Are You Bluffing?

One of the key factors in getting a discounted rate is that your service provider, whether we’re talking about cable or cell phone or something else, wants to keep you paying a monthly fee. Company representatives are able to offer discounts — but only if they think that you’re going to move to another service provider or drop the service entirely. If you even suggest that you’ll keep paying your current rate if you don’t get a discount, you won’t get the break.

That means you’ll either have to bluff your way through the conversation or be prepared to actually cancel your service if you don’t get what you want. Canceling may not be a bad idea — before you try to negotiate a lower rate, check around to see if any of the other service providers in your area can actually offer you a better deal for switching. At the very least, you’ll be able to ask your service provider to match their rate, and you definitely won’t have to worry if a rep decides to call your bluff.

Keep Trying

Just because one rep tells you that you can’t have a discount doesn’t actually mean that you can’t get it. Even simply calling back and speaking with a different rep can get you a different answer at many service providers. You may also find that the issue is the level of the representative you’re speaking with — if you can move up the ladder to a manager, you’ll likely find that a higher-up has the authority to offer far more discounts. If you get a ‘no’ at any point, it’s worth your while to keep trying.

Of course, you want to be polite about it. If you get multiple ‘no’s, it’s probably time to move on. And being nice throughout the entire process can make it much easier to get a rep to help you out. Anyone that you speak to over the phone has probably had to deal with more than a few impolite customers and won’t be inclined to really help another customer that falls into that category. Just keep calm, even when you’re asking to speak to someone’s manager. A surprising amount of decision-making power rests with whichever rep you wind up speaking to over the phone — a rep can choose to refuse a request, and you can get an entirely different answer if you call back and speak with another rep. That makes politeness even more important, because if it’s a situation that is purely at the discretion of the rep, you want the rep on your side.

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Want A Lower Bill? Ask For It

The Can Of Worms

I don’t think that a parent is necessarily obligated to pay for his or her child’s education — and I told my friend that. The fact of the matter is that there are a lot more options for finding money for college than for paying down debt, making it important to help yourself before helping your kids.

But my friend’s response boiled down to the fact that she would feel selfish and even like a bad parent if she didn’t set aside as much as she could for her daughter’s education. The whole conversation got pretty emotional: it’s hard to argue with a parent wanting to do right by her child.

Better For A Child

The more I think about it, though, the more sense it makes to de-prioritize saving for your child’s college. I’m not suggesting cutting such savings entirely, but I don’t think it should top the list either. It can even be a benefit to your child.

Prioritizing paying down debt and saving for worthwhile goals sets a good example for your children. But there’s another lesson to be learned from a smaller college fund: your child will have to take responsibility for paying for their own expenses, whether they’re taking out student loans or working part time. My own college experience played out like this. I received only minimal help from my parents, as far as money went, while many of my classmates had every expense paid for. But because I had worked all through college, I had a whole stack of job opportunities the moment I graduated. Some of those students with a great cushion from their parents were still looking for work a year after graduation.

The fact of the matter is that a person doesn’t have to have a huge college fund in order to attend even expensive colleges. Student loans may not be a particularly comfortable burden, but they do provide a certain flexibility in allowing a wide variety of people to pay for a college education. There are also scholarships, grants and part-time jobs as alternative ways to pay for school. That’s not even taking other options, like the Peace Corps or starting at a community college, into consideration.

There’s nothing wrong with a parent choosing to take care of his or her own financial priorities before trying to fully fund a child’s college education. It’s a good goal, but shouldn’t take priority over insuring one’s own financial stability.

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Saving For Your Child’s College: Maybe You Shouldn’t

Back Up Your Insurance With An Emergency Fund

Even with great insurance coverage, you’ll face expenses that simply aren’t covered by your insurance provider — or your deductible is high enough that your insurance doesn’t kick in. Maybe it’s a medical procedure, maybe it’s a cosmetic repair for your car — either way, having an emergency fund in place can help you eliminate the risk of an expense your insurance doesn’t cover.

Just how big an emergency fund needs to be varies, but even starting small can make a big difference. Even if you can only set aside $25 per week, at the end of the month you’ll have $100 saved up that you didn’t have before.

Keep A Close Eye On Changes

Especially in light of the current economic situation, many insurance companies are making changes to their offerings. They’re not the only ones, either: if your insurance is part of your benefits package from your employer, you may find that changes are coming from that direction as well. You should receive notice in writing of all changes — make sure that you read such documentation and understand it. In some cases, if may mean that you need to purchase supplemental insurance or change providers.

Make Insurance A Priority

It’s tough to manage all the insurance a person can really use. Even something as important as health insurance often falls by the wayside if you’re facing a financial crunch. But make it a priority to keep your insurance in place, especially your health insurance. You may not need it it — but it can just as easily make the difference between your finances remaining stable or an illness putting you entirely under.

It’s not just health insurance, either. If you can increase your home insurance, life insurance, long-term disability insurance and so on, it’s generally a good financial choice. We don’t know what the future holds, but we can see the risks. Minimizing the effects a situation can have makes sense, financially.

Check Out Your Insurer

Some insurance companies could use a little health coverage themselves right now. Take a look at the ratings for your insurance company from Standard & Poor’s or another ratings organizations: such information can tell you if your insurer is on solid ground. If the company is, great. If it isn’t, it’s worth shopping around to make sure that your policies will be there when you need them. This is especially true of policies you pay for over a long period of time for what may be a very large payout — life insurance, long-term disability and other options.

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Know Your Insurance Options

The personal finance system is based on point values. You can complete a variety of activities, such as reviewing your credit report for errors, to gain points. There are also set tasks that can earn you points on a monthly basis — such as setting aside money for savings each month and successfully avoiding banking fees. The site offers a simple interface, similar to those used on other parts of the site. You can see at a glance what you’ve accomplished, what goals you can still meet and those that you’ve had less success with.

The point system makes a lot of sense, given Mint.com’s typical user. It’s almost like a video game: you can complete tasks, advance your skills and earn points. The tasks all fall into one of five central money-saving principles:

• know your money
• spend less than you earn
• use debt wisely
• invest savings
• prepare for the unexpected

While these categories don’t sound particularly glamourous, they are core techniques to keeping your personal finances on steady footing. Having a single system to follow can also significatly simplify the process of getting financially fit.

It does take a little dedication and effort to keep up with your finances, even with a good tool like Mint.com. However, given the fact that the website will even outline steps towards financial security for its users, the work necessary to handle your personal finances is truly minimal when compared to most options that require you to bring together all of your information on your own. There’s no checkbook balancing act necessary. You can even set up Mint.com to notify you about your spending or when you’re closing in on a goal or even when your credit card interest rate changes — you can get either email or text message notifications to help you stay on track even when you aren’t logged in to Mint.com.

The new tool is still in beta — it hasn’t been rolled out to most users yet. A few sites are offering invitations to the beta, such as Mashable. It’s worth keeping an eye out for opportunities to join the beta, though, especially if you’re working on simplifying your finances. Mint.com has already eliminated most of the work that goes into keeping your own books — now the site is making it much easier to set personal finance goals and meet them. Mint.com is available only to U.S. users, but it does have a very good track record when it comes to privacy issues — one of the big issues with most online money management options.

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Money Management Makes For Financial Fitness

Coverdell ESAs

The big benefit of using a Coverdell Education Savings Account to save for your child’s education is that you can use the money in the account for certain expenses you might encounter from kindergarten to 12th grade. You can start saving money up for educations far beyond just college as soon as your child is born. A Coverdell ESA is also a solid method for building up savings for college expenses. You (or anyone else) can contribute up to $2,000 each year into an investment trust, which grows tax free. As long as you’re using the money for qualified expenses, withdrawals are tax free. You won’t be able to contribute to a Coverdell ESA after the beneficiary — the student whose name is on the account — turns 18 and all funds in the account must be withdrawn before the beneficiary turns 30.

It is worth noting that some of the benefits of a Coverdell ESA may expire in 2010. Congress must act in order to preserve many of the benefits associated with Coverdell ESAs.

529 College Savings Plans

No matter what state you live in, you have access to some form of a 529 College Savings Plan — each state offers their own version. Some states rely primarily on 529 Prepaid Plans, which are less flexible, but you have the option of using another state’s plan if you so wish. With a 529 account, you have few limitations on how much you can contribute. Your contributions are invested, and — as long as withdrawals are used for tuition and educational expenses — your gains are not subject to taxes.

A key benefit of using a 529 plan is that it generally does not impact what financial aid your child is eligible for. You also can control account disbursements indefinitely — in general, a 529 plan remains in the name of a parent.

Which Plan?

When you’re considering what sort of savings account to use to fund your child’s education, the big question is whether you plan to use the same account to save for expenses for elementary school through high school. If so, it’s worth opening up a Coverdell ESA — along with a 529 College Savings Plan if you can go even a small amount over that $2,000 limit. But with the changes that may be coming to Coverdell ESAs, 529 College Savings Plans are the more flexible option. If Congress does not renew the features that make a Coverdell ESA so attractive, you’ll want to have you child’s college savings in a 529 account.

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College Savings: 529s or Coverdell ESAs?

1. Plan around staple ingredients: Planning out your meals for the next week isn’t enough — it’s too easy to wind up buying some ingredient only needed for one dish that you won’t use again until you feel like having that dish again. I try to plan meals that rely on similar ingredients: for instance, I’ll make chicken noodle soup and baked macaroni and cheese in the same week, so that I can just buy one bag of noodles.
2. Keep snack foods on hand: Getting into cooking at home can be a real boon to your wallet, but it’s easy to slip up when you just want a little rather than a full meal. Rather than grabbing something at the nearest vending machine or buying lots of unhealthy snack food, keeping simple snacks like popcorn or cereal on hand can help manage not only your food budget but your health as well.
3. Double your cooking: It may sound counter-intuitive to cook more food in order to cut down on costs, it’s a relatively simple approach. By doubling batches of favorite meals and freezing them, you can effectively have your own tv dinners on hand for a fraction of the cost. On days when you’re just too busy to cook, it’s just a matter of pulling something out of the freezer.
4. Invite friends over: Once a week, I share a meal with friends. We rotate responsibility for main dish, side and dessert — it’s easier to plan for all of us, and I’ve actually noticed that I wind up spending less on those nights, even when I’m responsible for the main course.
5. Stock up on spices: Buying in bulk can bring down the overall cost of your groceries — but trying to eat what amounts to the same thing every day can make it harder to stick to a meal plan and a budget. But it is possible to make each piece of chicken in the giant pack you bought (or anything else bought in bulk) seem like a different meal, if you have a variety of spices on hand to help you differentiate.

These tips are just a starting point, of course. Depending on how much you want to cut your budget by and how many family members you need to feed, you may get varying results out of each tip. But it is possible continue cutting your grocery budget after you’ve taken care of the low-hanging fruit, like making a shopping list and getting the right coupons. Each of these tips comes from something I actually do to help manage my grocery budget.

Do you have any tips that have helped you cut your grocery budget? Please share in the comments.

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5 Tips To Cut Your Grocery Budget Down To Size

The Financial Gatekeeper

That’s where the idea of a gatekeeper comes in. We want to make the best decisions possible, and those take time. A financial gatekeeper can guarantee that we take that time.

Gatekeepers, by definition, control access to something. A financial gatekeeper controls access to your money. In the best cases, you can create a gatekeeper that kicks in when you’re considering purchases over a certain level — it requires some sort of consideration before you can access your money. If you have a solid relationship, for instance, you might talk to your partner whenever you’re considering a purchase of a certain size. A simple agreement to reach consensus on all major purchases can be enough of a gatekeeper to limit those impulse purchases and even force you to shop around for the best deal.

Creating Your Own Gatekeeper

Depending on your own spending habits, you may be comfortable setting your own rules and rely on them as a gatekeeper: if you can remember to wait three days (or whatever rule you decide on) before making your purchases, that works just fine. Many of us — myself included — however, feel more comfortable with an external gatekeeper. In my case, my husband and I have to agree on any major purchases — and on unusually large purchases, we have to agree on it for several days running.

You can also find other options for gatekeepers: I’ve heard of some people arranging with a financial planner or other professional to control the flow of their money (and therefore their spending), as well as people who simply keep their money in some sort of investment that makes it difficult to access except at specific times (such as a CD). It’s just a matter of finding a system that works with your own spending habits. After all, there is no point in limiting your purchases in one way if you do most of your spending in an entirely different manner. Take a close look at your finances before deciding one way or the other.

It may take a little experimentation to find a gatekeeper that really works for you: however you implement a gatekeeper strategy, however, you can effectively slow down spending and make sure that your money goes where you really want it to.

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Personal Finance Gatekeepers Can Come in Handy

1. Separate out your savings: If you can get your emergency savings into an account entirely separate from the rest of your money, you’ll be better off. You’ll have less temptation to spend that money and there’s no chance that your savings for a rainy day will get mixed up with your savings for that brand new television. 
2. Put your savings out of reach: While you need to be able access your money in an emergency, it shouldn’t be too easy to get. If it takes significant effort to actually use your savings, you’re far less likely to touch it for something that isn’t an emergency. Think of it this way: if you have a credit or debit card in your wallet, you’re going to run into a situation sooner or later where you’ll use it. Whether you forgot to move money between accounts or you just need a couple extra bucks, you’ll use that card for something other than the emergencies it’s really for. Eliminate the temptation. Stick that card somewhere difficult to access.
3. Automate your savings: Plenty of people have suggested that the easiest way to build up your contingency fund is to automatically withdraw money from your checking account to your savings account. It’s popular advice because it works. Having to think about moving your money around only makes you worry about it. It’s easy to slip into the thought process that you can’t really afford to add to your savings this week and suggest to yourself that you’ll add in an extra $25 next week or something similar. Don’t give yourself the opportunity to not save.
4. Decide what an emergency means: Different people have different standards for emergencies. There are plenty of people out there right now, reluctant to crack open their contingency fund although they just lost their jobs. There are also plenty of people willing to make use of their emergency funds when they come up short on pizza money. There’s no right or wrong definition of an emergency — but you have to know ahead of time when you’re willing to use your savings. You don’t want to make that decision in the middle of a crisis.
5. Set goals for your savings: You don’t really want to be sticking all of your extra money in your emergency fund for the rest of your life, do you? So set a goal for your emergency fund — maybe as much as a year’s worth of expenses. Once you’ve met it, you can start applying your money to other goals, like investments. The exact amount of money you need in your emergency savings is a number you’ll have to decide for yourself, though. If your job is solid and you’re in good health, you can be comfortable with a smaller fund. It’s up to you, though.

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5 Tips For Creating An Emergency Fund

All that money that is being ’saved’ isn’t necessarily going into a bank account. Money put towards debt reduction is actually counted towards savings. Robert Frank, an economist at Cornell University, told AP, “For economic purposes, paying off debt and saving are the same,” he said. “Incurring debt is negative savings; paying down debt is savings.” Frank believes that the current trend towards savings is actually a long-term behavioral shift: as a culture, we’re going to start value saving or spending much more than we’ve seen in the past few decades.

The trend towards savings is only growing right now, according to many economists. It’s not out of the question that the savings rate could rise to 6 percent — or even higher — in the next few years. I know that I’m working hard on getting at least a few more dollars into savings — and I’m pretty sure that a lot of people share my mindset these days. Unfortunately, economists think that approach is bad for the economy. Because we aren’t out there turning the cogs of commerce with what amounts to a substantial chunk of what used to be spending money, both the retail and manufacturing industries are taking major hits. If we aren’t out there spending money, the recession gets deeper. If the recession gets deeper, we save more and spend less. The economy is caught in a Catch-22.

The current economic situation isn’t the end of the world, though. The fact that many Americans are saving — are able to save — shows that there really is a light at the end of the tunnel. Yes, the economy is not in great shape right now and, as Americans do the right thing for their own finances, there’s a chance that the recession can get deeper still. But saving and paying down debt remain the right things to do, and they offer us a chance to come through the nation’s economic troubles on a more solid footing of our own.

Through saving and eliminating debt, we have an opportunity to build a better economic future, even if the economic present isn’t particularly wonderful. The past several decades saw record levels of spending — unsustainable spending — which now must be resolved. That means a recession. But when the recession is over, we’ll be more comfortable with our finances. It’s just a matter of getting through the current economic troubles: doing that is just a matter of saving and getting out of debt. Despite what the government might want, we need to take care of our personal finances now. It might not hurt if the government did the same — as much as cutting spending will hurt, it could provide a more long-term solution than throwing money at a recession economy.

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The Numbers Are In: Americans Are Saving More

There’s only been one major exception to my inexpensive shopping trips, and that was picking up the Thanksgiving ham. I could have gotten it during my initial bulk buying run, but I just couldn’t figure out how to get it into my freezer with my other purchases.

I still have plenty of food left, too: my husband and I are comfortably stocked for another at least another two weeks. Assuming that we only make it that far (though I am planning to see just how far I can stretch it), I will have spent approximately $580 for food for two adults for two months. That breaks down to about $35 per week per person — or less than $2 per meal. That’s actually on par with the baseline amount some states use for food stamps.

I do have a few tips to share that make the bulk buying experience easier:
Prepared foods drive up your food bill. The more you can make from scratch, the cheaper you can eat. The biggest obstacle for most people seems to be bread — but there are many recipes that require just 5 minutes of your time to make a loaf.
You don’t have to make everything from scratch, though — crackers are an example of your time being far more valuable than the effort it would take to make a certain food.
Ingredients store better than prepared food, despite the preservatives. You can store flour almost indefinitely, but a loaf of bread may not make it through the week.
Soups and stews are your friends: they’re easy ways to use frozen or canned vegetables, as well as any leftovers.
Break down anything in your freezer into meal-sized portions. For instance, if you buy a 40-pack of hot dogs, you don’t want to have to defrost the whole thing for just one meal.
Indulge in a few of your favorite foods. For me, I have a weakness for cheese. I bought a big block of Gouda and ate it on practically everything (and often by itself).
Plan your shopping trip in advance. Pick items you can use in multiple meals and draw up at least a general meal plan.

These tips come out of my experiences — and my mistakes. I think my experiment has shown that buying in bulk can be an effective way to save money on food — and I don’t have to spend nearly as much time grocery shopping as I’ve needed to in the past. Since I was already used to cooking from scratch, I think I may have wound up saving time as well as food.

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Buying In Bulk Pays Off

1. Know Your Rights: Depending on where your savings account is, there might some changes going on beyond the name on the building. However, making sure you’re aware of just what the bank is allowed to do with your money — and what rights you have — can help ensure that a sudden change won’t put your cash accounts in danger. You should also understand the protection the FDIC offers you for savings accounts, CDs and other cash accounts. If you’re not quite sure what the FDIC does, you can read up on it on the FDIC website: I’d recommend reading the bank closing information for Silver State Bank or another failed bank, rather than the various ‘About the FDIC’ pages. You’ll get an example of exactly what happens, rather than wading through hypotheticals. The FDIC actually protects more than you might think, including IRAs and money market accounts.
2. Minimize Movement: Unless you are truly not confident in an investment’s ability to ride out the recession intact, try to minimize moving your money around. That’s actually a fast way to lose money — with all the fees that can be associated with a move, you can wind up losing far more than you might expect. For most investments, the current downward trend is nowhere near permanent. Once the economy becomes stronger, stocks and other investments will regain value. It’s a waiting game. There are a few exceptions, of course. If you do need your money now, it’s reasonable to pull it out of an investment, although it’s worth discussing the matter with a financial planner in order to protect your investment as much as possible.
3. Save and Diversify: While it can be harder to sock away money during a recession, creating a bigger cushion of savings can reduce your worries about the current financial situation. It may seem counterintuitive to invest any of your savings during a recession, but it’s worthwhile to do so as long as you invest conservatively. CDs and other insured investment vehicles can keep your money safe while the market evens out. Do your research before investing anything, of course, and diversify where you place your savings to increase their safety as much as possible.

There is no perfect way to protect your investments, unfortunately. Even putting all of your money in a mattress at home is risky — and that money is certainly uninsured. However, you can ease your mind by taking the steps available to you: if you’ve done everything you can to protect your investments, you can rest a little easier when it comes to money matters.

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3 Steps To Keep Your Investments Safe

How Much Do We Really Need?

That’s the big questions: just how much do we each need to save for our retirement? It isn’t an easy question either — the answer depends on how long we have until retirement, inflation, even how long we expect to live. There are numerous calculators online that you can use to figure out what various experts think you should be saving. Right now, though, a lot of factors are in flux — making the answers that calculators spit out a very rough estimate at best.

Unfortunately, there isn’t a pat answer. You can estimate your required savings about as well as those calculators: multiply the number of years after retirement you plan to be around by the amount of money you expect to need to live on each year (don’t forget to take inflation into account). But even that magic number may be lowballing your needs. It’s hard to guess what medical expenses might amount to in years to come or how far inflation might go. Even if you’re relatively close to retirement, perhaps in your fifties, you can’t be sure what kind of money you’ll need for your retirement. The economy is just changing too fast.

What’s To Be Done?

I realize that it sounds very pessimistic — if there’s no way to tell how much you might need to save for retirement, why even bother? Well, there are a couple of approaches that can improve the odds of living comfortably after the age of 65. First off, make saving money a habit. Every dollar you can save today is one you won’t have to worry about come retirement. If you can set aside a good chunk of money, preferably in an investment that will earn you money, you could retire comfortably. The problem is that most of us are out of practice with the habit of saving. Instead, we think it’s normal to spend every cent of every paycheck — and rely on our employers to practically force us into saving for retirement through our 401(k) plans.

Second, we need to redefine retirement. The age of 65 was chosen in an era when, frankly, most people didn’t live nearly as long as they do today and those people that did live longer just weren’t up to working. But these days, life expectancies have lengthened and it’s surprisingly common to hear about people past the age of retirement looking for a job or something else to keep them busy. So we need to redefine retirement: maybe it needs to start at 70, rather than 65, and maybe it should include a part time job. Both would take significant pressure off our retirement savings.

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Retirement: What We Need and What Will Happen

I can’t think of anyone who wouldn’t want to have a spare grand in savings at the end of the month. Despite that, my first reaction to Ramit’s challenge was ‘Yeah, right — he’s probably going to have us doing all sorts of crazy things to save pennies here and there.’ But crazy frugality tips aren’t Ramit’s style. All of his previous posts have focused on increasing income, rather than decreasing spending. While this challenge does focus, at least partially, on decreasing spending, I think Ramit will continue to resist the more out-there approaches to frugality.

As I mentioned, I hate frugality and all the frugality sites that waste my time focusing on saving money on frozen orange juice and rice cakes so I can save $1 per week. $1? I find that much money in my shoe every day.

This challenge is based on the C.E.O. model: ‘C’ stands for cutting costs, ‘E’ is for earning more and ‘O’ is for optimizing spending. I think the combination is crucial: many bloggers and financial gurus focus on just earning money or just cutting costs. A combination, however, seems to be the only real route to a satisfying life. After all, no one wants to sacrifice all the benefits of the modern age just to avoid spending money, just as no one wants to spend every hour of every day at work in order to buy every little luxury. The balance that Ramit is demonstrating in his challenge is absolutely crucial to comfortable personal finance.

Before Ramit started the challenge, he asked his readers how much time they’d be willing to spend each day in order to save $1,000. Most respondents (215) were willing to spend an hour a day on efforts to save money. Personally, I’d agree: saving $1,000 in a month is certainly worth an hour a day. It works out to about $33 per hour — a rate I am more than happy to work for. The only difference is that with Ramit’s challenge, I’ll be paying myself instead of working for someone else.

The challenge officially started on Saturday, November 1st. Ramit has already posted two tips: Pack your lunches for the rest of the week and turn your thermostat down 3 degrees. Both are steps you can take today if you want to catch up. If you’re interested in saving your $1,000, you probably don’t want to wait much longer, though. It will get harder to catch up the longer you wait. You’ll also want to read the specific posts for each tip. Ramit has included both numbers on how much you’ll save as well as tips to get it done.

I think it’s worth noting that Ramit is taking part in his own challenge. He’s doing his tips right alongside readers in order to save up a grand of his own.

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The $1,000 in 30 Days Challenge

I know plenty of people are thinking about cutting back on Christmas this year. It’s not anyone’s favorite way to save money, but it is effective. The other options for reducing the impact that the holiday season has on your finances tend to involve saving up throughout the year: Christmas Clubs and other specialized savings accounts are meant to spread out the cost of presents and such throughout the year. Personally, though, I don’t think that such specialized savings account really provide that much benefit. In general, the way that a Christmas Club account works is simple: a certain amount of money is moved from your bank account every week — often around $25. Around Nov. 1, your bank cuts you a check for the amount that has accumulated through the year, and perhaps a small amount of interest. It’s that small amount of interest that bothers me — most banks offering Christmas Club accounts offer minimal returns on that dough that you’re saving up for the holidays.

You’d be better up saving on your own in most cases: putting the money in a higher yielding savings accounts or buying CDs. I’d rather a CD personally — the useful factor of a Christmas Club account depends on getting money out of your account and making it harder to spend. It’s out of sight and out of mind until you actually need it. The tough part about using a CD is the length of time you’re planning to hold it for and the initial balance: many banks require at least $1,000 for a CD, with a minimum term of one month. The interest rates get significantly better the longer you plan to hold a CD. It’s possible to find a combination of terms that work for you, but putting together $1,000 can be problematic.

The option of setting up an automatic withdrawal that mimics a Christmas Club account is also an option. You’ll have to put the money into a normal savings account. That’s not necessarily a problem: I prefer to just have my holiday savings out of reach, but that’s a personal preference. If you’re comfortable keeping that money in your savings account, go for it — it will certainly simplify matters. No matter whether you go with your own savings account or with a CD, you’ll still be getting a better return on your money than the terms of most banks’ Christmas Clubs offer — and you’re still making the holidays easier to pay with in the long run. You can even avoid some credit card debt this way, and that’s never a bad thing.

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The Holidays Are Right Around The Corner

For all my hard work, I’d really made only $50. My real hourly wage was only $2.50, at least for that first week. Because the clothes were a one-time cost, I got a ‘raise’ to $4 the next week.

My hourly wage, both official and actual, have gone up since then. But there’s still a major disparity between the two that is important to remember. Not everyone keeps a close eye on the difference and it can turn into a problem fairly quickly. When you’re looking for a new job, for instance, it’s important to be very aware of your real hourly wage, beyond the taxes automatically taken out. You might be offered a higher wage at a new job, but is it really that much of a better deal?

• Will your commute remain the same? Or will you need to pay more in transportation costs?
• Will you have to pay any costs to move your retirement accounts?
• Will your current wardrobe be appropriate? Or will you need to buy new clothes?
• Will you be traveling more, and paying for more calls home and other costs?

A new job can quickly turn into an expensive proposition.

It’s pretty easy to calculate your real hourly wage. Start with your actual annual earnings — you can make your calculations for shorter periods of time as long as you make sure that all your numbers are comparable. However, I do suggest making the calculations based on yearly numbers because there can be a lot of variation between weekly or biweekly pay periods.

Subtract your annual costs from your earnings. Even if something isn’t officially a work cost, you can still subtract it if you wouldn’t purchase it without your job. That includes meals out with co-workers, shoe polish and that one kind of pen you have to have but the office supply manager won’t purchase for you. The number that results is your actual income.

Divide your actual income by the number of hours you spent on work-related tasks. Odds are pretty good that you spend more than the standard 40 hours per week. Even if that’s what the time clock reads, you should include the time it takes to commute as well as anything else related.

The resulting number is your real hourly wage. Most of the people I’ve talked to look at that number in complete surprise — it’s often 40 percent less than what most people think they’re making. You can bring up your real hourly wage, however, without asking for a raise or changing jobs. It’s a matter of reducing the cost of working: you may be able to reduce your costs by making a lunch at home, carpooling or maintaining a smaller wardrobe.

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How Much Are You Really Making Per Hour?

The problem, I think, is that most of us want to save money. But we aren’t sure of what we’re saving money for: we may have some general goals but that might be it. I’ve run into this problem particularly often with saving for my emergency fund. I know that I need cash in case something happens — if only to avoid putting something like car repairs on my credit card. I have a really hard time picturing my emergency fund as a goal, though: I often think that it would be fine to spend money that I really ought to save, because I can always put more money in the emergency fund later. That isn’t the case, of course. It’s always easier to save now, rather than later.

It’s much easier to save for other goals. There are plenty of ways to remind yourself of a goal — if you’re saving for a down payment on a house, you could carry a picture of your dream house, for instance. You do have to be very clear on what your goals are, however. You need a goal to keep in mind for your savings, no matter how far out you’re looking. If you can’t picture your retirement, for instance, you’ll have a much harder time saving for it.

I’ve also found that it’s easier to save if you can watch your savings grow. If you pile all your savings into one account — emergency fund, house, vacation — you will have to keep close track to know how much you have saved towards a particular goal at any time. Some banks offer their customers the ability create multiple savings accounts for free — or at least the appearance of multiple accounts — to help you tell the difference between the money saved for a new car and that saved for emergencies. I use this method with my ING Direct savings accounts, and it’s definitely made a difference in the way I save money.

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Are You Saving With A Goal In Mind?

WaMu is the largest savings and loan in the U.S. But with the downgrade of the company’s debt, it’s clear that not all of WaMu’s creditors think that they’ll last. The bank’s stock prices look like a roller coaster — with a major downward trend. So far this year, WaMu’s stock has fallen almost 80 percent.

While investors are particularly worried, those of us with accounts at WaMu may not be too heappy either. Things aren’t dire, but it’s time we start keeping closer tabs on what our particular banks are up to.

Bankrate is a good place to start if you want to check up on your bank’s rating. The site provides you with two different scores for any bank or credit union you look up. The first is the Bankrate.com Rating, a scale of one to five, with five as the best. The second is the Safe & Sound CAEL (Capitalization, Asset Quality, Earnings and Liquidity) rating, a scale of five to one, with one as the best.

If you look up a few banks through Bankrate, you’ll notice that most banks are doing okay and some are doing poorly. Basically, no bank is scoring higher than a 3 and 3 rating. There are multiple listings for some banks that do business in multiple areas. The Washington Mutual Bank (Henderson, Nevada) has a 1 and 5 rating — the worst you can get.

These ratings aren’t perfect indicators — and not all of them have been updated recently. AIG, also in the news today because the company needs as much as $75 billion to stay afloat, still has a rating of 3 and 3.

Despite imperfect ratings, Bankrates remains a good starting point. I wouldn’t pull my money out of a bank just because of their rating, but Bankrate’s information provides a good starting point for further research.

Beyond Bankrate, you have a couple of options for tracking information about your bank. You can stick to newspaper articles — but the nature of newspaper reporting is that they’re talking about something after it happens. Instead, I’d recommend look at the information available to investors considering buying stock in your bank. Information like where the stock is trading can help you determine how investors see your bank. Whether investors are willing to buy a given stock indicates whether experts think that a financial institution is going to rebound. If a stock’s price is dropping, however, you know no investors wants to take the risk.

Can you afford that kind of risk? You’re actually in a better situation that investors. The FDIC probably guarantees your deposits, meaning that if a bank goes under, you will still have your money. Just the same, we should all be keeping a close eye on just how our banks are doing.

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Keeping Tabs on Your Bank

Funds and Deposit Accounts

A money market fund is an investment vehicle with a fairly solid interest rate. These funds are not FDIC-insured and require a significant amount of money (often around $50,000 to even begin investing). Money market deposit accounts are an FDIC-insured account opened with your bank — a much better deal for investors. The bank then bundles the funds from all of their money market deposit accounts to invest in treasury notes, CDs, money market funds and all sorts of investments.

The Details of a Deposit Account

Most savings accounts have a minimum balance — but a money market deposit account’s minimum is much higher than what you’re used to. Many banks also have a waiting period for withdrawals and other limitations. You’ll need to check with your bank to see what their rules for money market deposit accounts are.

Despite their limitations, money market deposit accounts are generally a much better deal than your savings accounts. If you use a standard savings account, you probably have a fairly low interest rate. Bank of America, for instance, offers the huge rate of 0.20 percent — yes, that decimal point is in the right place. Bank of America’s interest rate for money market accounts, though range between 1.74 and 2.18 percent.

When Money Market Isn’t Enough

There are savings accounts with much better interest rates than even the average money market deposit account, if you’re willing to go online. ING Direct and other online-only banks offer between 3 and 4 percent on savings accounts. Most of these banks don’t offer any kind of money market account, either. If you’re ready to make the move to online banking, you might wind up with a better interest rate than your local bank can provide.

There’s another way to find better interest rates on both savings and money market accounts, as well. Credit unions often have much better rates for their members on both types of accounts. You do have to be a member of the credit union in question, of course — if you’re not sure if you qualify for a credit union, look for local unions associated with your profession — those tend to be the most prevalent. There are also credit unions based on geographic location, church membership and other requirements.

Start Looking

The simple fact is that most people keep their savings in accounts that don’t earn them very much money. It’s always worth looking into whether you can get a better interest rate — I’m not advocating jumping from bank to bank to take advantage of special deals, but consider taking the next five minutes to pull up your bank’s website and take a look at their offerings.

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Money Market Accounts: More Bang for Your Buck

But in 2007, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) investigated over 1,320 cases of 401(k) mismanagement. That’s not 1,320 different employees with problems, by the way. It’s 1,320 different funds and companies with problems.

But how can you know if something is wrong with your 401(k)?

The primary tool you have is your monthly statement. Because there’s really no part of the 401(k) process where you have your hands on your money, your statement is your only chance to understand exactly what is going on with your 401(k) plan.

But if your statement doesn’t even make it of the envelope, it’s not going to do you much good. When you receive your statement each month, take a moment to open it up and look it over for warning signs. You will also want to compare it to your pay stubs, just to make sure that numbers match across the board.

10 warning signs

If something is going on with your 401(k), there are certain signs you can look for — clues that can help you keep an eye on your money. EBSA offers this list of 10 warning signs to help employees make sure that their 401(k) contributions are not being misused:

1. Your 401(k) or individual account statement is consistently late or comes at irregular intervals.
2. Your account balance does not appear to be accurate.
3. Your employer failed to transmit your contribution to the plan on a timely basis.
4. A significant drop in account balance that cannot be explained by normal market ups and downs.
5. 401(k) or individual account statement shows your contribution from your paycheck was not made.
6. Investments listed on your statement are not what you authorized.
7. Former employees are having trouble getting their benefits paid on time or in the correct amounts.
8. Unusual transactions, such as a loan to the employer, a corporate officer, or one of the plan trustees.
9. Frequent and unexplained changes in investment managers or consultants.
10. Your employer has recently experienced severe financial difficulty.

What if…

If you suspect that there is a problem with your 401(k) plan, it can be difficult to prove on your own. And because ending your 401(k) participation can have a major financial impact, most experts recommend continuing your contributions unless you are absolutely sure that something is wrong.

But if you do come to the conclusion that your 401(k) plan is being mismanaged, there are actions you can take. Contact your local EBSA office and they will begin an investigation. EBSA has had significant success with handling this sort of investigation; in 2007, the agency’s work resulted in more than $51 million in restitution and penalties.

You will need, at a minimum, copies of your 401(k) statements and your paycheck stubs, to bring a questionable 401(k) plan to EBSA’s attention.

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Is Something Wrong With Your 401(k)?

In general, one mantra works for both saving the environment and saving money: “Use less stuff.” There are some small steps you can take to implement that mantra in your life.

Energy Star Appliances

Energy Star appliances are government-rated appliances proven to be more energy efficient than other options. The initial price for many Energy Star appliances are a little higher than you might be used to, but in the long run, they’ll save you money by dropping your electricity bill.

It used to be that the Energy Star system only covered major appliances, like washers and dryers. The Energy Star site now lists a whole array of electronics, though, from lighting to televisions to battery charging systems.

Compact Fluorescent Light Bulbs

Want an easy fix for your electricity bill? Swap out your incandescent light bulbs for CFLs. For each bulb you change out, you’ll save at least $30 in electricity costs over the life of the bulb — and that’s taking into account the fact that CFLs have a slightly higher purchase price.

Public Transportation & Carpooling

Looking for ways to cut that gas bill? Depending on what part of the country you live in, you may be able to make use of public transportation. Even in some of the Midwest cities notorious for less-than-adequate municipal bus systems, you may be able to get a cheap ride to the mall or other city hubs.

For those trips that public transportation just won’t help with, consider carpooling. Rather than offering to meet up with your friends, see if someone will swing by and pick you up. Same goes if anyone needs to run the same errands you do.

Shop Locally

Minimizing the trips you take outside your neighborhood may limit your selection a bit, but even if your nearest grocery store is a little pricier than some of the others in town you can still save by not using so much gas.

There’s another facet to shopping locally that can bring the price down even more: if you buy locally grown produce and other food from farmers’ markets and similar local suppliers, you can often spend significantly less to buy your food. A farmer who operates just outside of the city limits doesn’t have to factor in the fuel costs that grocery stores who bring produce in from two states away must.

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Green: An Easy Way To Save Green