Life Insurance is a Priority (Carole)

You probably hate it when a salesman calls to sell you a life insurance policy, but in reality it is some of the most important money you will ever spend.  Part of any healthy financial plan includes sufficient life insurance.

Here are the basics:

1.  Buy Term life insurance.  It's the least expensive for the best coverage --  it costs a small fraction of a Whole Life insurance plan (which also contains a lousy investment vehicle).
2.  Each wage earner should be insured for ten times what they earn in a year.
3.  If you are a stay-at-home mom (or dad) you should probably have about $500,000 in life insurance on yourself.  It costs a lot to raise children to adulthood if the primary care-giver is no longer around.  If your children are nearing adulthood, you could lower this amount a bit.  But I wouldn't.  How nice to have significant money to help your young adult children with college expenses and weddings.
4.  Buy a rider on your policy for each of your children.  I would recommend at least $10,000 each.  Our youngest son passed away from cancer when he was three.  The $5,000 policy we had on him didn't come close to covering his funeral costs -- and that was 10 years ago.  We never thought it would happen to us either.

It's difficult to even think about anyone in your immediate family dying.  But this is an uncertain world we live in and it is better to be well-prepared, just in case the unthinkable happens.  I'm 48 (today, in fact) and  already I've known dozens of friends and family members who have lost a spouse or child -- or both.  It happens every day.  You have absolutely no guarantee it won't happen to you.

Certainly a life insurance check for $500,000 or $1,000,000 (tax free, I might add) will not replace a loved one who has died, but it would certainly make your family's financial future much easier to manage.  Believe me, you'll have enough to deal with if a family member dies.  What a blessing it would be to pay off your house and invest the rest to live off of for the rest of your life.

This is a priority, and term life insurance is pretty inexpensive when you consider the incredible safety-net it provides for your loved ones.

Teaching Your Children About Finances (Merrick)

I've been thinking a lot lately about how I, as a mother, will teach my children about finances. Obviously with only one child who is four months old this might seem a little soon to be thinking about this, but I don't want to be one of those parents whose child is suddenly eighteen and I have yet to give the topic much thought. By then I feel like it is much too late.

I found this great article on Penniless Parenting that talks about this, so today I thought I'd share:

Teaching Children Good Money Habits

Enjoy, and Happy Friday!

Price Matching (Janssen)

Every week my mailbox is full of fliers from the various grocery stores and drugstores in my area, each proclaiming multiple items on huge sale (these are loss leaders, intended to lure you into the store where, hopefully, you will then buy a lot of non-sale items).

You could spend a lot of time driving around to each different store or you can ask one store to price match. If your store does price match, you can simply show them the mailer or ad and they'll give you the same product for the sale price.

All your shopping, with the best sales, in one store. Hard to argue with that.

Wal-Mart is particularly well known for price matching. I must admit that I cannot deal with shopping at Wal-Mart (invariably, I end up wishing to tear out my hair when there is only a single cashier for an entire Super Wal-Mart or I cannot find the products I want or the parking is horrendous), but it almost certainly would be the very cheapest way for me to do my grocery shopping as they would price match the sales from all three of the other local grocery stores in my area.

Other big chains that price match include Target, Staples, Best Buy, Toys R Us, Circuit City, Lowe's, Sears, and Office Max. It's particularly handy if specials are going on at stores that are not particularly close to you - you can save yourself money AND gas.  

And this isn't just for groceries or school supplies. When we bought our mattress a few weeks ago, the store price matched a mattress from a competitor, which brought the price down $150. Not to mention free delivery. 

Oh, I love price matching.

When Negotiating, Make Them Say "No" (Carole)

Some of the most money savvy people I know, live by this phrase,

"Make them say 'No'." 

It means that when you are trying to buy an item or service (car, house, household repair, renovations, something at a garage sale) where there is negotiation involved, you should always bid low, low, low.  The object is to get the other person to say "No."  Because if the sales person says "Yes" to your bid, you COULD have bid lower.

Your goal is to figure out the lowest possible price.

I have a relative who uses this tactic on just about every purchase he makes.  He offers about 75% of the asking price.  He's pretty sure this bid will be safely below the "No Line."  For example, if a car is listed at $15,000 then he offers about $11,000.

Sure enough -- "No!"  (Bidding lower than 75% can often be offensive, but if you have a thick skin and can handle a cool, steely glare, give it a try!)

Now he has a bottom price to work from and he can negotiate up from there.  He almost always gets a killer deal this way.  

There are many strategies that can be used when negotiating on a item, but these three simple rules seem to work in almost every case -- even for those of us who don't enjoy confrontation.

1.  Make them say "no," then work to a price you can both be happy with
2.  Remain pleasant
3.  Be willing to not buy this item.

Please share your negotiation success stories!  What has worked for you?

Evites (Merrick)

I recently received an email invitation for a friend's bridal shower. A few weeks before this, I received an email baby announcement from my cousin. And a few months previous to that, I had two baby showers where the invitations were sent via email.

Although the email wedding announcement that I recently received seemed to be a little strange, I see nothing wrong with using email for bridal and baby showers, baby announcements, birthday cards, or party invitations. In fact, I think it's genius.

For my baby shower, we designed our own invitation and reminder in Photoshop, then inserted the image in an email. We sent out the invitation a week before the shower, and the reminder the day before the shower, and people could directly RSVP by replying to the email. So simple!

However, if you don't have Photoshop, or don't want to design your own invitation, there are lots of good websites that let you make and send your evites for free, including evite.com, Purpletrail.com, Mypunchbowl.com, and Pingg.com. These do the work for you, sending out all the invitations, sending a reminder, and allowing the guests to RSVP and see other guests who have RSVP'd.

Email is such a good communication resource, and best of all, it's free! So next time your gearing up to buy invitations, envelopes, and several rolls of stamps, think about sending an evite.

Asking (Janssen)

My dad has a phrase he uses a lot: "The worst they can say is 'no.'"

I've thought about this a lot as I was preparing for my move and taking care of various logistics.When I'd think of a way I could save some money, but wasn't an absolute sure thing, I'd recite to myself, "The worst they can say is 'no,'" and I'd pick up the phone.

Two experiences reinforced the wisdom of remembering that the worst thing you can get is a denial of your request:

1. My husband and I had joined BJ's a few months earlier, but this store doesn't exist in Texas which meant we would lose out on a full year of our membership (because the store had just opened, we got a bonus two months for joining). I called up BJs and asked if I could get a partial refund. What do you know? They said yes. And since we'd only used the bonus two months, I actually got the ENTIRE membership fee refunded. That was a happy moment.
2. I had spent the last several months stocking up on diapers, buying a package or two here and there whenever there was a really good deal. When my mom and I started getting things packed up (and by "my mom and I" I really mean "my mom" because I mostly laid on the bed or the couch), we discovered I had seventeen packages of diapers, not to mention at least a half dozen packages of wipes. They would have taken up an enormous amount of space in the car and shipping them would have negated the good prices I got for them. So I called up CVS Pharmacy and asked if I could return them for store credit and then rebuy them once I got to Texas. The manager said that was fine, I took my embarrassingly large cart of diapers to the checkout counter, and walked away with a gift card that fit easily in my wallet - much better than seventeen packs of diapers would have. You can bet I'm a CVS fan for life.

I happen to know that I'm not the only child in my family who has learned this lesson - Merrick just bought a high chair for her baby and asked the store to take 10% off because the box was quite damaged. Guess what? They said yes.

Automate Your Savings (Carole)

You've probably heard the oft-repeated phrase, "Pay Yourself First."  These just might be the most important words in the English language when it comes to your financial health.  If it's all you can do to pay the mortgage, utilities, groceries, car payment and insurance and you are not putting money aside in some kind of savings vehicle on a very regular basis, then you will never get ahead financially.

The only way to long term financial stability is to put money away somewhere for the future.  You can call this savings account whatever you want:  Emergency Fund, Rainy Day Money, Retirement. . .  Guaranteed the day will come when you will be glad it's there waiting.

If a personal savings plan (in addition to a 401k or IRA) is not part of your current budget and seems absolutely impossible, take heart.  Everyone feels this way!  It almost doesn't matter how much money you earn, you can easily spend it all.  We've all learned that if you make more money, then your bills automatically go up by at least that same amount.  I think it's one of Murphy's Laws.

To stem this tide, you need to set your personal savings plan like any other BILL THAT MUST BE PAID.  Pay yourself -- every month, or every paycheck.  My husband often tells of our first experience with this.  We decided (after being married for many years) to have $100 electronically removed from our checking account every month and put into a money market account.  We both almost hyperventilated after setting it up!  Could we really afford this???  Would we have to transfer it right back within seconds of having it taken out?  Maybe you feel those same fears.

But guess what?  The $100 came out the next month and we still paid all of our bills.  Whew.  And it happened again the next month and the next month.  It was magical.  And easy.  Unbelievably, we didn't really miss it.  Most budgets (even tight ones) have more wiggle room than you think.

After a few months, we sucked in our breath again and increased the amount to $200.  Same thing.  We didn't miss it.  But we did love watching that money market account grow bit by bit each month.  That gave us some serious endorphins to keep going.

After a year, we decided to really ramp things up and increased our auto-withdrawal amount to $1000!  Surely this would kill us.  But it didn't.  We survived and paid all our bills.

Start small.  But start.  I'm not saying you need to do the same amounts we did, but try something.  Call your bank or get online and set yourself up for an automatic withdrawal to some kind of safe savings vehicle (CD, money market, savings account. . .) and watch your stress level go down as your personal savings goes up.

This is what's called "Getting Ahead."

Cooking With a Crock Pot (Merrick)

I ran across an article on Brokelyn.com last week. It was about cooking cheaply with a crock pot -- you can find the full article here.

Basically the article just talks about this guy that started using his crock pot to make one big meal that would last him a week. His crock pot creations started out pretty bad, but he soon discovered quite a few great recipes that he could make very inexpensively and that would last all week. His food savings were huge because he was only making one meal a week, but also his time savings were pretty big. And as we all know, time is money.

This got me thinking about cooking using the crock pot. I love the idea of spending $15 a week on food -- we certainly spend more than that -- but I don't love the idea of eating the same thing every day for lunch and dinner for seven days straight. So I'd like to think of this in the sense that time is money, so we're saving money by saving time. If you've ever cooked with a crock pot, you know how easy it is. It's my favorite Sunday meal because I can throw everything in before we leave for church, and then come home to a delicious smelling house and have dinner on the table in less than ten minutes. But really this is pretty much the extent of my crock pot use.

Then, a few months ago, I ran across a recipe that was for dessert made in the crock pot, and this opened up an entire new world of adventurous cooking. I realized I could use this great tool to make more than just a Sunday dinner roast. I could make soup, pasta dishes, rice dishes, fondue, caramel dip, cake, and a million other categories of food. Oh, the things I've been missing out on, like all these amazing sounding desserts! Who knew you could use a crock pot to make all of those? Think of all the time you could save by making a four course meal all in the crock pot (that is, if you had four crock pots...).

So, are you crock pot users? Are you adventurous and make a wide variety of food in the crock pot? Or, like me, do you mostly just use it for roasts? Do tell...and share your recipes if you're so inclined.

Small Savings: Printer Ink Revisited (Janssen)

I don't know what it is about me that makes the cost of printing from home so distasteful to me, but for some reason it is one of the things I most dislike spending money on.

The other thing is that you're not supposed to throw your ink cartridges away because it's bad for the environment, so not only do I get to be bothered about spending MONEY to get new ink, I have to feel guilty about what to DO with that stupid empty cartridge.

At a job I had a few years ago, the supply room was filled with used cartridges (probably a dozen or more) that no one knew what to do with, and I finally discovered that you could print of free shipping labels from HP and send them in to be recycled. I felt happy about that.

Until I realized I could actually be coming out slightly ahead, rather than just breaking even with my empty printer cartridges.

Thanks to some hasty Googling at work a few months ago, I discovered that Staples (the office supply store) has an ink recycling program where not only do they take your ink cartridges off your hands, but they give you $2 in rewards back for each one you turn in (up to 10 per month).

You also get either a percentage (usually 10-20%) or a dollar amount of new ink cartridge purchases back in reward dollars, which means the overall amount you're paying for your cartridges drops a lot.

And then you get to spend free money at an office supply store which, nerdily, is my idea of heaven on earth.

Substitutes (Merrick)

I think I would consider myself an adventurous cook. I'm not one of those people that tries a new recipe every night, but I do like to experiment every once in a while. Many times, these recipes call for ingredients that I don't typically use, and then, unfortunately, don't use again. For example, I tried some new recipe recently that called for cake flour. I bought a small-ish box, use a cup or two for the recipe, and since that time that box has sat in my pantry, untouched. Bad news.

Well if I'd been smart, I would have searched online for cake flour substitutes, because I would have found out that I could use all-purpose flour and cornstarch instead.

Although I don't spend a lot of money on ingredients that I'll never use again, I do spend some occasionally and looking back I feel like it's wasted money. Especially if there is a perfectly good substitute.

I have several cookbooks that have a page or two in the back dedicated to ingredient substitutions. I'm sure you do too. So next time you have a recipe that calls for some unusual recipe, don't waste your money; use a substitute.

Eating On a Dollar A Day (Carole & Janssen)

I'm out in Boston with Janssen and her sweet new baby.  Plus her little family is days away from a move across the country.  We're a bit busy, to say the least!  So, rather than writing a post today, we're sharing a very interesting Time Magazine article, and the accompanying  blog, about 2 people who are feeding themselves on $1 per day.  Maybe a bit extreme, but it will get you thinking about your own food budget in a whole new way!

You'll quickly notice that they eat vegan.  

Time Magazine Article
http://www.dollaradaybook.com/blog 


Hope you're having a happy, happy day!!

Setting Financial Goals (Carole)

Anyone who knows anything about my husband knows that he is a goal setter.  I'm not sure how old he was when he set his first goal, but by the time I met him when he was 23, it was deeply entrenched in his soul.  In fact, when we were on our honeymoon back in the summer of 1983, he insisted that we take the time to write down our life goals.  These goals dealt with education, career, lifestyle, finances, travel, life experiences and habits to name a few.  We still have the original papers we wrote these down on in our Goals Binder that is kept at his desk at home.  We bring these sheets back out at least once a year and review how we're doing.  I'm frankly flabbergasted at how many of these goals we have achieved over the past 27 years!  We continue to set goals every year (both as a couple and individually), but we especially enjoy looking back at those original goals.  A few of them didn't turn out to be realistic or even relevant, but many of them were right on track.

You'll not be surprised that paying off our student loans in five years, paying off our house early and a set $ amount saved for our retirement years were a major portion of what we talked about that day.  In 1983, David was just about to begin his 2nd year of dental school and we were right in the middle of the whole student loan thing.  The idea of even buying a house was still years in the future and retirement seemed light years away.  But even so, we tried to make our best guess for
1.  How many years until we would be able to buy a house?
2.  What would a dental practice cost?
3.  How many years would it take to pay off our student loans?
4.  How much money will we need to retire in 2030?
This was an exciting discussion!  Our entire lives were ahead of us.

Now 27 years later (our anniversary is 2 weeks away) we've accomplished MANY of these goals -- and amazingly close to the dates we chose way back then.

I would highly recommend that you take time to think your life-time finances through, map out a plan and write it down.  I would encourage you mix in a hefty dose of Blue Sky with your Reality.  You really need both.  I think goals should move you forward at a speed (and maybe in a direction) that normal life would not.  If this were not true, why bother?   It's nice to be able to look back every year at a written goal sheet and be reminded of what you had hoped for when you were young and idealistic.  Maybe you'll discover you're ahead of the game in a few areas and possibly you'll be grateful for a nudge to get moving forward again.