

Many people go wrong in the size of the restaurant they open. They don’t have the right size space for their concept, she adds. “You’re going to want to build as small and lean a kitchen as possible with as large a place for food and beverage as possible, to optimize your revenue potential,” Birnbaum counsels.

Another potential problem is that many beginning restaurateurs don’t maintain an adequate pre-opening budget, she adds. They haven’t compiled a list of all the potential start-up expenses they may face.

“They need to make sure they’re fully capitalized,” she adds. “With the start-up expenses in a restaurant, there are all kinds of construction overruns. They need to know build-out expenses, equipment expenses, labor expenses. They have to know the architectural fees, the kitchen design fees, the equipment fees, the TV expenses for a sports bar. Depending on what they’re doing, there are so many expenses that have to be accounted for. For instance, it’s best to negotiate a lease that doesn’t actually begin until your build-out is complete. Your construction can run over. You’re paying a lease, but making no income.”

Birnbaum counsels prospective restaurateurs to add a 20 to 30 percent contingency fund, over and above their pre-opening budgets. She also advises having working capital for at least three months before opening the doors.

In the end, she urges, consider starting your own eatery only if you have squeaky clean personal credit, can demonstrate good character, are investing yourself in the restaurant, and can convincingly show how you’ll make money.

Lessons for all

If there’s a near universality to the idea it would somehow be fun to own a restaurant, there’s also universality to most monetary wisdom. Jody Birnbaum’s advice to would-be restaurateurs is applicable to us all, even if we don’t dream of unveiling our own chophouse, sushi bar, or grilled cheese emporium.

Do your homework. Remember Birnbaum’s guidance to do a lot of market research before investing in a restaurant. Researching an investment is solid advice for many other kinds of investors, including the retirement-minded. If you need to keep your savings safe, buying high-risk, high-return mutual funds makes as much sense as opening a steakhouse in a colony of vegetarians.

Sizing up an opportunity. Birnbaum noted many go wrong in the size of the dining operation established. By the same token, a lot of average folks don’t size their investments properly. How many people got burned in the tech wreck of the early 2000s by buying too much speculative stock in start-ups. And how many who should have bought condos bought McMansions before the mortgage meltdown?

Quarter-year cushion. As you recall, Birnbaum advises prospective bistro owners to maintain a contingency fund and keep three months working capital on hand. Similarly, many personal finance fiascos, whether resulting from a surprise job loss, medical crisis or any other reason, could be avoided if people just kept three to six months living expenses on hand for emergencies.

Whether founding and operating your own five-star restaurant or simply managing your menu of everyday consumer expenditures, it’s important to keep one thing in mind. An ingredient crucial to success is simple common sense.

That being said, this one caught my eye and I filed it away for later investigation. Fast forward about a month and the e-mail resurfaced in my inbox. I decided to dig deeper and I must say that I’m pretty impressed with what I found.

BillGuard is a free (more on that later) service that scans your credit and debit card statements in search of deceptive or fraudulent charges. In essence, it’s a crowd-sourced fraud detection system that “gets smarter with each click.” When something questionable pops up, it alerts you and asks you if the transaction is legit.

Of course, if there’s something truly fraudulent on your bill, you’ll still need to follow up with your card issuer to straighten it out. But without BillGuard, you may not have discovered the problem in the first place.

To use BillGuard, you have to create an account and then grant them read-only access to your credit card statements. This may sound scary, but it’s in many ways similar to services like Mint.com, with seemingly solid security and good privacy policies. They’ve also raised significant venture capital, so this isn’t a fly-by-night operation.

As of this writing, BillGuard claims to have saved users over $630k, having found “bad charges” in roughly 20% of the accounts they’ve scanned. The system also identifies and lists things like credit card fees and recurring charges. As such, it can help you ferret out zombie charges and the like.

My first thought was wow, this sounds too good to be true. I wonder how they make their money? As it turns out, they had originally intended to offer BillGuard as a “freemium” service, with the first card being free and a monthly charge for additional cards.

They have since transitioned to a completely free (to users) business model. To generate revenue, they are licensing their platform to banks who can integrate the service into cardholder accounts. They are also accumulating massive amounts of valuable (but anonymized) data on spending patterns, fraudulent charges, etc.

While this latter aspect might bother some, I’m not particularly worried. Credit card companies, retail chains, etc. are already mining my data to better understand spending patterns and improve their marketing tactics. At least BillGuard offers a direct benefit in return for access to these same data.

To make a long story short, I signed up for the service, granted access to my accounts, and was pleased to see that there wasn’t any obviously fraudulent activity. Yes, I could do this by hand, but I get busy and sometimes don’t have time to review statements in a timely manner.

I will say that it tagged a few transactions as questionable, but a quick review revealed that these were all legit. For the most part, these were charges from local merchants for which they didn’t have enough info to render a verdict. I marked them as okay and expect them to pass muster the next time around.

Going forward, they scan your accounts on a monthly basis and send you an e-mail with the results. All in all, it’s a nice system that has the potential to save you from fraudulent charges.

This site wouldn’t be what it is without the contributions of readers like you. Thank you for seven great years!

*Note: Sarah’s post on whether or not you should buy a house was #3000.

1. A framed copy of the graduation announcement

I’m guessing that all of my son’s classmates are buying the standard-issue graduation announcement, which is approximately 4 x 6 inches. I’ll buy some decent mattes and frames for that size item, carefully lay in each kid’s announcement, add a line of calligraphy at the bottom congratulating the student, and voila! I have perfectly acceptable gift to give.

And, unlike a $50 gift card, the graduate will keep this gift and probably display it on his nightstand in college (at least until he moves and it gets shoved into some cardboard box).

2. A school memory book

Many photo developers, such as Shutterfly and Walgreens, offer remarkably inexpensive photo books. If you know the graduating senior well, dig out a handful of photos of him or her, add a bunch of generic ones from the school, and create one of these books. A guaranteed winner. If you don’t know the kid all that well, still make the book but focus on the generic photos from the school, together with any that you can find of your child together with the graduate.

Yes, official school yearbooks are basically fancy photo books, but nothing beats a semi-custom book — and you don’t need to limit yourself to one year when making your own books.

3. A cool t-shirt

Our town, and probably your town, has a custom apparel shop (if you can’t find one, go to any independent sporting goods store that makes uniforms for local teams — or buy a custom t-shirt online). These places are clever, and can make a cool t-shirt out of about any image or collection of images.

Bring in a favorite photo, your school logo, a favorite saying, an image of your school mascot, whatever, and they can put it on a shirt. This is one of those gifts the graduate will not be getting from anyone else. And since multiple copies of the same shirt cost much less than the first, make a batch of them to cover all the grads on your list.

4. An engraved mug

A mug is an exceedingly useful item for someone starting out on her own. She can drink out of it, store pens or change it, use it to keep a window open, or make it into a candle holder. And if the mug says “Smithville High School Class of 2012… The best ever!” or something like that, it’s a seriously cool gift.

If you have a set of these made, either online or from some bricks-and-mortar business, you’ll have enough gifts to go around without spending mugful of moolah.

5. A box of stationery and stamps

OK, this one will label you old-fashioned, but… If you don’t mind that, this is a gift that will be appreciated long after most graduation gifts are consumed. Who writes letters anymore? Kids who need to thank all the people who gave them graduation gifts, that’s who. And kids with grandparents who remember when mail was the primary way to communicate. And kids who will eventually be going on job interviews and will need to thank their interviewers.

6. A small, strong box

For the first time in their lives, graduates who leave home will have to keep track of all sorts of small items, from Social Security cards to passports to student loan papers. And they’ll want these things to be safe.

A steel box, which you can pick up at any office supply store, will seem like an odd gift at first, but soon the graduate will be delighted to have somewhere to store the growing pile of important items. And that box will follow them throughout their lives.

7. A blank book

True, most books have been obviated by the Kindle and its ilk, but there’s still something enchanting about a book full of blank pages waiting to be sketched on, written on, filled with scrap-book items, etc. The next decade of the graduate’s life is going to be jam-packed with memory making moments, and having somewhere to note some of these will be a joy. Rediscovering this book many decades later could be a truly moving experience.

One thing is for sure about all of these gifts — it’s unlikely the graduate you care about will get anything similar from someone else. And these gifts will long outlast the usual claptrap, cash, and gift cards. Congratulations!

Here are some tips for those that missed the filing deadline:

• File as soon as possible. If you owe money, penalties and interest are accruing as we speak. The sooner you file, the less you’ll have to pay.
• Pay as much as you can. If you can pay the full amount due, great. Do so. But don’t be surprised if you receive an additional bill for the penalties and interest. If not, then pay as much as you can and apply for an installment agreement (use Form 9465) to pay the rest.
• Plead your case. The law allows the IRS to reduce/remove penalties (but not interest) based on “reasonable cause.” There’s not a lot of guidance as to what’s acceptable here but, if you have a legitimate excuse, it can’t hurt to ask. You’ll need to produce a written and signed (under penalty of perjury) statement detailing the facts.
• File to claim your refund. If you don’t owe anything, you should still file in a timely fashion. There won’t be any penalties either way (since the penalties are based on how much you owe) but you won’t get any refund that might be due until you file.
• You can still e-file. E-filing is actually available up through the extension deadline (October 15, 2012).
• You can still Free File. If your income is $57k or less, you can use the IRS Free File program. If not, you can use the free fillable forms or any of a number of other tax prep methods (including pen and paper).

Finally, if you’ve already filed, but you dropped it in the mail late, you might be okay. Rumor has it that the IRS doesn’t bother checking postmarks, so if it was only a couple of days late, you may be in the clear. Just keep an eye on your mailbox for any tax bills that might show up — and keep your fingers crossed.

Also, as a reminder, the penalty for “failure to file” is more severe that the penalty for a late payment. Thus, in the future, you should file your return on time (or at least request an extension).

And now… Grab a red pen and circle April 15, 2013 on your calendar. That’s the deadline for filing your 2012 income taxes.

This is just a quick note to let you know that Citi is offering 10k bonus points on the Citi Forward card. Here’s the deal…

Simply apply for the card, get approved, and spend $650 within the first three months to get 9k points. Sign up for electronic statements (again, within three months) and you’ll get another 1k bonus points. The 10k total points can be redeemed for up to $100 in store gift cards through the ThankYou network.

Going forward (no pun intended), you’ll receive 5 points for every dollar spent at bookstores, record stores, restaurants, movie theaters, and video stores. You’ll earn 1 point for every dollar spent elsewhere. You can earn up to 75k points per year, and there is no annual fee for this card.

ProTip: According to multiple sources, purchases from Amazon qualify for the 5% “bookstore” treatment. Nice!

If you keep this card for the longer term, you will receive 100 bonus points for each on-time payment. You can also reduce your interest rate based on making on-time payments for three consecutive months, but none of you should care about that because you never carry a balance. Right?!?!?

Speaking of interest rates, you’ll get 0% on purchases for the first seven months, and 0% on balance transfers (albeit with a 3%/$5 minimum transfer fee) for 12 months assuming the transfer is made within the first four months.

If you’re interested…

As a followup to my earlier post about remote deposit at ING Direct, I just wanted to share my first deposit experience. I had two small checks lying around so I figured I’d test it out.

Here are the steps:

1. Endorse your check.
2. Launch the app and hit the “deposit” button.
3. Snap a photo of the front of the check.
4. Snap a photo of the signed back of the check.
5. Enter the amount of the check on the next screen.
6. Select the account into which you want to deposit the check.
7. Enter any relevant notes about the deposit.
8. Repeat for additional checks.

Seconds later, I had a pair of e-mail notifications (one for each check) stating that my deposits would post the next business day (since I made the deposits after 5PM).

At 10AM this morning, I received another pair of e-mails stating that the deposits had been processed and that I was free to void the checks. The funds are showing up in my balance, but are not yet “available”. Since both checks were so small, I expect the full amounts to be made available tomorrow.

This is a guest post from Sarah Gilbert.

The story of one mortgage

I got my mortgage statement in the mail a few weeks ago. I bought my Portland, Oregon home 10 years ago on a busy street in an up-and-coming neighborhood with what I thought was a super-low interest rate: 5.25%. It was a five-year ARM, meaning that it would stay at 5.25% for five years and then change every year based on some margin over the 10-year treasury rate.

The good news is that it can’t move more than one percentage point in either direction, and also cannot move outside a five point range (i.e., it’s capped at 10.25%). I could remember my parents, who bought my childhood home in 1978, paying 14% or more. An ARM, I thought, could only get so bad.

Now, I’ve been proved so right, I almost cry with joy each year when I get my interest rate statement. After a couple years in the mid-2000s of rising, it’s been going down, down, down, to an all-time low of 2.825% starting April 2012. I’m paying about the same for my mortgage as it would cost to rent a much-smaller, downstairs apartment nearby, the one whose landlord is too chintzy to even provide recycling bins.

I have a home that was bought when the market was in the first half of a decades-long rise. It peaked in August 2008 (my home, says Zillow, was worth $344,000 then) and has since fallen in value to about 20% less than its peak value (still close to double what I paid and more than double what I owe; I’m not complaining, ever).

But I get questions all the time from friends and readers: should I buy, now? Is the market at its bottom? Is this an interest rate market worth jumping into? And what about the mortgage interest deduction: might it go away? Is home ownership a good thing any more, or is it better to rent? What they all want to know is:

Should I buy a home now?

As always, so much is dependent on your circumstances. I think, generally, yes, the current interest rate market is worth jumping into, and yes, the housing market seems to have come to (at least a temporary) bottom. Given the disclaimer that no one can possibly know anything for certain about the future, I consider myself a pretty good prognosticator. I base this on the belief that trends are all about psychology, something I’m better-than-average at assessing.

In my opinion, the low point of February 2011 will not be seen again for a while. If I’m right, and your market, like mine, is beginngin to trend up (albeit gradually), now is a great time to buy. (Was that enough “ifs”?) Here’s how to decide if you should buy a home now:

• Do you have good enough credit to score a less-than-5% ARM or fixed rate mortgage? If yes, take a look at the proposed mortgage terms and do — or have your mortgage broker do — the math. What is the maximum interest rate you could ever pay, and how much would you pay for your mortgage in that case? Is that more or less than you’d pay in 10 years for rent? (Very probably, rent will increase each year no matter what the real estate market does.)
• How high could your payment go? Could you afford that now? My maximum possible mortgage payment (not accounting for increases in property taxes) is about $1,400; if the interest rates are that high I’m sure I’d pay that much for rent for my family of five.
• How stable are you? My family is very stable; most of our extended family lives in this city and my husband and I went to the same high school where our children will go. We feel like we belong here. Plus, I’m a freelance writer and my husband is an Army Reservist; it’s unlikely that our jobs will take us away (and if they do, we could conceivably rent the house). If we were more transient, the uncertainty of the market in the immediate future would probably make renting a far safer bet.
• Are you the sort of person who will do it all yourself? Home ownership means gardening and fixing things and making sure your gutters are clean. If you’re paying other people to do it — especially in a 100-year-old house like mine — it can erase any financial benefit of home ownership fast. I love to garden and paint and dig and I even installed the tile in my own bathroom (it’s gorgeous!). My dad and husband have framed and drywalled and done the electricity and plumbing. Not everyone has that skillset or desire.
• Do you have money saved up for a down payment? This is the key, really: when I bought my home, 5% down payments were ordinary. Now even people with great credit must put up 20%. If you don’t have it in non-retirement savings, you should probably rent, keep your expenses as low as possible, and save until you have a nice chunk of change.
• How about this tax thing? There has been a lot of talk lately about eliminating the mortgage interest deduction for taxes. If your home is significantly above the median home price; between $200,000 and $220,000; this might reduce your tax bill pretty nicely. Nickel has a nice evaluation of whether this is a big deal; I haven’t itemized for a few years thanks to my plentiful children and low healthcare expenses and state taxes. In any case, I think you shouldn’t count on mortgage interest deduction as part of your home ownership equation.

I think now is a great time to buy a home; the market seems to have stabilized and the interest rates are very, very low. However, I don’t think it’s a sure thing, the sort of market you should rush into blind without doing the math for your situation. And, of course, the real estate market is very location specific.

That being said, the Fed shows no signs of considering interest rate hikes in the near future (~2 years). Rising gas prices only makes it more likely they’ll keep rates low. And home prices are always in flux; if they’re up too high in a few years when you’ve saved a down payment or know where you want to live for the next decade, rent for another year and I’d be willing to bet the market will be down again.

Here are some details:

• There is no fee to make remote deposits.
• You can either use their mobile app or scan/upload.
• There is a limit of $3k per check.
• For checks under $500 deposited into an Electric Orange Checking account, the first $200 is available the next business day, the rest after two business days.
• For checks over $500 deposited into an Electric Orange Checking account, the first $200 is available the next business day, the rest after five business days.
• For all checks deposited into an Orange Savings account or a Kid Savings account, the funds will be available after five business days.
• Checks deposited after 5PM on weekdays, after 2PM on Saturdays, or anytime on Sundays or holidays will be processed the next business day.
• Checks may be rejected if the image is blurry, too dark/light, or otherwise unreadable, has not been properly endorsed, or if it exceeds the $3k limit.
• After depositing, you’ll need to hang onto the check until you get an e-mail from ING Direct saying the deposit is complete.

What do you think? As far as I’m concerned, this is a very welcome addition. That being said…

I would personally like to see a limit of $5k/check, as I sometimes receive checks in excess of $3k, but only rarely (if ever) will I get one over $5k. I realize that my situation may be unique, but it’s a limitation that will force me to continue using the ATM for at least some of my deposits.

I actually have a couple of low dollar checks lying around right now, so I will test it out and report back on my experiences.

Hat tip: Sweating the Big Stuff

A little over five years ago, I replaced all of the lightbulbs in our house with CFLs. At the time, CFL prices had finally come down to the point of affordability and the technology improved to the point where we could find (with some searching) bulbs with decent light quality and minimal warmup time.

With this past Sunday being Earth Day, the next generation of lighting products — LED lightbulbs — has been in the news. From a technical perspective, these bulbs look great. Instant on, no warmup, good light quality, extremely long life, and low energy requirements. The main problem is the price — as much as $60 per bulb.

So… The question is whether or not it makes sense to switch to LED lightbulbs. I’ve given this a lot of thought and decided that the time isn’t quite right, at least for us. Don’t get me wrong, I fully understand that the large upfront investment gets paid back (and then some) in terms of energy savings and bulb replacement costs.

But, in our case, we’re already realizing the energy savings due to our prior switchover to CFLs. As it turns out, the energy requirements of CFLs and LEDs are roughly equivalent, as they both use ca. 25% of the energy of an equivalent incandescent bulb. We still have a lot of life left in our CFLs, as well as a number of replacements sitting on the shelf in our laundry room.

At the same time, I’m expecting LED bulb quality to continue improving and prices to drop considerably in the next few years. Thus, I’ll likely begin the transition over time as our CFLs wear out. As our supply dwindles, I’ll consolidate the remaining CFLs into individual fixtures/rooms and start replacing them with LED bulbs.

Honestly, in this case, the extremely long life of LEDs works against them as I don’t want to invest a ton in bulbs that are likely to be left in the dust by newer models as the technology matures.

That being said, if you’re looking for LED bulbs, I highly recommend checking out this detailed review by Marco Arment. You might also want to check out this bulb (that’s a link) from the Lighting Science Group. It’s been getting rave reviews.

So, dear readers, I’d love to hear your thoughts on the topic. Are you making the switch to LED bulbs? Or are you sticking with your current incandescent or CFL bulbs?

Note: There’s been some discussion of the mercury content of CFL bulbs in the comments, so I thought I’d add this link to instructions (from the EPA) on how to clean up a broken CFL. I’ve also written elsewhere about how to properly dispose of CFL bulbs – don’t just throw them in the trash!

If you, like me, have been around since nearly the dawn of time, you likely recall an early 1970s TV show called Marcus Welby, M.D. The show’s premise was simplicity itself. A kindly old doctor, who teamed with a young, studly, hipper doc, made house calls on a variety of patients, and usually became ensnared in their lives.

As I recall it, patients rarely came to his office. He went to them, with doctor’s bag in hand and a smile on his face. His bill for services rendered couldn’t have been bad. I can’t recall a patient ever disputing a charge.

I’ve often thought of that show as I watched with alarm the morphing of the American health care landscape over the past decades. Every year, it seemed, as my income inched higher, my insurance premiums exploded by double digits halfway to the moon. At least I stayed pretty healthy, which was good because overnight hospital visits had grown about as costly as a mid-sized automobile.

Not 40 years after America bought the notion of Dr. Welby striding each week into his patients’ homes, health care had done a 180, and become more impersonal, inaccessible, and expensive than anyone could have envisioned.

So imagine my excitement and relief when some positive news finally emerged for those of us weary of high costs and the inability to get some basic medical care when we need it. That news was the advent within the past decade of the clinics tucked inside many neighborhood Walgreens and CVS pharmacies.

I don’t know about you, but if given the choice between having to make an appointment at a crowded and impersonal doctor’s office or medical center filled with sniffling patients, or simply strolling down to the pharmacy clinic located in my immediate neighborhood, I’d choose the second option any day of the week. If time is money, and we know it is, that’s spending green in your pocket.

The unveiling of these clinics is an upbeat development in a minefield of misery. So much so I sometimes worry they won’t be patronized enough and will vanish from the scene. While it’s probably an unreasonable fear, I’m not taking any chances. This is my opportunity to run down the list of all the reasons to utilize them, and ensure they’re embraced to such an extent they’ll never go away.

Quality of care

The first question most folks ask about these clinics is about the level of care offered. I checked it out, and am told pharmacy-based clinics are staffed by board-certified nurse practitioners who are able to diagnose, treat, and prescribe.

From what I hear, these women and men are as well or better trained than the general practitioner of years ago, the very Welbyish doc we see in our mind’s eye when we summon memories of the “good old days” of family medicine.

Accessibility

Don’t fret about getting sick on evenings, weekends or while your doctor lines up a putt at the 11^th green. Pharmacy-based clinics are open seven days a week, many evenings, and even on your physician’s preferred golf dates.

It’s even possible to go online and reserve a time to meet the medical professional at your local clinic. Of course, pharmacy-based clinics offer walk-in services as well as appointments.

Conditions treated

Have you ever had to take hours away from work or family to visit a doctor and have a sore throat or upper respiratory infection treated?

Well, these conditions, along with flu, coughs, ear infections, sinus infections, bladder infections, skin conditions like shingles and eczema and many others can be treated around the corner at your neighborhood pharmacy clinic.

Vaccinations

Who wants to go through the hassle of a doctor’s visit to simply get a flu shot? With the dawn of the era of pharmacy-based clinics, you don’t have to. Flu shots, pneumonia vaccinations, shingles vaccinations, and other vaccinations are now as close as your local pharmacy, and often less costly.

Insurance

Treatment by pharmacy-based clinics is covered by most insurance plans. For instance, Walgreens Take Care Clinics report: “Most commercial insurance plans, including Medicare and Medicaid, are accepted. If insured by a plan that covers a visit to the clinic, patients pay their insurance co-pay. Treatment for common illnesses starts at $79 for cash payers and/or the uninsured.”

Physicals

The chore of getting school, camp, college, sports, or administrative physicals is another nuisance you can check off your list by visiting your local pharmacy-based clinic. If you’re beyond the age of needing such exams, it’s likely you have a child or grandchild who can benefit from these physicals.

Referrals

Let’s say you don’t have a doctor, or your health condition is beyond the scope of medical services provided by the pharmacy-based clinic. Additional good news awaits you. The nurse practitioner on staff can provide you a referral to physicians in your area. Moreover, their lists are updated with names of physicians who are welcoming new patients.

Visit summaries

Tired of trying to read your physician’s handwriting? That’s not a problem at pharmacy clinics. CVS Minute Clinics, for instance, provide visit summaries at the conclusion of each visit. The summary will provide any test results and a treatment plan, which can be faxed to your physician with your permission.

Wellness and prevention

Pharmacy-based clinics can screen you for high cholesterol, hypertension, obesity and other conditions, and can help you monitor conditions for which you’ve already been diagnosed, such as asthma and diabetes.

They can get pack-a-day folks on a quit-smoking regimen, offer assistance to lower cholesterol, and provide a variety of other wellness services as well.

It’s my sincere hope that you go out and use your neighborhood pharmacy-based clinics, as long as you don’t overwhelm the friendly staff at the clinic in my ‘hood. You’ll find them good for your health: physical and fiscal.

Just over a year ago, my wife wrote a small check for an end-of-the-year school function of some sort. The check was made out to the school, but it was collected by another mom. A month or so later, I noticed that it still had not cleared the bank.

At the time, I assumed that it had just gotten lost in the shuffle and that it would eventually re-surface, perhaps when school started again in August. Well, it didn’t. And ever since then, this seven dollar check has been hanging out in MoneyDance waiting to be reconciled.

Over the weekend, I decided to ask the bank how best to handle this. At this point, I’m pretty sure that this check has been lost and/or forgotten, never to resurface again. Nonetheless, I wanted to check with the bank before completely forgetting about it.

Since I was already logged in, I clicked the “chat” icon in the Bank of America web interface and was soon connected with Jonathan. I explained the issue and this was his answer:

“Check are good for 180 days (unless otherwise noted), so if the check came from your personal checkbook, it would be void by now.”

That’s about what I figured, but I wanted to be sure, so I asked if he was 100% sure that Bank of America would refuse payment of the check if it ever resurfaced and got deposited. His reply:

“Yes, that’s correct.”

Good to know.

In fact, under the Uniform Commercial Code, banks in the United States are not legally obligated to pay checks older than six months (link). Of course, this leaves some wiggle room. Your bank may not be required to honor an old check, but they might choose to do so. You would thus be well-advised to check with your bank before ignoring an old check in your register.

Since it’s such a small check, I’m not worried about it showing up in the future and causing an overdraft. It is, however, possible that we’ll eventually close that account and that the check will subsequently re-surface. I thus printed a pdf of the conversation and dumped it into Evernote on the off chance that I ever need proof that I was told the check was void and wouldn’t be honored.

For the record, I would happily write a new check if I could figure out who to pay. Unfortunately, the school was just a pass-through entity in this case, and the money was ultimately destined for someone in the classroom. Thus, we have no idea who we owe.

Guess what? Starting next year, Social Security recipients as well as those receiving veterans’ benefits, railroad pensions, and federal disability payments will no longer receive physical checks sent through the mail. Instead, the government will only issue electronic payments.

In general, this means direct deposit to a bank account, though debit cards will be available for the unbanked. For the time being, tax refunds will be exempt from this requirement, though the IRS has been pushing direct deposit for quite some time.

As it turns out, 90% of these payments are already made electronically, but still… Making the remaining 10% of these payments (7.3M per month) represents should save the feds a significant chunk of change.

The changeover is expected to be complete by March 2013, at which point the USPS will have even less business (and greater losses) than it does right now.

All in all, I see this move as a good thing. It’s significantly cheaper — the estimated cost savings is $120M/year — and avoids the possibility of checks being lost or stolen. The primary downside is for those without bank accounts, as they could wind up facing ATM fees to access the money on their debit cards.

What do you think? Is this a good move?

Those warm breezes blowing in your window make you think about spring cleaning, don’t they? If the outdoors world is smelling fresh, you want your house to smell fresh, too! But there’s no need to run out and buy the costly cleaning supplies and equipment you see on the TV ads.

Here are six ways to get a clean home without cleaning out your wallet.

1. Consider unconventional cleaning tools

You’ve probably broken a dozen toilet bowl cleaners in your life, but you keep buying them because you need something to clean the bowl with. The next time you break one, skip the usual piece of junk and visit a hardware store instead. There you’ll find a large variety of tough brushes designed for many serious chores — at least one of these brushes will have the right angle to clean the bowl, and it will probably be the last toilet brush you ever need to buy.

While you’re there buy a regular, rectangular, old-fashioned bristle brush, which you can use to clean tough grime in the bathtub or kitchen sink (it will last years longer than the toughest sponge you can buy, and it will work better). Another thing to look for in the hardware store: an industrial strength squeegee. Using this to wipe away the water when you clean the windows will provide a better shine than wiping with a paper towel, and it will shortly pay for itself in towel savings.

2. Make your own cleaning solutions

White vinegar is a great natural cleaner. It is mildly acidic, which helps it clean soap scum, grime, and other deposits on all smooth surfaces. And it naturally deodorizes (its own smell quickly fades when it dries). You can create a gentle cleaner by mixing one part of white vinegar to an equal amount of water. Pour this into an old spray bottle and you have an ideal kitchen and bathroom spray cleaner.

If you’re trying to clean more stubborn stains, try heating the solution in the microwave until it’s just warm before applying it to the stain — the heat adds a little soap scum-melting power. And if you’re cleaning the inside of the toilet, use straight white vinegar rather than the 50/50 solution.

Baking soda is another natural cleaner, and it’s slightly abrasive so it can help with tougher problems. Smear a paste of baking soda and water onto really tough stains and let it sit for 15 minutes. When you wipe it off many stains will disappear. Of course ammonia, which is an ingredient in many commercial cleaners, works great, too. A strong glass cleaning solution is one cup of water, one cup of rubbing alcohol, and one tablespoon of clear, non-sudsing ammonia.

3. Shop at a janitor supply business

If you really need the commercial cleaning solutions, at least stop buying them at your grocery store. Instead, visit a janitor supply business (online or in a real store, if you live in a big city). Just type “janitor supply” in any search engine and you’ll be connected to a world of good prices on cleaners. Yes, you’ll probably have to buy in larger quantities than you are accustomed to, but the savings will make it worthwhile.

4. Skip the disposable wipes and toilet brushes

Sure, the TV and magazine ads make these things look great — just wipe and flush! But in reality they are no more convenient than re-usable versions, and the money you’re flushing down the toilet after each use should make you cringe! Any time you hear the word disposable, force yourself to imagine your money being disposed!

5. Paper towels? Please!

Hopefully you’ve been keeping a bag of old socks and t-shirts to use as rags. Now that spring cleaning is here, break it out and put those old threads to use. Soft, cotton or cotton-blend cloth is a delight to use when you’re washing windows, cleaning floors, dusting, etc. And since it’s a rag, just pitch it if it gets too soiled.

6. Recruit the kids

Make spring cleaning a family affair and get your kids in on the act. Depending on their ages, their help might be more nuisance than actual help, but at least you’ll be getting them into the spring cleaning habit. And if they’re old enough, put them to work on real projects. They might not be cleaning experts, but nearly any kid can help pick up clutter, dust large surfaces, vacuum carpets, and handle scores of other chores.

One big tip: Make it fun and their contribution will be much more valuable!

Spring cleaning is an age-old tradition because nature calls for it. Heed that call with some of these tips and your wallet will make it to summer intact!

Whew. We’ve had quite a month here at the FCN household. As many of you know, we bought a new car last month. What most of you don’t know is that we bought another new car this week. The first time around, we were replacing my wife’s old minivan and we opted to sell the old car ourselves.

This time, we went another route.

I’ve never actually traded in a car before, but after having just been through the process of selling our old car I decided that I would see what the dealer would offer on my old car this time around. Here’s how it went down…

Doing our homework

I once again started the process of negotiating at arm’s length using the internet as my ally. I checked both Edmunds and TrueCar to get a feel for what people are actually paying for the vehicle we were looking at. I then got a baseline price from Costco, and used that as a comparison point when shopping around for the best deal. In doing this, I didn’t bring up the possibility of a trade-in because I didn’t want to muddy the waters.

At the same time, I checked the value of my old car using both Edmunds and Kelley Blue Book, and I noted both the private party sales prices and the estimated trade-in value. Based on our recent experience selling a car in our local market as well as the make, model, mileage, and condition of the car, I figured the best I could hope to get in a private party sale was $9500, possibly a bit less.

So… With an agreed upon price for the new car and a solid knowledge of the value of our old car, we headed to the dealer. Upon arrival, we inspected the new vehicle and asked to take it for a drive. At the same time, I asked them to take a look at the old car and let us know what they’d be willing to pay if we traded it in.

I knew that they’d offer less than what I could get if I sold it myself, but there are other factors (both financial and non-financial) to consider here.

Advantages of doing a trade-in

First and foremost, in most states with a sales tax, the price of your trade-in is subtracted from the purchase price of the new vehicle before they calculate the sales tax. Around here, that amounts to a 7% savings.

Next up, we have the cost of selling it. In order to get top dollar, I’d have to get the car detailed. To get it near showroom quality (inside and out as well as in the engine compartment) we’d have to pay around $125. On top of that, I’d have to take out an ad in the newspaper ($50/week — I also use Craigslist [free] but for whatever reason have better luck with newspaper ads). Finally, I typically buy the CarFax ($35) and provide that to potential buyers when showing the car.

In addition, we have the value of my time. This is harder to put a number on, but if I sell the car myself I have to make time to get it detailed, show it to people, etc. This often has to be done at their convenience, which could mean taking time off work, missing soccer practice (we’re in season and I’m coaching), etc.

Finally, we have the various headaches and risks associated with selling to a private party. How do you deal with the inevitable test drive? The request to take it to a mechanic? What about closing out the deal without getting ripped off (e.g., getting bad check or having to do a high value cash transaction with a stranger). There are workarounds for all of these, but they require time and effort.

In the end, I decided that I’d be happy with somewhere in the neighborhood of $8500 on the trade-in. That $8500 would be worth $9095 after factoring in the sales tax savings. I would also save around $210 in costs related to the sale (assuming a quick sale), bringing the effective value up to $9305 — pretty close to what I could get on my own, and without any headaches.

Negotiating the deal

When we got back from the test drive, I inquired about the appraisal on our old car. They came back with an offer of $7600, which was way too low. After a few rounds of back and forth, I got them up to $8400, which was close enough to my target that I pulled the trigger. Negotiations at the point had slowed to a crawl, so I don’t think I could’ve done much better.

Assuming that I was right about being able to sell the old car for $9500, I ended up leaving around $300 on the table. As far as I’m concerned, that $300 was money well spent given the time commitment and headaches I avoided by doing a trade-in vs. selling it myself.

Here are a few notes for making this work:

1. Negotiate the price of the car ahead of time — and independent of any possible trade-in. Be sure you’re happy with the sale price regardless of what you do with your old car before setting foot in the dealership.
2. Likewise, do your homework and know what your old car is worth heading to the dealer and soliciting an appraisal.
3. Clean up your old car before heading to the dealer — you don’t need to invest a ton getting it detailed, but vacuum it out, remove all the extra junk, etc.
4. Don’t be afraid to walk away from the trade-in (or the purchase as a whole) if the dealer’s final offer isn’t to your satisfaction.
5. Be prepared to close the sale right then if you reach a satisfactory deal.

In our case, I got them to bump up the last couple hundred dollars to $8400 by saying that I’d write the check “right now” if they could do this. At that point, I was also able to produce the title to the old car (I had it in my pocket the whole time) as evidence that I was ready to close the deal. Note that I had intimated earlier in our discussions that, if we couldn’t reach an agreeable price on the trade, I’d need to go home and think about the entire transaction.

In reality, the price on the new car was good enough that I would’ve ultimately gone through with the purchase either way, but I would’ve hung onto the old car and sold it myself if they hadn’t made an acceptable offer. In the end, I probably could’ve come out a few hundred dollars ahead by selling the old car myself, but I’m quite happy with the price vs. convenience tradeoff in this case.

Oh, and in case you’re curious, I chose to go the private party route in our previous transaction because the situation was different. That car was a bit older, had much higher mileage (albeit with a relatively recently rebuilt transmission), etc. and the trade vs. sell numbers worked out in favor of the latter.

I’ve received a couple of last minute questions from readers about whether or not you need to file your taxes on time if you don’t owe anything. Interestingly, the answer is “no” — here’s why…

All relevant penalties (for both underpayment and failure to file) are based on the amount owed. In the case of failure to file, it’s typically 5% of your unpaid taxes per month (or portion thereof) after the deadline that they receive your return, topping out at 25%. If you file on time but pay too little, you’ll face a penalty of 0.5%/month of the amount due (plus interest).

So… If the IRS owes you money, there’s actually no need to file on time. You’ll need to file no later than April 15, 2015 to claim your refund (after that it’s forfeited) but you won’t be penalized for filing late.

This isn’t to say that you should go ahead and file late. After all, that’s your money. You might as well claim it as soon as possible. And don’t forget the possibility that you’re mistaken, and you actually do owe taxes. In that case, you may unwittingly subject yourself to the wrath of the IRS.

If you want to be on the safe side, you should at least request an extension and then sort things out after the deadline.

If you need to move but don’t want to sell your home, you have other options. The rental market has been heating up, and rents have been keeping up with (if not outpacing) inflation, rising almost 3% annually around the country. Renting your home instead of selling it may be a great way to make extra money and avoid selling at a loss. My wife and I recently became landlords, and we decided to hire a property manager to help us handle the process of renting our home.

What is a property manager?

A property manager can be a single person or a firm consisting of several people who manage rental homes for homeowners and act ask their representative with the new tenants. Property managers handle every aspect of renting out your home. They are responsible for finding new tenants, screening them, collecting rent, evicting non-paying tenants, hiring maintenance crews when things break, and a host of other tasks that you may not want to handle. They act as the middleman between the homeowner and the new tenants.

How to find the best property manager

Like most service industries, you do not want to simply pick a property manager out of the phone book. This company and their employees will be managing one of your biggest — if not the single largest — assets. Don’t trust your home and its value to just anyone. One of the best ways to find a great property manager is to ask for referrals from people you trust.

Do you have a friend or coworker who just rented their house? Who did they use? Even if they had a bad experience with a potential property manager, you want that information so you’ll know who to stay away from. Your realtor is another good person to ask for a reference, but be careful — they may try to steer you to their firm, which might handles rentals.

Once you find three different property managers, you will want to interview the property manager and ask a lot of questions before you hire them.

What fees do they charge?

Property management firms typically take 10% of the rent as their fee for managing your property and interacting with the tenant on your behalf. So, for example, if you rent your home to someone for $1,300 per month, then the property manager will receive $130 and then send you the remaining $1,170 balance every month (assuming no other expenses were incurred).

This is the standard rate in most states, but fees might vary a bit depending on where you live. Property managers may also charge homeowners one-time fees for advertising the property on the MLS network and other websites, and some may charge a fee each time that they you a new tenant.

Why you would want a property manager

Some people who either have the time or are handy with tools may want to forego the expense of hiring a property manager. Others may not want to deal with pesky tenants, or they may even live outside of the area. Just because you are moving to a new state doesn’t mean you want to sell your home. Hiring a local property manager to keep an eye on things can be a great help.

While the decisions for how your property is handled and maintained still rest with you as the homeowner, a property manager helps take care of the day-to-day operations and interactions with your tenants leaving you to draw a passive income. There are also tax benefits that help defray the cost of property management, as such expenditures can be deducted from your income taxes.

Why you may not want one

Hiring a property manager may be an expensive convenience. Your margins may be so tight that their fees could be the difference between earning a profit and suffering from negative cash flow each month. Some homeowners may also be uncomfortable with the lack of control that comes from hiring a property manager to screen tenants, collect rent, and schedule maintenance.

What about you? Do you own rental property? If so, do you use a property manager to help you with it?

The March inflation numbers are now out, which means we can now predict the new (May 2012) rate for Series I Savings Bonds…

As a reminder, the rate for Series I Savings Bonds is made up of two pieces: the fixed rate and the variable rate. The fixed rate is set by the feds, and has been at 0% since the fall of 2010. The variable rate is pegged to inflation, and can be easily calculated if you know how much the CPI-U has changed over the past six months. To do this, simply divide the old CPI-U into the new one and you’ll get an estimate of the semi-annual inflation rate. From there, you just double it to estimate the annual change and add the fixed rate.

Back in September, the CPI-U was at 226.889 and by this past March it had increased to 229.392. This works out to a 1.103% increase (229.392/226.889 = 1.01103). If we double this, we get 2.206%, which rounds to 2.21%. So… The variable rate should with to 2.21% starting in May.

As for the fixed rate, I seriously doubt it will be increased from the current 0%, but stranger things have happened. Assuming it remains at 0%, you can either by now and get 3.06% (current variable rate + 0%) for the next six months, followed by 2.21% (new variable rate + 0%) for six months, or you can wait until May 1st and get 2.21% for six months (new variable rate + presumptive fixed rate).

If it were me, I’d probably buy now instead of waiting. What about you? Do you invest in I Bonds? If so, have you already taken the plunge for this 2012?

P.S. I’ve had a couple of people ask me about the best place to find inflation data. I always go straight to the source — the Bureau of Labor Statistics. Here’s a direct link. Check the box under the “Price Indexes” heading for “CPI for All Urban Consumers (CPI-U) 1982-84=100 (Unadjusted)” and click “Retrieve Data.”

A reader named Jim recently wrote in asking how to handle an excess contribution to a traditional IRA. Upon receiving his e-mail I ran a quick search of the archives and was surprised to discover that I hadn’t covered this topic in the past. With the filing deadline almost upon us, I decided it was high time to rectify the situation.

For starters, let’s define our terms. According to the IRS (see Pub. 590):

Generally, an excess contribution is the amount contributed to your traditional IRAs for the year that is more than the smaller of:

• $5,000 ($6,000 if you are age 50 or older), or

• Your taxable compensation for the year.

The taxable compensation limit applies whether your contributions are deductible or nondeductible.

Contributions for the year you reach age 70.5 and any later year are also excess contributions.

An excess contribution could be the result of your contribution, your spouse’s contribution, your employer’s contribution, or an improper rollover contribution. If your employer makes contributions on your behalf to a SEP IRA, see Publication 560.

There are a couple of points here…

For starters, you may have noticed that they referred to “IRAs” plural. This is because you can have (and contribute to) more than one IRA at a time. And this isn’t just talking about traditional vs. Roth. You could have multiple traditional IRAs, multiple Roth IRAs, or a combination thereof.

It’s important to note that all of your IRAs (traditional and Roth) share a common contribution limit which currently stands at $5k/year ($6k/year if you’re 50 or older), so don’t contribute more than $5k total.

It’s also important to distinguish between how much you can contribute and how much you can deduct. While the deductibility of traditional IRA contributions is phased out above certain income limits, you can make non-deductible contributions no matter how much you earn. In fact, this is the basis of the contribute-and-convert strategy for funding a Roth IRA (a.k.a., a “backdoor” Roth) if your income is too high to contribute directly.

So… What happens if you make an excess contribution?

The short answer is that you’ll face a 6% annual tax for excess contributions that aren’t removed by the filing deadline — and this penalty will continue year in and year out until you rectify the situation. The good news is that you can buy yourself some time by requesting an extension.

This tax, which is figured using Form 5329, cannot exceed 6% of the total value of your IRAs.

To rectify the over-contribution, you’ll need to withdraw it plus any related earnings before the filing deadline (or extended deadline if you request an extension). You should contact your IRA custodian for instructions on withdrawing the excess contribution and any associated income.

As for the tax treatment of the withdrawn contributions, you’ll need to report it as taxable income if you previously deducted it. Depending on how much time has passed, this can get messy so be sure to read through Chapter 1 of Publication 590 before acting. You will also have to report as taxable income any money earned on the excess contribution, and this amount might be subject to a 10% early withdrawal penalty.

Oh, and if you’ve already filed your 2011 return, don’t fret… You still have six months to withdraw the contribution and file an amended return — this is essentially an after-the-fact extension. Here again, be sure to read through Publication 590 (or seek professional help) to be sure you get the details right.

One of the greatest things that ever happened to me was being born of Depression-era parents. Because both could so clearly recall the deprivations of the 1930s, I began hearing about the need to save early. Very early.

How early? My folks rarely missed a chance to pontificate on the merits of interest-bearing passbook savings accounts while pinning me into a fresh diaper.

Their message was that you saved for all the expected things, like taxes, down payments on a house, a new car, and college educations. What’s more, you saved for the unexpected developments, things like a sudden leak in the roof, the untimely demise of a furnace or the surprise need for a root canal.

But because they believed in truth, justice, and the American way, they weren’t well equipped to school me in a third, more insidious, reason to save.

That third reason comes about when all signs point to you being able to finally blow some hard-earned cash. But the justification for doing so is the very reason you should be — that’s right — saving, saving, and saving some more.

Confused? Read on. I think you’ll not only see my point, but recall events in your own lives and careers paralleling those I’m about to describe.

Meet Ned

I’ve got this friend we’ll call “Ned.” I’ve known him for years, and can vouch for the fact he’s smart, talented, industrious, all the traits you’d most want in an employee. Married, burdened with a mortgage and the father of two kids rapidly approaching college age, he decided to shutter the business he’d helmed for a number of years and take a full-time job for the bennies that would accrue.

Drawing on experience that included earlier stints as both an employee, and as the boss of his own shop, he quickly proved himself an outstanding team player in virtually every task he touched. And indeed, his performance reviews reflected that status, identifying him as a real up-and-comer in the enterprise.

Then came a true watershed moment. A colleague within his organization left on a sabbatical, and Ned was tabbed to cover both his own responsibilities and the sales functions of the departing co-worker. The following weeks proved pivotal.

Ned not only shouldered his own duties with his customary aplomb, but injected fresh new insights into the sales position. Under Ned’s stewardship, sales and revenues climbed to levels never before tallied by the firm.

That’s when Ned’s boss “got it.” Not only was Ned good, he was too good. Any more brilliance from him, and she might be leapfrogged on the corporate ladder by the very man whose job performance she graded.

When Ned’s next job review came around, he had reason to expect an even more glowing appraisal. Instead, his boss tore into him, ripping his decision-making skills and marginalizing his contributions to the company. And from all accounts she managed to pull it off with a straight face.

Maybe she thought he’d get mad and quit, but that didn’t happen. So she began hinting, first subtly and then more baldly, that Ned should look elsewhere for employment.

Ned finally was forced out, his boss kept her post and large paycheck, and the firm lost a vital contributor. Karma being what it is, Ned may actually do better financially in his next job. But this unexpected turn of events cost him thousands of bucks in benefits and the expense and hassle of a job search.

Meet Paul

Are the events I just recounted unprecedented? Hell, no. They happen every day, and have happened every day since the dawn of time, in every kind of organization worldwide. An earnest, hard-working and talented employee shows too much ability for the boss’s comfort, becomes a threat to the big kahuna’s continued employability, and the up-and-comer is out. The company sags back to its former mediocrity, and a talented rising star is now the sadder and wiser.

One of the most telling, and side-splitting, examples of this phenomenon played out in a big city with which I have more than a passing acquaintance.

The former mayor anointed a new schools chief we’ll call “Paul.” Paul hit the ground running and got the very results the mayor sought. Then he got results even better than the mayor expected. Standardized test scores soared, and bad schools began turning out grads just shy of Rhodes Scholar status. The press noticed and began slobbering over Paul’s phenomenal achievements, predicting much, much bigger roles in city government could be his reward.

The mayor then called a press conference. Did he say Paul was the greatest schools chief in city history? Did he offer Paul a new, better position? Did he suggest Paul could stride atop the surface of a nearby Great Lake?

No. As press corps members snickered up their sleeves, and even wise-to-the world four-year-olds rolled their eyes, he fired Paul’s ass, right out of town.

I can’t recall the flimsy reason given for the firing, but it was set forth with a straight face, as if the mayor figured no one would see through his conceit. What was as transparent as the plate glass windows on a downtown department store was that Mr. Mayor viewed Paul as a potential threat to his next re-election.

We can debate at length the crippling effect this phenomenon has on organizational effectiveness at every strata of business and society. But for our purposes here, the takeaway should be there’s no limit to the reasons to save.

It’s not just the expected and unexpected reasons my parents enumerated as they shoved a pacifier into my mouth, but a third category that should especially concern you if you’re a highly capable employee with a less-than-secure boss.

You see, as we’ve learned from the stories of high-achievers Ned and Paul, sometimes one of the biggest potential risks to your personal cash flow, one of the biggest threats, is that you yourself are a threat.

I’ve written in the past about the new Series I Savings Bond purchase limits and the fact that paper bonds have (mostly) gone away. I’ve also mentioned a possible strategy for getting extra (and paper, no less) savings bonds when you file your taxes — assuming that you’re getting a refund.

In short, this strategy involves overpaying your taxes and then requesting up to $5k of your refund in the form of I Bonds. In order to do this without giving the government a lengthy interest-free loan, I’ve decided to file an extension and send in an overpayment with along with IRS Form 4868.

As soon as that payment clears, I’ll file our return and request the refund in the form of a Series I Savings Bond, thereby allowing us to circumvent the nominal purchase limits. Just keep in mind that you can ask for a max of $5k in bonds even if you’re married and filing jointly.

Admittedly, our situation is somewhat unique in that we’ve already maxed out our bond purchases for the year and are looking for more. But if you’re in a similar situation, this is a pretty easy trick to score an extra $5k in bonds.

The clock is ticking. Are you worried that you might miss the looming tax deadline and wind up filing late? If you think that might be a possibility, be sure to request an extension.

What’s that, you say? An extension? Yes, an extension. In fact, everyone is entitled to an automatic, six month extension. All you have to do is ask. The deadline for such requests is the filing deadline — next Tuesday, April 17th.

A few facts about income tax extensions:

1. To request an extension, you should use IRS Form 4868. Any tax prep software worth its salt will also be able to handle this, as will any professional tax preparer.
2. Unless you’re living in one of the few states with no income tax, you’ll also need to file a state income tax extension. Check with your state’s Department of Revenue (or equivalent) for details.
3. Even if you request an extension, you still have to pay the amount due no later than April 17, 2012 to avoid penalties.
4. After filing an extension request, your new deadline for filing your income tax return will be October 15, 2012.

The point about still paying what’s due by the original deadline is very important. This is because you’ll face penalties if you don’t pay on time, or if you pay in too little. Another important point is that the penalty for “failure to file” is typically higher than the penalty for late payment. Thus, even if you can’t afford to pay, you should still go ahead and file.

If you choose to file an extension, you should claim credit for your payment on the appropriate line of your return:

• Form 1040, line 68
• Form 1040A, line 41
• Form 1040EZ, line 9
• Form 1040NR, line 64
• Form 1040NR-EZ, line 21
• Form 1040-PR, line 10
• Form 1040-SS, line 10

Happy filing!

This is a guest post from Sarah Gilbert.

Every once in a while, I’ll get swept up in the idea of a job. A friend will post something on Facebook or e-mail me a job description or I’ll just come across it, in the way we do these days — on the internet, it’s sure — and I’ll engage in desperate mental flirtation with the concept of me as (who knows)…

The executive director of a farm-centric non-profit, or the half-time marketing manager of my friend’s startup, or the web editor of a bike culture magazine, or even the farmer’s market counter girl for another friend’s chocolate shop. I’ll come up with all the ways I could fit this into my life (how do I still find time for the personal finance writing? The book I’m working on?) and figure out how I’d be able to save some of the income and then…

Childcare. Uh-oh.

Childcare is the profit-killer

I had a dream. Or, I have one regularly, typically involving barista spots at Starbucks or local coffeehouses, or getting up at 6 a.m. Saturday to sell vegetables at the farmer’s market. While I have an MBA and could get a high-pressure all-of-my-mental-energy job for six figures (and 60-80 hours a week), I’ve chosen to focus more of my mental energies on my kids and writing while they’re young. Food retail jobs, I’ve mused, would be a great way to earn a little money being around things I love (coffee, local food) and enjoying that precious opportunity to observe humanity! I am, at heart, a novelist.

Kids are expensive, and Saturday morning crack-of-dawn childcare isn’t cheap, though; I pay $10 or $12 an hour for those babysitters who would be willing and able to arrive before dawn. Unless I was paid $20 or $25 an hour (laugh along with me), I’d barely net enough to buy a couple of bunches of kale, let alone my favorite locally-raised-and-cured bacon. I’ve calculated, as I’ve biked to far-away events, that every 10 minutes costs $2 in child care. Great idea! But I can only “afford” to do jobs that pay professional rates.

Childcare costs are not the only thing

I spent five minutes intensely in love with the bike magazine editing position. The price seemed right, and I was skilled at all the duties the job description mentioned. The job was supposed to be “three hours a day” and I figured I could do this while my two older boys were in school. That just leaves my four-year-old! My sister’s been offering to watch him for about $4 an hour during the day. I’d have to get him there and pick him up, meaning my other two free hours would be used up in that. So I’d spend all my “free” time, needing more (and more expensive) child care for my other commitments and passions, and that would just be if I was, indeed, able to fit the responsibilities into those three hours — an assumption I doubted highly.

It wasn’t just the money this time. I would make a reasonable “real hourly wage” thanks to my sister’s bargain offer; less than that retirement-fund-growing goal I’d had in mind, but more than two bunches of kale. But I’d lose nearly as much mental space and most of my after-bedtime bonus time — when I usually do my for-love writing — as with the MBA-quality job. For a net of less than a thousand dollars a month. I dropped that dream job opportunity like a bad lover.

Sometimes, the opportunity is worth the opportunity cost

I’m not always so ruthless with my childcare cost-benefit analysis, and you shouldn’t be either. There are plenty of reasons why I might want to give up all my mental energy or work a job that netted me a bagful of organic vegetables. Take the marketing job at a friend’s startup; if my husband hadn’t been deployed halfway across the world, I probably would have gone for it. The job wouldn’t have made me a ton of net income, but I would have been able to deduct my childcare expenses on my taxes, and more importantly, I would have had some great resume-building experiences.

If my goal for the next five years was to get my kids off to school and find one of those MBA-quality jobs, I’d have been crazy not to take any position that allowed me to pad my resume without giving up much time with my kids.

And if my goal had been that non-profit executive director job (one I would so love), I think the farmer’s market position would have been a great door-opener. Working elbow-to-elbow with the leadership at the farmer’s market would prove my dedication to farming as well as making great connections in the local network of food-and-farms folks.

Juggling motherhood and money ain’t easy

Making a decision to devote your emotional self to your kids in the midst of the would-be-best years of one’s career isn’t easy. It can often mean some very difficult decisions — turning down great opportunities or realizing that rich sources of extra money are really money-losing after you count in the backs and the forths, the after-bedtime extra work, the “friction,” as I like to call it. But that doesn’t mean you should say “no” to everything, as long as you’re doing it for the right reasons — and remembering to keep a little of your mental energies to devote to yourself!

It’s hardest of all to be a mom if you’re not holding a little back — money, time, and emotions — just for yourself.

If you haven’t done so already, you have a week left to fund an IRA for 2011. This goes for both traditional and Roth IRAs, but a Roth IRA has a special advantage (aside from the tax differences).

In short, non-rollover Roth IRA contributions can be withdrawn at any time, for any reason, without taxes or penalties. If you don’t believe me, check out IRS Publication 590 for details. Or see here for a plain English explanation.

Don’t get me wrong… I’m not suggesting that you should plan on raiding your retirement accounts early, but this little factoid gives you the ability to stretch your contributions to the max without having to worry about over-extending yourself.

Said another way, if you have enough cash on hand to fund a Roth IRA, you should think about going ahead and doing so — even if it means dipping into your emergency fund. After all, if you find yourself in a pinch, you can always undo the contribution.

If everything works out for the best, you’ll be able to rebuild your savings without pulling that Roth contribution back out and you’ll be ahead of the game. And if you car breaks down, you lose your job, or whatever, you can always undo the contribution.

One of the main reasons I like this strategy is that you’re limited to contributing a limited amount of money each year, and you can’t go back in future years to make of for contributions that you skipped. Thus, you should do whatever you can to lock in your contributions while they’re available.

A few things to watch out for:

1. Be sure you’re contributing to a Roth IRA because traditional IRAs don’t offer the same flexibility to undo contributions.
2. If there’s a chance you might need to pull this money back out, don’t invest it aggressively. Instead, hold it in a low-risk investment vehicle until you’ve rebuilt your regular savings.
3. Be careful not to exceed your contribution limits. Remember… Your traditional and Roth contributions are subject to a common limit so don’t try to contribute $5k to each.
4. As always, be aware of the income limits for Roth IRA contributions. If you earn too much, you’ll have to jump through a number of hoops to get money into a Roth.

And don’t forget about next year… The clock is already ticking for your 2012 IRA contributions.

Over the weekend, I had an epiphany. My wife and I were talking about our investments when I lamented that I wish I had the temperament for investing in rental properties, but… I just can’t handle dealing with other people’s incompetence.

And there, in a single sentence, I summed up the conflicted feelings about real estate investing that I’ve had over the years. Yes, real estate investing makes senses on a number of levels, but I’m just not willing to deal with the day-to-day incompetence of my tenants.

I know that this likely sounds both harsh and self-righteous, and I recognize that many (most?) tenants are responsible people but, based on discussions with friends, nightmare tenants aren’t as rare as you might think.

I’m talking here about tenants who are chronically late with their rents payments, who break their leases early, who damage your property well beyond the value of their damage deposit, etc. Of course, they always have a good excuse, but what’s done is done.

Sure, landlords have the option of pursuing legal remedies, but that’s both costly and time-consuming, and the legal deck is often stacked against the property owner.

There are, of course, other reasons not to be come a landlord, not the least of which is the late night call about the overflowing toilet (or whatever else goes wrong). While it’s possible to outsource the property management to mitigate these issues, that comes at a cost and greatly reduces the profitability.

This isn’t to say that real estate investing is a complete non-starter, but we’ll be sticking to REITs vs. individual holdings. This shouldn’t come as a surprise, since we do the same thing with stocks and bonds — i.e., it’s index funds all the way.

For the record, as I write this, the lowest reported price in the country is $3.12/gallon in Parlin, NJ and the highest price is $5.79/gallon Death Valley, CA (source). Today, I paid around $3.85/gallon.

Some experts are saying that gas prices could reach a national average of $4.50/gallon, with the average in California topping out around $5/gallon. That would be higher than the record prices of 2008 when the national average rose to $4.114/gallon and California topped out at $4.588/gallon.

At the same time, others are saying that gas prices will once again spike this year, but will fall short of the all-time records. For reference, gas prices surged last spring but then moderated over the summer.

Whether gas prices end up going pretty high or really high, a major concern is what impact the price of gas will have on our fragile but recovering economy.

According to a recent Gallup poll, gas prices would have to rise to somewhere in neighborhood of $5.30/gallon before the average American would significantly reduce their spending in other areas or otherwise change their lifestyle.

What do you think? How high will gas prices go during the coming year?

Please also share in the comments your thoughts about how high gas prices would have to go for you to make significant budgetary (or other) changes — assuming that we haven’t already crossed that point.

This is just a quick note to let you know that American Express is offering a $100-$200 bonus signup bonus on their Blue Sky and Blue Sky Preferred cards. Here’s the scoop…

Simply apply for one of these cards, get approved, and spend $1000 within the first three months of card membership. You’ll then get a 7,500 point (Blue Sky) or 15,000 point (Blue Sky Preferred) bonus redeemable for a $100 or $200 statement credit, respectively.

The Blue Sky card gives you one point per dollar spent with no annual fee whereas the Preferred card gives you double points for dining, hotel, and car rental expenditures — but it has a $75 annual fee. The Preferred card also give you $100/year in the form of an “airline allowance” that can be used for baggage fees, in-flight purchases, etc.

Here’s the catch… The statement credits can only be applied against “eligible purchases,” which include airline tickets, hotel stays, and car rentals. But at a conversion rate of 7,500 points per $100, that’s an effective rate of 1.3% on all purchases (and 2.6% on doubled purchases). That’s not too bad if you’re a frequent traveler.

Both cards offer 0% on purchases for the first 12 months. We never carry a balance, so that’s a non-issue for us, but some might find it attractive.

American history is replete with examples of the rags-to-riches story. A penniless youth grows up amid grinding poverty, wondering where his (or her) next meal is coming from and whether mom and pop can make the next rent payment. He (or she) studies hard, finds a way to fund a higher education (or an entrepreneurial venture), burns the candle at both ends, and ends up a rich and famous success.

While they’re not unheard of, stories of individuals who grew up in the lap of luxury, then went on to achieve a quantum leap beyond their upbringing’s ultra-comfortable existence, don’t seem as common. Maybe it’s because they’re not as fun to relate as rags-to-riches sagas. But it’s probably also because there’s something about growing up in a shabby fourth-floor walkup and frequenting the neighborhood soup kitchen that is ideal for fanning the fiery flames of ambition.

I bring this up because of what I’ve read lately about college housing. The term “student housing” has, over the generations, been synonymous with “bare bones.” Put another way, you didn’t have to study at Michigan State University to experience “Spartan quarters” during college.

Doubling or even tripling up with roommates, you made do with a tiny dorm room or apartment furnished with banged-up desks and chairs seemingly cast off from a Salvation Army resale shop. The cot-like beds were equally unsuited to sleep and other activities for which collegians are known. Working wall sockets and institutional fluorescent lighting were what passed for “high-tech” features.

Many have cited conditions in which they lived as undergrads as the reason they hit the ground running the minute they took hold of their sheepskins. They wanted to put as much distance between their new lives as college-educated earners, and the one before, where they subsisted on grilled cheese sandwiches prepared on a clothes iron.

Luxuriance 101

But thanks to a new trend that has developers of student housing competing with one another to build increasingly luxurious off-campus residences, many of today’s students will look back on their college years as times not of deprivation but of creature comforts it once took decades of earning and saving to afford. These students do not sleep in communal quarters, but in private bedrooms with private baths. They savor gourmet kitchens with stainless steel appliances, flat-screen TVs in every residence, hardwood floors, and the most advanced high-speed Internet services.

The common areas of their buildings boast game rooms, outdoor areas with barbecuing facilities, sand volleyball courts, private art collections, state-of-the-art fitness centers, and at some places, swimming pools with sauna and steam rooms.

I assume it’s only a matter of time until we hear of student housing with staffs of masseuses and private chauffeurs as well as maid and butler’s quarters. I can picture it now. A visitor arrives to make a call on an undergrad at his student residence hall, rings the doorbell, and a butler appears. “Please make yourself comfortable in the sitting room, sir,” the British-accented butler intones. “Biff will be with you in a moment.”

Good habits established early

Like most of my fellow students years ago, I would have loved to have lived a pampered, luxe life as a college student, and would have considered myself a most deserving recipient of the opulent lifestyle. But from the perspective of 35 years after the fact, I have no doubt it would have been the worst thing for me.

Because I scarcely knew where my next dollar was coming from, both during college and the first years after graduation, it was a given that I’d not only have to live a penny-pinching, abstemious existence, but that only by keeping my nose to the grindstone would I find a way out of it. Gradually, my financial fortunes improved, and as they did my lifestyle did as well. Still, I’m not sure that even today I could justify spending on some of the niceties today’s students in their luxuriant quarters take for granted. Just how often would I use a sand volleyball court, anyway?

The relatively new phenomenon I’m describing is all the more intriguing given the early warnings being issued by personal finance experts about the critical importance of 20-somethings saving early, often, and big time. The gurus have peered into the future and laid out dire prophecies for the generation in and just out of college. It seems that, given the size of the Baby Boom voting bloc, there’s little chance U.S. lawmakers will display the gumption to slash Social Security and Medicare benefits.

The boom-meisters will go right on reaping that largess, which will be funded by the generations behind them through frighteningly higher taxes. The upshot: those up-and-comers just launching a career could face a reality once considered preposterous, that they will live less pampered lives at 50 or 60 than they did as college students.

I believe depriving college age folks of a little good ‘ol-fashioned deprivation, the kind that scared the Greatest Generation and others into becoming lifelong savers, is not a good thing. But I know many collegians and their parents would disagree. For them, I hope the next wave of swank student housing comes complete with free use of a private jet, the better to wing off to the Turks and Caicos for a week after midterms.

I mean, if you can’t spend your college years hanging around the playgrounds of the international jet set, why bother?

We had a fire last year. We lost our furniture, my wife’s clothes, etc. We were renting at the time and had no renter’s insurance. The fire department couldn’t determine the cause. Can we deduct any of these losses from our income taxes?

Wow, what a bummer. A loss like that is bad enough even if you do have insurance. The fact that it’s an uninsured loss is just adding insult to injury. The good news for Jimmy and his wife is that they’ll at least get a bit of a tax break to help soften the blow.

According to the IRS (see Topic 515, Publication 547, and Publication 584 for details) is that you can typically deduct casualty and theft losses relating to your home, household items, and vehicles from your Federal taxes.

A “casualty loss” is defined as a loss from the damage, destruction, or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake, or volcanic eruption. Note that this does not include normal wear and tear, and that you need to reduce your loss by any amount reimbursed by insurance.

If your property is damaged but not destroyed, then your loss is the lesser of the “adjusted basis” (i.e., your cost plus or minus improvements and depreciation) and the decrease in fair market value of your property due to the casualty.

In addition to reducing the loss by any amount reimbursed by insurance, you also have to reduce it by the salvage value of the damaged property (e.g., if you can sell it for scrap, the amount you could recoup from that sale counts against the total loss).

To claim a casualty or theft loss, you need to file Form 1040 and report it as an itemized deduction on Schedule A (or 1040NR, Schedule A for non-resident aliens). For personal property, you figure the deductible amount by reducing the loss by salvage value and/or insurance payments. You then need to reduce this amount by $100 per casualty or theft event claimed during the year. Add it all up and then subtract 10% of your adjusted gross income (AGI).

The casualty or theft loss itself is reported on Form 4684.

So there you have it… If you suffer a major casualty or theft loss you may get a bit of a break at tax time. That being said, your net loss is only deductible to the extent that it exceeds 10% of your AGI, so this deduction isn’t quite as good as it sounds at first.

Hopefully you’ll never have to use this information, but I thought I’d put it out there just in case.

This is a guest post from Geoff Williams of CardRatings.com

This month is National Financial Literacy Month, so say the people who make up the months. I think it’s a good argument that every month should be Financial Literacy Month, but, hey, April is probably as good a time as any for parents to think about what they’re teaching their children about how to manage their money.

Obviously, understanding how savings accounts and credit cards work should be near the top of the list, but it’s good for young kids to be exposed to the wonders of mortgages, rent, auto loans and the whole gamut.

Mostly, though, children need to learn how money works and understand where their money goes. It might not be a bad idea for adults to get a refresher course, as well.

Entrepreneur Day

I was reminded of that last week. My oldest daughter, Isabelle, 10, had Entrepreneur Day at her school. It’s a major project for the fourth graders. They were all tasked with making something and mass producing it to sell to the third- and fourth-graders in their school. Isabelle made key chains and returned from the school bus last Friday to tell me that she had made $31.

That’s right, she earned $31 at her public school, money she was allowed to keep; it’s a great program. And then at a family function we had that night, she unloaded a few more key chains on her eight-year-old sister Lorelei, an uncle and aunt, and her grandparents, and then proudly informed me after dinner that she made a grand total of $40.

So she wanted, on the way home, to stop at a store and buy a Wii game that cost $50, and pleased with her entrepreneurial efforts, I happily agreed to pay the extra $10. Besides, she’s a good kid.

The morning after

The next morning when we settled up, Isabelle gave me a plastic bag with $40 in it, and then I went to a cash box that I had given her on that Friday morning, so she could make change during her selling spree. When I gave it to her, the cash box had $25 in it. Except now, the $25 was nowhere to be seen.

“Oh, that was part of the $40,” Isabelle told me when I asked her about it.

“But then you didn’t make $40,” I stammered, suddenly realizing I had been unintentionally snookered. “You made $15. So the Wii game, that I thought I was only paying $10 for, I actually paid $35 for. Actually, the game came to around $53, with the tax. So you paid $15, and I paid $38. You made out like a bandit.”

The true cost

Then I started looking at my daughter’s receipts and realized the bandit analogy was more appropriate than I realized. That’s right — I was robbed. I had spent $11 on key chain supplies for Isabelle, meaning I had actually spent a total of $49. But a few hours later, when I was sharing this anecdote with my soon-to-be ex-wife, she reminded me that my $11 wasn’t the only expense. She had also taken $27 out of my bank account for an initial wave of materials Isabelle felt she needed to make her key chains. This brought my total investment in my daughter’s budding jewelry business to $76.

Bottom line: My daughter made a profit — a Wii game — and me? Not so much. Actually, I changed my mind about it being important for parents to teach kids about money. My kids are doing just fine, and in fact I may ask one of them for a loan soon. I think I’m the one who may need more financial education.

As with most other reward credit cards, you also have to opt-in for the bonus rewards on a quarterly basis. To do so, simply hop on over to Discover’s website and click on the “5% Cashback Bonus” link.

For Spring 2012 (April-June) you can get 5% cash back on up to $1500 in purchases at restaurants and movie theaters. As a special bonus, they are also offering 5% cash back on groceries during the month of May.

Also… If you’re looking for a solid balance transfer offer, this card has an 18 month 0% promo period, albeit with a 3% transfer fee.

Have you done your taxes yet? If so, how long did it take you? I no longer do my own taxes, but back when I did I usually spent a long evening collecting all the necessary paperwork and plugging the numbers into TurboTax.

Well, guess what? According to the IRS, if you’re amongst the 68% of filers who use Form 1040, you’ll spend a whopping 22 hours filing your taxes. 22 hours!

I know what you’re thinking: how could it possibly take 22 hours to file your taxes? To be fair, the form completion accounts for just four of those hours. The rest of the time is made up of record keeping (10 hours), tax planning (3 hours), form submission (1 hour), and “other” (3 hours).

The average cost for all of this? $290.

For 1040A filers (19% of all tax filers) the number drops to 10 hours, broken down as follows:

• 4 hours for record keeping
• 1 hour for tax planning
• 3 hours for form completion
• 1 hours for form submission
• 2 hours for “other”

The average cost for tax prep using Form 1040A is $120.

For 1040EZ filers (13% of all tax filers) it takes 7 hours to file your return, as follows:

• 2 hours for record keeping
• 1 hour for tax planning
• 2 hours for form completion
• 1 hours for form submission
• 1 hours for “other”

The average cost for tax prep using Form 1040EZ is $50.

Finally, if you run a business, you’re likely filing Form 1040 along with one or more of the following: Schedule C, C-EZ, E, or F, and Form 2106 or 2106-EZ. Time required? 32 hours!

• 16 hours for record keeping
• 4 hour for tax planning
• 6 hours for form completion
• 1 hours for form submission
• 4 hours for “other”

And the average cost for a business return is $410.

As for us, we no longer do our own taxes, but we do have to pull all of the paperwork together. To do this, I’ve developed a finely-tuned system that involves throwing everything in a pile during the year and then sorting the pile the night before I visit our tax guy. Total time required? About two hours.

Be sure to also check out GetRichSlowly’s post on tax preparation costs for 2012.

In case you haven’t heard, the Mega-Millions jackpot has topped $540M. Yes, you could win just over a half billion dollars (before taxes of course) for the low, low price of one dollar. So… Are you going to buy a ticket?

If you’re not interested in paying for the privilege of playing the lottery, you can check out this lottery simulator from GetRichSlowly, instead. But if you do decide to buy a ticket and play along…

Be aware that your odds of winning are 1 in 176 million. Also, if you do win, you’ll have to choose between an annuity worth the full amount or a lump sum payment. Decisions, decisions.

According to an ABC news report, given the current interest rate landscape, a $500M jackpot win would equate to a lump sum payment of around $359M. Conversely, if you annuitized, you would get $19.25M/year for the next 26 years — with payments going to a designated beneficiary in the even that you die.

Why the connection with interest rates? Because the good folks behind the lottery will by a zero coupon bond to cover the annuity payments. The lump sum payment is equal to the size of the required bond and with low interest rates, that bond needs to be larger. In a high rate environment, the lump sum would be lower.

While musing with my kids about what they’d do if they won the lottery, our 14 year old said “I know what you’d do, dad. You’d buy mutual funds.” Does he know me, or what?

Actually, with that kind of cash laying around, I wouldn’t have much need to take risk, so I’d probably invest it quite conservatively.

Our twelve year old chimed in saying that he’d build a full court basketball court in the backyard. When asked why he wouldn’t just buy a huge house with an indoor court, he said that he likes our house and doesn’t want to move. Good kid.

What about you? If you won the Mega-Millions jackpot, what would you do?

Full disclosure: My wife bought six tickets last night — one for each of us — as a bit of fun. Yes, we’re fully aware that the lottery is little more than a tax on people who are bad at math, but that doesn’t mean we can’t have a bit of fun with it.

Hat tip: Bargaineering.com

My job is requiring me to move to a new town. So, my wife and I are faced with what seems to recently be the newest typical American family dilemma. What should we do with the home that we bought almost four years ago? While it can be hard to figure out whether to buy or rent a home in the first place, homeowners can face a similar struggle when it is time to move.

Should you sell your house and possibly take a loss? Or, should you consider becoming a landlord, with all of the potential dangers that also entails? There is not always an easy, cut-and-dried answer to this question. Here are a few things to consider whether to sell or rent out your home.

Why selling may not be a great idea

I happen to live in an area of the country that hasn’t suffered as much as other regions during the housing crisis. While new mortgages may be hard to come by and builders have drastically slowed their new home construction projects, home values in my area of the southeast have remained flat. While this stability has been nice, it means that home prices have not appreciated, either.

In fact, you can still purchase the same home model down the street from us for the same price we paid for our home. You may consider that a great thing since we should be able to sell our home for the exact price we bought it. While this is true, it does not consider that we are currently still in a buyer’s market.

Buyers currently have the upper hand in real estate deals. They can demand that the sellers make additional repairs, cover all closing costs, reduce their asking price, etc. If a seller tries to stick to his guns and not negotiate enough, the buyer can simply go down the street and find a more willing seller to bargain with.

There are so many homes on the market, and home sellers are doing everything in their power to keep buyers happy. So, in my case, while I most likely would not lose money on the asking price for my home, I could lose thousands of dollars in extra demands buyers almost certainly will make in closing costs and extra repairs essentially eroding the down payment I made four years ago and most of the equity that I have built up.

Why we chose to become landlords

I’ve always dreamed of investing in real estate. Becoming a landlord allows my family and me to continue growing our net worth as our renter helps us pay down our mortgage each month. Not only is our rental income a positive cash flow stream of income for my family, but eventually our home mortgage will be paid off and the entire rental income will a passive stream of income for us.

This payoff point is set to occur right at the same time we will most likely retire. Another great benefit of becoming a landlord instead of selling our home is that we will continue to enjoy many tax benefits of being a homeowner. As a landlord, you can deduct items from your income taxes associated with the rental property such as mortgage interest, depreciation, the cost of repairs, insurance, property manager’s fees, and many other costs that you face.

The benefits of a property manager

My wife and I chose to use the service of a property management company to help us find tenants, advertise our home, screen tenants and run credit checks, handle any repairs, take care of evictions, and be responsible for the day-to-day operation of being a landlord. For us it makes complete sense since we will not actually be in the same city that our home is located in and cannot come back to make repairs or show the home to new potential tenants.

We interviewed three separate property management firms and also received recommendations from friends and coworkers before deciding on which firm to use. A property manger may not be the way to go for every new landlord. There are some costs involved with hiring a property management firm. Most charge a fee of 10% or more of your monthly rent. Other firms also charge a fee for advertising your home each time it is vacant, and some also require you to keep a maintenance fund with them in order to expedite minor repairs that may need to be made.

Whether or not you chose to use a property manager, it can be well worth your time and energy to sit down and evaluate the costs and benefits of their services.

Owning rental real estate is a great way to continue building wealth even through tough economic times. This isn’t the best direction for everyone, but it can work out very well in certain cases. You’ll have to take a hard look at your own family’s financial goals and weigh them against the cost of choosing one outcome over another.

Have you weighed the costs and benefits of becoming a landlord vs. selling your home? What did you decide? And what were the key factors that you considered?

As I sit here in the airport waiting for my flight, I wanted to share a tip for international travelers… A few weeks ago, I talked about the best credit cards for international travel. Today, I want to talk about currency exchange.

For starters, I’ll just say that credit cards are a great way to get a good foreign exchange rate — especially if you can find one without a foreign exchange fee. But even if you have a great card, you’re likely to want at least a bit of foreign currency when traveling.

While in Argentina on a recent trip, I noticed that there were numerous currency exchange booths in the luggage claim area. As I walked past them, I noted the exchange rate — roughly 3.25 pesos per dollar. The actual exchange rate at the time? Close to 4.35 pesos per dollar.

As it turns out, there was also a bank in the airport, just outside of the secured area. Instead of changing my money at the first opportunity, I did it at the bank and got the going rate. Had I been unaware of the prevailing exchange rate, and jumped at the first chance to change my money, I would’ve lost a whopping 25%.

In fact, if I hadn’t exchanged money at all I still would’ve come out ahead as most local merchants would take US dollars at a 4:1 rate — not the going rate, but far better than 3.25 per dollar.

So if you’re traveling overseas I recommend checking the exchange rates before you travel and then making sure you’re not getting totally ripped off when you got to make the transaction.

Lots of articles try to convince you that raising money-smart kids is a good idea, but you know better. Who wants kids who limit their immediate gratification by putting money in a savings account? And every parent knows life is a lot better if you shut your screaming kid up by buying her everything she wants at Toys R Us, right?

If you sometimes worry that your kid is too wise and worried about money, just follow these eight tips and nip that fiscal responsibility in the bud:

1. Buy them everything they want

Hey, let’s be honest, isn’t life better when you just buy the little duffers whatever they want? It stops the whining immediately and keeps the kids busy for a few minutes so you can enjoy that $5 latte you just bought. So what if they start to believe that they’re entitled to everything? Isn’t entitlement the American way? We deserve it all!

2. If they break it, replace it

Oh, poor little Johnny stepped on his new squirt gun that he tossed on the floor last night. It’s busted and he’s bawling. Don’t put up with that — rush over to Walgreens and buy him another one right now! You don’t want the kid to learn about consequences, do you? That might spoil his morning.

3. Teach them that money grows in your wallet

Your kids don’t care how long and hard you work for your paycheck, so don’t bother discussing the connection between work and pay. Instead let them believe money just miraculously appears whenever they want something. Life is lot more magical that way! Don’t spoil their youth by suggesting that life could possibly be anything other than one happy day of overconsumption after another.

4. Set a bad example

Hey, kids do as their parents do, right? So teach them slovenly financial habits by displaying those habits yourself! Run up your credit cards, pay your bills late (if you bother to pay them at all), buy lots of cheap stuff you don’t need, don’t use coupons, don’t take care of your possessions, buy the latest smart phone even if the one you have is perfectly good, run the water while you brush your teeth, drive your gas guzzling SUV even when you’re just going around the corner to pick up another sack of burgers instead of making dinner yourself…

5. Provide a nice fat allowance

Since money practically grows in your wallet (see item 3 above), why not share the wealth with your kids? Don’t hold back, especially when they’re teenagers. After all, you don’t want your kids to be out with friends and run out of money, do you? Someone might think you’re poor! Instead, give your children a big enough allowance to let them treat the whole gang when they go to McDonalds.

6. Chores? Please!

Don’t bother asking your kids to do anything to earn the money you’re doling out to them. After all, this might teach them the concept that money comes from hard work, which is such a drag (see item 3 above). Wouldn’t life be better if no one needed to work? Let your kids enjoy that fantasy for as long as possible. And don’t even think of asking them to mow the neighbor’s lawn or get a part time job when they’re teens — come on, they’re only young once!

7. Discourage saving

If Grandma sends Madison $25, march her to Target right now before that money burns a hole in her pocket! Saving money is so overrated — have you seen the dismal interest rates banks pay on savings these days? And forget teaching your kids how to invest in the stock market — it’s bound to crash again some day. Your kids are much better off blowing through the money right now.

8. Skip the thank you notes

Speaking of that gift from Grandma, don’t trouble yourself trying to get your little honey to sit still long enough to scratch out a note of thanks. That’s so old fashioned! Why should your children be grateful for what others give them? They’re entitled to it, right? Writing a thank you note might remind them that they aren’t the center of the universe, and you certainly don’t want to burst that bubble!

You might read somewhere that kids who learn how to handle money grow up to be money-smart adults, but wouldn’t you rather have kids who live in the moment and don’t worry a whit about the future? Life will be much more fun for them, right? Right?

The latest news on the mortgage front is that Bank of America is testing a new program where they turn (former) homeowners into renters. Yes, really. It’s called the “Mortgage to Lease” program and it aims to convert those who are behind on their mortgages into leasees.

When I first hear this news, I was blown away. They’re taking former homeowners and turning them into renters? Sounds crazy. And crooked.
But it’s not actually a new idea. In fact, Fannie Mae tried something similar back in 2009, though participation was quite low.

And the more I though about it, the more I realized that its not nearly as bad as it sounds. Given that the alternative is to simply foreclose and kick people out, maybe this a win-win. The (former) homeowners get to stay put, and Bank of America doesn’t have a bunch of empty, houses sitting around falling into disrepair.

Participants will sign their home’s title over to the bank, which will then forgive the mortgage debt. In return, the they’ll be allowed to rent their home back from the bank at or below market rates (and for an amount less than their mortgage payment) with the bank being paying the property taxes and insurance.

Note: You’ll still need a renter’s insurance policy.

I’m not sure about the tax consequences here, as forgiven debts are (in some cases, at least) treated as taxable income. In this case, however, the participants are giving up their homes so, so it’s really like they’re selling at a loss as opposed to having their debt truly forgiven.

The end game will be for the bank to sell the homes to real estate investors, though they will initially be the landlords. This program is currently in the pilot phase in limited markets. To qualify, you have to have a Bank of America mortgage, be at least 60 days late on your payments, and be underwater on your mortgage.

What do you think? Is this program a good idea?

If not, what would you suggest as an alternative?