Here’s another technology gadget for your home. It’s price-per-use? Similar to a dish washer.
By Farnoosh Torabi | MainStreet.com
The FDIC has avoided depleting its funds, announcing the government will seize Washington Mutual and sell its assets to JP Morgan Chase (STOCK QUOTE: JPM) for around $2 billion. Thanks to the deal the FDIC says it won’t have to use its assets to bail out WaMu’s deposits.
What does this mean for you?
Fewer Branches. While no specific location announcements have been made, J.P. Morgan expects to shut down up to 10% of the combined banks’ branches across the country.
“Seamless” Transition. The FDIC’s main mission is to make sure banking services continue. Since the federal group managed to find another bank to relieve WaMu, your scheduled direct deposits will transfer as they did in the past. Your ATM card will still be valid and accepted at your usual ATM machine, says Tibby Ford, spokesperson for the FDIC.
Some Possible Changes. Keep abreast of any and all new rules announced by JP Morgan. As soon as a bank is acquired, the new ownership can announce new interest rates and fees on financial products, experts say. “Basically the minute the acquisition of deposits occurs, the acquirer can reestablish interest rates.” It’s up to us to keep aware. Technically, the new bank needs to inform its depositors through the mail, but that may take some time. “You have to be more proactive,” says Ford. Check on the bank’s Web site or call a bank representative to get caught up. She adds that during the transition, when available, the FDIC will post important bank service changes on its Web site. In addition, don’t get rid of any old bank paperwork that states your current balance and investments. If there are any discrepancies that pop up after the acquisition, you can defend your records. “Definitely keep track of everything,” says Tracy Mills of th Consumer Bankers Association. “That should be an automatic thing to do,”
Your Rights Are Protected. In some cases, changes installed by the acquiring bank may cost us money, but then there are protections in place in that event. For example, if the acquiring bank chooses to reduce the saving rates on certain products, our 12-month CD for example, we have the right to liquidate that CD early without a penalty, says Ford.
Related:
Five Personal Finance Moves to Make Today
Lehman Mess! Merrill’s Moves! What About My Cash?
Do you have enough FDIC Insurance? An IndyMac Lesson.
Like you, this week I’ve been trying to better understand the major events at Wall Street.
I’ve compiled a list of thoughtful resources that make the entire situation a lot easier for the average person to distill. Here are my favorites:
Video
Geezeo Expert Farnoosh Torabi and Jim Cramer discuss how this situation affects you as an individual. What should you be doing now to ensure a healthy financial future? Here are five steps.
Paul Solman explains how the mortgage crisis triggered a “domino effect” with other banking insitutions. This is easy to understand without pandering to the audience.
Radio
NPR’s piece “Our Confusing Economy, Explained” breaks it down for the average person. If you can understand how bookies work, you can grasp how this mess started…
Articles
Are you a family of four? “That will be $9,200, please.” MainStreet’s Lyneka Little does a great job of breaking down the amounts everyone will owe.
Cramer: Alternatives to Bank Bailout Are Worse What could happen if the bailout doesn’t take place…
Everything You Wanted to Know About the Credit Crisis But Were Afraid to Ask - Ben Stein presents an easy-to-understand overview of how we got into this mess.
Discussions
As you can imagine, the events of the last two weeks have been discussed across several Geezeo groups. Here are a few:
Economic help! Hot topics, user suggestions
Personal Financial Tips
Farnoosh Torabi gets opinions from people on Main Street about new research that shows ’sexist’ men earn more. Remember to ask Farnoosh your personal question in her Geezeo Expert Group.
Buying a house, be it your first or your tenth, is on a lot of minds these days. There’s no doubt, home prices are down. Home values in California fell 34% from last August. The median home price across the USA is down 9.5% from last year. However, interest rates are still at historical lows.
This begs the question: when do you buy? If you believe the price of housing will continue to fall, you may be tempted to continue to wait this out. But with mortgage interest rates hovering around 6% the era of cheap money to borrow may be ending.
Interest rates will continue to fluctuate; my crystal ball leads me to believe they will rise in the years to come. Housing prices may fall for some time still, but they will bottom out. So in 2008/2009, if you are in the market to buy property, you are faced with the dilemma of trying to time the “bottom” of the price market, or time the interest rates.
Throughout the 1970s and 1980s mortgage interest rates ranged between 8% - 16%. In 1981 alone interest rates fluctuated between 13.21% and 15.38%. Imagine making mortgage payments with those interest rates. For example, the median home price in the USA today is $203,100: for that size principal, the payment on a 30 year fixed mortgage at 15.38% interest would be ~$2,630.
Again, using the median home price of $203,100 and an assumed 20% down, at 6% interest a 30 year fixed mortgage payment would be $974.15. If rates increase a mild 2 points to 8%, the same payment increases $218.07 per month to $1,192.22. That’s $2,216.84 more per year.
If you double the price of the house to $406,200 and run the same equations, at 6% a monthly payment would be $1,948.30. At an 8% interest rate the payment jumps $436.14 per month to $2,384.44 - an additional $5,233.68 per year.
If you have saved a sufficient down payment - most lenders are looking for 20% these days - and are also emotionally ready to invest in property, now may be the perfect time. Instead of trying to time the bottom of the house price market, in the long run you may be better served by locking in a low interest rate.
-Michele Steinberg, FinanceGrrl
Related:
How to Pay Extra on Your Mortgage, Save Money
Jim Cramer’s Rules for Real Estate Investing
Renovate Your Home The Right Way
By Jeffrey Strain | MainStreet.com
You probably know less about the fundamentals of saving money than you assume.
Discussion of the fundamentals of the economy has come to the forefront because of the current economic crisis. While you may have little control over the economy as an individual, you hold a lot of power over the fundamentals of saving money.
The biggest failure is that most people assume saving money is about paying less for something than you expected. But it’s a long-term process of conscious decision-making based on basics.
Amazingly, many people don’t adhere to the most obvious fundamental: Make more money than you spend, or spend less than you make. Ultimately you need to live within your means. Beyond this, there are less-obvious rules:
Purchase value
When you buy anything, look at the purchase value rather than the purchase price. The cheapest item will rarely save you the most money in the long run. How long will the item last, how many uses can you get out of it, how well does it do the job?
Spend to save
Be willing to spend on items that save money over time. There is a long list of products that can save money depending on how you live your life. Some examples: a sewing machine, coffee maker, rechargeable batteries, home insulation. These all cost money, but they eventually pay for themselves.
Emergency fund
An emergency fund is the safety net that allows you to both purchase value and spend to save. Without an emergency fund, you live paycheck to paycheck, which forces you to purchase only what is cheapest and needed at that moment. You don’t have the monetary security to plan ahead and shop for what is best for your long-term savings when you are worried about having enough money to make it to the next paycheck.
Maintenance
The value of what you buy doesn’t stop as soon as you hand over the money for it. How long the item is useful often depends on how well you maintain it. If you buy a lawn mower and store it properly, it’s going to have a longer life than if you leave it among the elements. It’s like getting regular checkups at the dentist.
Retail price
The only reason you need to pay full retail price is because you didn’t have the time or make the effort to get a better deal. There are always discounts available and once you determine what you need, you should spend some time looking for them.
If you have a choice, you should buy used instead of new. While buying used might have been problematic in the past, that is no longer the case with the Internet at your fingers. Craigslist and eBay provide an online flea-market with anything you could ever need. Local stores like consignment shops, Goodwill, local flea markets and garage sales can also be places to find the things you need. Some stores specialize in used items such as sporting goods and designer clothes.
Using the same line of thinking, you shouldn’t buy things at all that you can get for free. Be willing to borrow, lend and trade. Use public services like the library. Be willing to list things you may need on sites like FreeCycle.org to get them at no cost.
What your time is worth
One of the most important fundamentals of saving money that people often forget is knowing what your own time is worth. A simple way to come up with a number is to divide your monthly take-home pay with the number of hours you work each month. You can then determine if the savings are worth the time and effort. If you’re only going to save a few dollars when it will take you several hours to do it yourself, then it’s not worth your time. Time is money, so understanding what your time is worth can help you make good money-saving decisions.
By embracing these fundamentals, you place yourself in a position where you can make great gains in savings. If you fail to understand that saving money is more than the price you pay at the store, you will find that you’re never saving the amount that you thought you would be.
Related:
The 10% Rule
Four Smart Ways to Invest Tiny Sums
10 Myths About Saving Money On Gasoline
“We want Givvy to become a great site used by millions of consumers to improve how they give to charity.”
Here’s a great idea for a financial site, this time with an emphasis on giving: Givvy.com. Like Geezeo, Givvy allows you to manage your finances and connect other like-minded individuals. Givvy is different in that it allows you to construct a “giving portfolio” comprised of several worthy organizations. Use it to set your personal giving targets. You can also share and promote your portfolio with your friends, spurring them into action, too.
John, why did you decide to give the world Givvy.com?
I found that my own giving was too ad hoc, resulting in a mismatch between what I care about and where my donations were actually going. It was frustrating so I started looking around for a tool to help me be more effective and didn’t find much. Hence Givvy!
How does Givvy.com facilitate charitable giving?
Givvy works similarly to Geezeo in that it is free to use and has a number of social opportunities. For example, Givvy allows users to create “giving goals”, “giving portfolios” and networks of similarly-minded friends.
What’s been the best discovery about response to the site so far?
People are responding well to the site, especially the planning tools. It’s very young so we are still learning how people are using the site and what we can improve. People are very passionate about giving, so we are getting a lot of feedback.
What are your long-range goals for Givvy?
We want Givvy to become a great site used by millions of consumers to improve how they give to charity. We want GivvyBase, our free charity database, to become a resource to any donor or person interested in nonprofits. We also are looking to shake up the workplace/employee giving market and will be delivering solutions very soon that can work for companies as small as 20 or as large as 20,000 employees.
What are your personal giving goals?
Like many people I’m still sorting that out. I care about children’s issues, especially homelessness and domestic abuse. That’s the parent in me. I’m hoping to discover more interesting organizations through Givvy and the activity on the site. Beyond that, I’m interested in environmental issues and continuing the fight to find cures to the most deadly cancers we face. There’s a history of cancer in my family and more needs to be done.
What would you say to someone who has never given an online financial contribution?
First, it’s safe. All of the donations on Givvy go through Network for Good, and they safely process millions of dollars in donations every year. Next, it’s private. You can choose to easily give anonymously on Givvy, avoiding the aggressive marketing and sales of your personal information by many charities. It’s a great way to give!
Thanks, John! Please check out Givvy.com and see how it can become part of your financial planning, too.
Related:
Imagine a World Where Shares are Shared…
The Freshman Fund - Give the Gift of College
Pro Wrestler Marlena to ‘Give Away’ Home
As the season changes into Fall, we always want to get out and experience the change! But sometimes our budgets can restrict what we are able to do and when. However, you don’t always have to strain your budget in order to get out and do things.
Here are some things that you might be able to do near you this Fall:
Apple Picking
I just did this last weekend and it was a lot of fun. Not only do you get to get out and enjoy the beautiful weather, but you also get to bring home some amazing apples. Often times if you go to an Orchard, you sometimes get a free hay ride out to where you pick the apples. If you have kids they will love this! Not only is picking the apples a lot of fun, but you can bring them home and make a variety of baked goods instead of buying them at the store – apple pie, apple crisp, apple sauce, etc.
Pumpkin Carving
This is great for any age! All you have to do is buy the pumpkin and then carve away any design/face you like. Pumpkins aren’t too expensive and you get to display them throughout your house with candles afterwards. Also, baking the pumpkin seeds can be a lot of fun and tasty as well.
Wine Festivals
Depending on if you live in an area where there may be a winery, you might be able to attend a wine festival and tasting. Fall is the greatest time of year for this because this is when the grape harvest begins. At these festivals there are often wine tastings, food, and other events going on such as great live music. Check on this MainStreet.com article for more information on some great wine festivals.
Fairs
Fall is the time for fairs throughout the country. Although fairs can get expensive with the food, rides, and games…there is also a lot to do once you purchase your ticket in the fair that is for free. Often times there are live concerts, horse shows, pig racing, craft fairs, and a variety of other interesting events to see. For kids there are usually petting zoos where $0.25 will buy you some food to feed them! You can also bring your own food into the fair and sit at the picnic tables that are provided to save some money (possibly bring lunch and purchase a candy or caramel apple for desert!).
Shopping
People love to shop, especially when the seasons change. The fall is time for sweaters and lightweight coats. Instead of heading to the department stores and spending all your money on a few things, make your way to the nearest outlet stores near you. These stores will allow you to get more for your money of the same brand names you love and want to have.
Fall Foliage
This is a really big thing in New England. People come from all over to drive up the coast and throughout New England just to see the leaves changing to brilliant colors of orange, yellow, and red. Although this may sound a little bit corny, it is so beautiful. If you can find a lake or stream the colors reflect off of it and it makes for some great pictures and a great place to picnic. Also, the weather is perfect to take a hike in the mountains in the fall. Not only will you get some great exercise, but the views with the leaves changing colors will be breathtaking.
Although some of these events will cost some money, many of them can be done outdoors. You will get to enjoy the great fall weather before the snow comes and it is too chilly to venture outdoors for long periods of time! You can also often check websites on a town/city near you and these will sometimes have a calendar of events per month. Just remember that not everything requires a lot of money and you should try to get yourself outdoors while the weather still permits it!
Photo: Robb E. Kiser
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Fall Fashions on a Budget
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At my job I am helping to implement a new system that will make expenses flow more smoothly. What we are realizing however is that any employee may get caught up in a random audit at any point in time. If this happens to you, whatever you do not have receipts for will come out of your pocket and you will not get reimbursed for.
There are also so many times in everyday life that I have found myself needing receipts. For a while I used to just throw all of my receipts away and just go with the flow, but I realized how much money that was costing me in the long run.
There are many reasons you should keep your receipts:
Tax Purposes
As I mentioned above, you won’t get your money back if you get caught up in a random audit at your company and don’t have the receipts to back up your spending. Although the chances of you getting caught up in a random audit might be small, if you have over a thousand dollars in expenses and no receipts…you could put yourself out of money that you didn’t have to spend. Also, the IRS is really putting their foot down with expense reports, so random audits are becoming more common.
Food and Gas Receipts
When I go out to dinner or get gas and pay with my credit card, I often find it hard to find a reason to keep my credit card receipt since there is nothing to return. However, I have started keeping my receipts to make sure that the charge that is put on my card actually reflects how much I owed. You don’t want to realize after you have thrown your receipt away that your waiter or waitress gave themselves a bigger tip than what you left them.
Returns/Exchanges
When I used to work in retail, we would not give anyone cash back or put it back on their credit card without the receipt (as is common for many retail stores). Another setback is that if you didn’t have your receipt, even if the product was not on sale, we could only give you back the price that rang up on our registers. This means that you could lose a large portion of what you paid for the purchase (the same goes for exchanges). Without a receipt you also get store credit for purchases, although some people do not mind this if they like the store enough.
Last month I also found keeping my receipts helpful when I had to return a pair of sneakers that had already been worn. I had kept all my receipts from Christmas purchases that had been made and after one of the sneakers I had bought from Nike had gotten a hole in the bottom, I took it back with the receipt and they fully refunded me all of my money…it was great considering they were $120 sneakers!!
It is better to find yourself with too many receipts that you will never need again, than to figure out that you needed a receipt that you threw away last week and now cannot do anything about it.
I find it easy just to keep a letter envelope and put my receipts in it every time I get them. The reason I choose not to keep all of my receipts in my wallet is because I don’t like my wallet getting huge. After a while if I am sick of having all my receipts in there I will just end up throwing them away on impulse (thinking I no longer need them). However, by keeping them in an envelope I don’t even remember I have them all until I take the envelope out again. I typically keep receipts from 6-8 months just to be safe or in case anything comes up.
Once you get into the habit of keeping your receipts it really isn’t a big deal. I know that many people don’t like to keep clutter, but it will really benefit you in the long run or in case an emergency comes up. Check out this Geezeo article for another way to organize your receipts without the hassle of clutter!
Photo: Jane M. Sawyer
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The main engine of your personal finances: your job. Do you love it? Here’s how one woman found a job that combined her interest in animal behavior and public performance.
