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Don’t Screw Future-You

Finance, Life

A conversation between me and my temporally displaced self.

Future Me: Excuse me, Jason?

Me: Yes?

FMe: <Slap!>

Me: May I ask what that was for?

FMe: Of course.

Me: What was that for, jerk?

FMe: That was payback for all of the hell you have put me through.

Me: What?!? I’ve never even met you, before.

FMe: Of course you have. I am future-you, and I’m sick of getting screwed by past-me, that is, you.

Me: Huh?

FMe: Listen close. You’re not the sharpest brick in the box and I don’t want to explain this twice.

Me: ???

FMe: A long time ago, when you first met our wife, you were dumb.

Me: I don’t appreciate….

FMe: Shut up. I was dumb then, too. Remember? You…err…we bought a new truck, built an addition on our…err…your…err…whomever’s house, got married in the same year. On top of many other expensive decisions. Do your recall?

Me: Yes, I do. So what?

FMe: If that wasn’t enough, you and your smoking-hot bride are still shopping like you’re rich. You drive a new car. Your kids wear new clothes. You’ve got a house full of new furniture. How did you pay for all of that?

Me: Naturally, I charged it. Zero payments, zero interest for a year! Pretty smart, huh?

FMe: What happens in a year?

Me: I don’t know. I’ve got a full year to figure that out.

FMe: <Slap!> I’ll tell you what happens! Future-you, that’s me, gets screwed! Your raise didn’t come through. You had a baby. The truck broke down. Your wife took maternity leave. A roommate moved out. You took a loss in the stock market. You didn’t plan! You had no savings to cover any of those problems because you were too busy servicing debt to pay for your current life.

Me: How was I to know?

FMe: <Slap!> Life happens! You never know what is coming next. You need to plan and save for what might happen. Otherwise, you’ll just accumulate more debt to be serviced by yours-truly. That is not acceptable.

Me: So? What are you going to do about it?

FMe: <Slap!>

Me: Really? Again?

FMe: <Slap!> I’m struggling to pay your debt. Your son starts college next year, but you’ve left me completely unable to help. Your daughter wants to get married in a couple of years, but the Father-of-the-Bride can’t afford a tux. My wife, your beatiful bride, wants a vacation that I can’t afford. You’ve screwed me, dude.

Me: I’m sorry. What can I do to fix it?

FMe: Buy me dinner, first.

Me: Huh?!?!?

FMe: Stop the excess spending. Spend less than you make, for a change. No credit.

Me: None?

FMe: None. Nada. Zip. Zilch. Only spend what you can afford. Budget. Pay off those nasty bills. Don’t leave me hanging.

Me: So, what you’re saying is that, if I don’t have the money, I shouldn’t buy it?

FMe: Exactly. That’s the path to wealth, freedom, and financial independence. Live in the real world.

Me: Gee, thanks, Future-Me! Now I know.

FMe: And knowing is half the battle.

What would your future-you have to say to you?

I Smell a Scam

Finance

I hate scammers. Whether it’s the garage-sale shoplifter, telemarketing “charities” with 99% overhead, 3-card-monte

shell game (Photo credit: mixatal (Clive Power))

dealers, or the guy who begs Grandma for cash every week, they all need to be strung up. Since vigilante justice is generally illegal and occasionally immoral, it’s best to just avoid the problems from the start. Here are some scams to watch out for.

Pyramid Scams – All of the little parties people throw to earn free items at the expense of their friends are pyramid schemes. Most of those are legitimate money-sinks. A few, however, exist solely to get their “consultants” to bring in more consultants. The sales aren’t the actual way to make money. If you don’t have anyone “downstream” you won’t make any money. If the focus isn’t on selling an actual product or service, but is instead on bringing in people under you, you have entered the world of pyramid scams. Generally illegal and always immoral. Don’t sign up and, if you do, don’t ask me to participate.

Advance Fees and Expensive Prizes – If you win a contest and you are expected to send money to claim your prize, it is a scam. You don’t have to pay sales tax in advance. You don’t have to pay transfer fees. Real prizes are delivered free, accompanied by a 1099, because prizes are income. No prize requires pre-payment. No loan service requires “finder’s fees”. If it doesn’t sound right, don’t pay it and certainly don’t give your bank information to anyone you can’t verify.

Work at Home – The most common work-at-home job I’ve found is stuffing envelopes. You see the signs on telephone poles all over the city. “Make $10/hour stuffing envelopes from the comfort of your own home! Just send $50 to….” When you get the instructions, you are told to hand up signs telling people to send you $50 for instructions on how to make $10/hour stuffing envelopes. Everybody is feeding off of everybody else.

Charity – Never give money to a charity over the phone. Always take the time to verify where you are sending your money. Some freak may call to tug on your heartstrings with a sob story, but you don’t have to give them money. At least ask them to send it in writing so you can do some checking, first.

Phishing – Simply put, don’t click on any link in any email, unless you know where it is going. If it is a link to a financial institution, go enter the address into the address bar yourself. If you find yourself on a site you don’t recognize, don’t give them your personal information and don’t ever reuse your usernames and passwords. If you do, one bad site could get access to everything you do online.

[ad name=”inlineleft”]Foreign Lottery – To be clear, Spain did not just hold a international lottery and randomly draw your email address. No lottery in the world works that way. If you didn’t enter the lottery while you were in Spain, you aren’t going to win it. The scam is that you need to provide your bank information, including a number of release forms so the scammers can transfer money to you. In reality, you are signing over control of your account and will be wiped out.

Nigerian/419 Emails – Ex-Prince WhateverHisNameIs wants your help to get his fortune out of WhereverHeIsFrom. The New Widow Ima F. Raud has an inheritence that she won’t live long enough to spend. They’ve both been given your name as a trustworthy person to handle the transactions in exchange for a mere $10 million. What friends do you have that would make this seem legitimate? Once again, they will get your bank information and take your money. At a minimum, they will try to get you to pay a few thousand dollars for “Transfer fees”. Don’t do it.

Overpayment by Wire – I had this one attempted on my last week. You sell something online. A potential buyer agrees to purchase the item, sight-unseen. They’ll send a cashier’s check and, after it clears, one of their agents will pick it up. Unfortunately, the buyer’s secretary screwed up and added a zero to the check. Would you mind wiring the overpayment back, minus a small fee for the hassle? The check is bogus and there is no way to verify it. You’ll deposit the check and it will be assumed to be real. The bank will make the funds available well before it comes back as fraud. You’ll see the available funds and send the money by non-refundable Western Union and some thug in Nigeria gets a new iPhone.

Foreclosure Scams – Some scammers try to prey on the vulnerable because they are, well, vulnerable. If you are facing foreclosure, be very careful about where you turn for help. One scam is to get you to sign over your home “temporarily” to clear the title. That doesn’t work, but you won’t find that out until you are handed an eviction notice and told you still owe the money.

Stranded Friends – You get an email from a friend saying he’s in London/Moscow/Sydney/Wherever, and he’s been mugged. He’s got nothing and needs $2500 to get home. Can you help? Do you really have friends close enough to ask for a $2500 international bailout, but not so close they tell you about the vacation ahead of time? Would they really be too timid to call you collect instead of begging for change to use an internet cafe?

ING Direct – 2 Day Sale

Finance, Reviews

Today and tomorrow, ING Direct is having a “Financial Independence Days Sale”.

It’s a good sale. If you open a checking account or Sharebuilder account and you’ll get $76. Apply for a mortgage and you’ll get $776 off of the closing costs.

I have accounts at 4 different banks. Two of those were opened for specific debt-reduction purposes. Of the others, one is used for most of my cash flow and bill payments, and the other is ING. As of this moment, I have 15 accounts or sub-accounts with ING Direct.

Opening an account is painless and only takes a few minutes. They are currently offering up to 1.25% in an interest-bearing checking account, though I’ve never qualified for more than .25%. That account comes with overdraft protection, so you are charged interest instead of overdraft fees.

Once you have your first account set up, sub-accounts can be created in literally seconds. Why would you want a bunch of sub-accounts? I have a number of saving goals. Each of these goals has its own account at ING. I can tell at a glance how much we have saved for our vacation next month and far away we are from affording my son’s braces. My kids each have an account here because, currently, the interest rate is at 1.1%, which is miles ahead of most traditional banks. Combined with the convenience of total online control, there’s no contest.

Money transfers are smooth. I use one of my accounts as a transfer account to get money to and from two separate banks.

I also have a Sharebuilder account. For those who aren’t familiar with it, it is a stock brokerage with low fees and a low barrier to entry. If you set up an automatic investment, you get $4 stock trades with no minimum. I’m not aware of any place cheaper.

That all sounds like a lot of ad copy and the links are affiliate links, but the truth is, I am just that happy with ING. I’ve never had an accounting error, or any problems at all.

The downside? Paper checks are verboten. They will not accept paper checks, but you do have a check card to use. You can hit 35,000 ATMS for free withdrawals, but any deposits are held for a few days before you have access to the funds. It can also take 3-4 days to transfer money from ING to another bank. I keep enough in the accounts that I’m always spending or transferring older deposits while I wait for the new ones to clear.

Even if you don’t like the bank, get a checking account, use it a few times and get $76 for very little trouble. Open a Sharebuilder account, buy some stock and collect $76 for it. Without an automatic payment, it will cost you less than $20 to buy, then sell the stock, netting you $56.

Who doesn’t like free money?

Selling on Craigslist

Finance

The vast majority of personal finance websites(including this one) focus on reducing your bottom line–cutting costs. The other end of the budget is at least as important. Have you tried raising your top line lately? Have you picked up a side hustle, sold an article, put ads on a website, or even sold some of your stuff? After we had our garage sale a few weeks ago, we were left with some furniture that was too nice to donate or discard, so we decided to sell it on Craigslist.

The key to selling your stuff on Craigslist is taking pictures. They don’t have to be good pictures, just something to let your customers know what they are getting. Take pictures, post the measurements and, if it’s electronic, the model number. Beyond that, a simple description will suffice.

Be safe when you are posting the listing. Don’t give your address and don’t post when you will be home. That’s just a job offer for burglars. When you talk to a potential buyer, never tell them there is nobody home. Tell them your roommate is the only one home and he doesn’t want to deal with the sale. Don’t give strangers on the internet an opportunity to rob you.

When you are meeting a buyer, pick a public place away from home, if at all possible. If you are selling furniture, it may not be possible, but it is for smaller items. Meeting in a busy gas station parking lot or even in front of the police department is a good way to stay safe. Secondary crime scenes are nasty things and inviting the wrong stranger in is offering one ready-made.

[ad name=”inlineleft”]Bring a friend. Preferably, an intimidating friend. Crime is less likely to happen if there is more than one person there. Bring a friend to a public place to meet the buyer to maximize your safety.

Don’t get ripped off. Craigslist scams abound. Bad checks, forged checks, and shipping scams are just some of the problems.

Only accept cash. It’s hard to forge a greenback.

One of the most common scams, after a bounced check, is the cashier’s check scam. You’ll get an email saying the item is great and payment is on the way. When the check clears, a relative of the buyer will come to pick up the item. Then, oops, their secretary made the check out for $3000, instead of $300. Would you mind sending the overpayment back by Western Union, minus $100 for your troubles? First sign of trouble: over-complicating a simple transaction. Second sign: not using cash. The cashier’s check will be forged. There is no way to verify funds on a cashier’s check, and the bank will post it as available well before it comes back bad. You will be able to spend the money, only to have the money disappear later. That means you can’t wait to see if the check clears before wiring back the overpayment. There is no way to recover your money.

If you get a response that includes a link, do not click it! Ever. No matter what the link looks like. Ever. No clickyclicky. It may be an innocuous link to your ad, but the link can be masked. Any other link is almost definitely a link to a virus-ridden website. Repeat after me: No clickyclicky.

If you get an email about Craigslist transaction protection or escrow, you are being scammed. Run away.

Craigslist can be great way to turn your junk into cash, but only if you actually get the cash. Keep yourself safe and scam-free.

Cutting Healthcare Costs

Finance

It’s not a secret that health care can be expensive. Many people pay two and three digit bills for their prescriptions. A visit to the doctor’s office can hurt the budget. Glasses cost hundreds of dollars? How can you cut this cost?

Drugs

If possible, go generic*. There is no difference between Trazorel and trazadone, aside from the cost. Wal-mart, Target, and many other stores offer common generic prescriptions for $4-5. When you are talking to your doctor, ask if there is an drug option that has an available generic. When you are talking to your pharmacist, ask if there is a generic alternative available.

Get the price match. The Cub Foods pharmacy near me matches the Target generic drug price, giving us $4 generics for the asking. This is often an unpublicized deal, so make sure you ask. If your pharmacy will not match nearby prices, consider going elsewhere.

See if there is a 90 day plan. Many insurance companies sponsor a 90 day prescription plan that gives you a 90 supply of drugs for the 60 costs as long as you are willing to accept the drugs by mail. For expensive prescriptions, this 33% discount can be a substantial savings.

Physician

Does your clinic offer online consultations with your doctor or nurses? Some clinics offer a chat or email option to talk to your doctor without requiring a visit that will add fees and copays to your expense sheet. Most clinics and hospitals have a free nurse line for basic questions, like “When is my baby‘s fever dangerous?” It’s a great chance to save some money. I know, from personal experience, that they won’t be shy if they feel you need to come in, but they generally won’t try to convince you to come in if aspirin will fix the problem.

Stay in-network. Check with your insurance company to make sure the doctor you want to see if in your network and therefore, available at the cheapest out-of-pocket price. If not, and you really want that doctor, ask your insurance company if they accept nominations for the network and ask your doctor if he’d be interested in being nominated.

Stay home for your cold. Don’t go to the doctor for every minor problem. The best remedy a doctor can give your for your cold will reduce it to a seven day malady. On the other hand, if you do nothing, it will go away in about a week. Why waste the money? This counts double for the emergency room and urgent care. Strep throat is not an emergency. Wait until morning and go to the clinic, paying the lower fees instead of the large ER costs. Make an appointment for a doctor visit, if possible. Urgent care is billed the same as a regular visit, but most insurance plans double or triple the copay for urgent care visits.

Cash Flow

A Health Savings Account(HSA) is a pre-tax account to save for qualifying medical expenses similar to a Flexible Savings Account(FSA). The main differences are that HSAs are only available for people with high-deductible insurance plans and do not have to be spent on medical expenses. Non-qualifying expenses move from pre-tax to post-tax, meaning you will be charged federal income tax for non-qualifying withdrawals. FSAs are “use it or lose it” plans. If you don’t use it, it will go away, usually at the end of the year. That makes December a great time to stock up on over-the-counter medicines and possibly replace your eyeglasses, as both of those are qualifying expenses. Find out if you have either option available. If you use either one, set aside a place to store every imaginable medical receipt, so you can be reimbursed. Make sure you understand the FSA-eligible expenses.

An Ounce of Prevention

Get routine checkups. The earlier you find a problem, the more options you have. This goes for everything from cancer screenings to blood tests. Get a physical every year and know what is happening with your body. We may be living in the future, but replacement parts are still hard to come by.

Maintain Your Health

It’s cheaper to be healthy. Eat right, exercise, quit smoking.

I enjoy a good meal. It’s one of my favorite things. I won’t cut rich foods out of my diet, so we reduced portions. Beyond the first few bites, the flavor isn’t nearly as enjoyable or even noticeable. There’s no more enjoyment for huge servings than small ones.

Get more exercise, even if it’s just a 2o minute walks twice a week parking on the far side of the parking lot, or taking the stairs instead of the elevator.

Vision

Go online. This one is worth a write-up all by itself. I have 6 pairs of prescription glasses–all varieties of frames and coatings–that have cost a grand total of about $150. There is no noticeable difference between my cheapies and the designer alternatives. While I work on the write-up, the best site to introduce you to the concept of online glasses is GlassyEyes. Reviews, coupons, and discount likes. They have step-by-step instructions on turning an intimidating idea into a simple and cheap solution to an expensive problem.

How do you save money on health care?

* There are no generics available on new drugs until the initial patent expires. This gives the pharmaceutical companies a change to recoup their research and development costs. Without this patent period, new private drug research would evaporate. Don’t hate the brand names, but don’t show undue loyalty.

Things to teach your kids about money

Finance, Parenting

cute kid (Explore) — Image by Swami Stream via Flickr

As parents, it is our job to teach our kids about a lot of things: driving, reading, manners, sex, ethics, and much, much more. How many of us spend the time and effort to teach our kids about money? A basic financial education would make money in early(and even late) adulthood easier to deal with. Unfortunately, money is considered taboo, even among the people we are closest to.

It’s time to shatter the taboo, at least at home. Our kids need a financial education at least as much as they need a sex education, and—properly done—both educations take place at home.

How do you know what to teach? One method is to look back at all of the things you’ve struggled with and make sure your kids know more than you did. If that won’t work, you can use this list.

Balance a checkbook. This is the most basic of financial skills. The easiest way to teach this is to help him open a checking account and demand he keeps the register current and reconciled. Make him use a paper register. Quicken or an alternative may handle the work, but your kid will never learn the underlying principles if he doesn’t have to sit down with a pen and calculator to do the work. The cheat can come later, when he is capable of handling the task himself. It’s the same reason schools don’t let kids use calculators until the basics are thoroughly mastered.
Calculate paid interest. Understanding how much something costs after accounting for interest should be enough to scare anyone away from credit cards. I believe that the reason it doesn’t is because most people don’t understand how to figure out what interest is costing them. In case you don’t know yourself, the math is simple: balance X interest rate(as a decimal) / 12. That will show you how much you are paying each month for the privilege of borrowing money.
Use your money to make money, not to pay interest. The flip side of interest is earned interest. It’s always best to let your money work for you, building your wealth than to struggle to finance a bank’s payroll liabilities.
Save 25%. My son is required to put a quarter of everything he earns in his bank account. He gets $20 for shoveling the neighbor’s driveway, so $5 goes in the bank. The money he gets for gifts is handled the same way. Everything he gets, whether it be from a gift, his allowance, or work he does—gets divided the same way. If I can establish that habit for him, and impress upon him the value of saving 25% enough that he continues into adulthood, he will never have money problems.
Always contribute to retirement. At every opportunity, from every paycheck, make a contribution to retirement. At a minimum, a 401k contribution should be made at a level that takes full advantage of any company match. If there is no match, even $25 per paycheck will add up over time. Teach them to work towards the 401k contribution limits.
Spend less than you earn. This is the shining, glorious foundational principle of successful finances. Not just individuals, but businesses and even governments should learn this lesson. If–at all times–you are spending less than you earn, you will have more options to handle the remaining bits. If you live on the wrong side of this equation, you will never be able to get ahead, no matter how hard you work.

Those are the lessons that I am working to instill in my children, a little at a time. Am I missing any?

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