Saturday, December 16, 2006

Need Food for Christmas - Ask at Church

Most churches do much to help the poor throughout the year, but during Christmas they really work hard to provide a good Christmas dinner for needy people in their community.

I know of at least 2 churches in my community that give away boxes of food to families every month (I'm sure there are more, but I personally know of these two). These boxes contain cans of vegetables, boxes of pasta, canned fruit, dried fruit, frozen dinners, desserts, dried milk, beans, and sometimes personal hygiene products like toothpaste, mouthwash, feminine products, and soap.

During November and December these food boxes are supplemented with special purchases like frozen hams, cakes, pies, stuffing mix, frozen cooked chickens, canned concentrated juice, and condiments.

Supporting the community is one of the missions of most churches. So, if you need a little help during the holidays don't hesitate to ask for help at a church. And, if you don't need any help, consider donating to a local church, especially during the holidays.

Friday, December 15, 2006

5 Year Balloons - Losing Your Home

My partner's co-worker is losing her home.

No, she didn't miss too many payments. No, she didn't fail to pay her real estate taxes. She just picked the wrong mortgage when she bought her home. She chose a 5 year Balloon.

A Balloon Loan is somewhat like a 30-year mortgage. Both loans have payments that are amortized for 30 years. The difference is that with a Balloon, after the specified time period is up (5 years for a 5 year Balloon, 7 years for a 7 year Balloon, etc) the remainder of the loan becomes due in full (What is a Balloon Loan).

That means that after 5 or 7 years of faithfully making your payments, you have to come up with the entire amount that is still owed on your loan. The amount that is still owed is usually a very large sum of money, because not much of the principal has been paid off in only 5 or 7 years.

Many people choose these types of loans because the interest rate is a little bit lower. They figure they will want to sell the house within 5 years, or they think it will be easy to refinance the loan if they decide not to sell the house. All too often, neither is the case, and they end up needing a huge hunk of cash.

It's not uncommon for the bank or Credit Union that holds the Balloon to decide NOT to refinance the loan. In this case, if you haven't prepared yourself you will be rushing around desperately trying to find a bank that will refinance your loan in a short period of time.

If you fail to find a bank in time, you must either pay the loan in full, or lose your home.


This is what happened to my partner's co-worker. She had no clear idea of how the Balloon worked, so she didn't research and pursue a new loan. She waited till the last minute and was shocked to find that she was not only going to lose her home, but her credit rating was going to be decimated as well - by defaulting on the loan.

My advice is to stay away from Balloon loans. With a 30 year fixed-rate loan, if you decide you want to sell the house after 5 or 7 years, you will have time to do it without the spector of doom hanging over your shoulder. And, you won't be homeless on Christmas.

Thursday, December 14, 2006

How to pay for Christmas

How are you going to pay for Christmas this year? Did you save money throughout the year? Surely you knew Christmas was coming, right?

I saved a little bit of money each payday, and had it automatically sent to my Freedom (Smart Money) account at INGDirect. So, when I was ready to go Christmas shopping all I had to do was log in to ING and have the money transferred to my checking account. It only took 2 days for the money to get there, and I was all set to shop.

You don't have to make much money to do this. Five dollars a week adds up to $260 a year, and you won't even notice it coming out of your paycheck. Five dollars is easy to forget about.

If you are thinking that $260 is not even close to what you need for Christmas, then by-all-means save more. Whatever you do, do not touch those credit cards. STEP AWAY FROM THE CREDIT CARDS!

If you didn't save money for Christmas, now is the time to start saving for next year.

Wednesday, December 13, 2006

Refinance to pay off Credit Card Debt - No Way!

There's always been so much talk about using a cash-out refinance to pay off credit card debt. I've always believed that this was a Bad Idea. But with Christmas right around the corner the temptation to do this is even stronger, and refinancing to pay off credit card debt after Christmas is an even Bigger Bad Idea.

Why? Because...
  • you will charge more for Christmas knowing that the debt will be consolidated (you tell yourself that with a cash-out refinance the credit card debt is paid off. But it's still there - added to your mortgage)

  • you will actually pay just as much, if not more, for the credit card debt - even if you refinance at a lower interest rate - because you will take longer to pay it off (Home Equity is your nest egg...)

  • credit card debt is unsecured. If you default on your credit cards (don't pay them) creditors can hound you, but they can't foreclose on your home. If you move that debt into your mortgage you are securing the debt, and if you default the mortgage company will take your home (cash-out refinancing).

  • a cash-out refinance costs money (loan origination, closing costs, etc). If you can come up with cash to refinance, why not use that toward your debt? If you can't come up with cash, are you going to add the closing costs to the loan? If so, you are adding debt onto your debt to pay off your debt. (Sounds rediculous, doesn't it.)

  • home equity is your nest egg. It's your security during a time - your retirement - when you have little or no ability to create income. Find other ways to pay for the things you want now (like Christmas gifts), while you are young and strong and able to make money.

  • if you cash out more than 80% of your homes value, you will pay PMI (private mortgage insurance). PMI will offset the savings you hoped to gain by refinancing (Understanding cash-out...).

  • if you have substantial credit card debt, you are more than likely NOT managing your money well. Do you really think that paying off your credit card debt will stop you from charging again? If you are considering a cash-out refinance because you want to spend more than you have for Christmas, you will more than likely end up with new credit card debt - and be in far worse shape than you are right now!
Using a cash-out refinance is Bad Idea. Using a cash-out refinance to pay for Christmas is an even Bigger Bad Idea. Don't you agree.

Tuesday, December 12, 2006

Easy Gift Cards with MyPoints

There are tons of ways to earn gift cards, music downloads, and long distance calling cards online. Although this is not, technically, earning money, if these are things you would buy anyway, it amounts to the same thing.

My favorite method of earning money (gift cards) online is with MyPoints.com. Once you sign up, MyPoints will send you email containing advertising offers. You read the email, click on the "Get Points" button in the email, visit the site that opens (for as little as a few seconds), and your account is credited 5 points.

Five points for each email doesn't sound like much when you need 500 points or more to get a Gift Card. But it really is fast and easy to earn a $10 Gift Card. And the stores you can get Gift Cards for are probably stores that you shop at now.

Wal-Mart, Target, Sharper Image, Pier 1, Old Navy, Linens'n Things, Bath & Body Works, Kmart, JCPenny, Home Depot, Gap, CVS, Blockbuster, and Barns and Noble all offer a $5 or $10 Gift Card for 1500 points or less.

Fifteen hundred points is three hundred clicks on that "Get Points" button, but that isn't hard to do. I have MyPoints send the email to my yahoo mail account (not my primary email account) and I go there when I have free time or I'm just surfing the internet.

I open the email, click on the "Get Points" button, let the site load, then close it. It only takes a couple of minutes to earn that 5 points, and sometimes I earn much more than 5 points.

One day I was comparing prices for printer ink online, and doing the MyPoints clicking at the same time. I opened one of the MyPoints emails and found an advertiser offering a decent discount on the printer ink I had been looking for. I surfed the advertisers site, satisfied myself that they offered a good value and bought my ink from them.

I earned extra points on the purchase, plus the 5 points just for visiting the site, and found the printer ink I was going to buy anyway. How easy was that!

I've also earned 10 points per dollar spent at Overstock where I go to buy sheets, anyway. I bought a set of 400 thread count, King size sheets for $40 at Overstock and earned an extra 400 points. Forty dollars for King Size sheets! You can't find 180 thread count sheets in King size for $40. (shipping at Overstock is $2.95, no matter what you buy.) Now, you can't beat that with a stick.

Anyway, so far I've earned three $10 Gift Cards from MyPoints. I redeemed them all at Wal-Mart, because I shop at Wal-Mart every week, anyway. Earning that $30 was easy, and I actually found some great deals along the way.

Give MyPoints a try. If you surf the internet, read online, or just like to comparison shop on the web, it's not too much trouble to click on some email while you're doing it.

Monday, December 11, 2006

Easy Microwave Cleaning

Our microwave gets tons of use. It's easily used 6 - 12 times every day. But, I never think of cleaning it until I am just about to put something in there. Right at that moment, I don't want to stop what I am doing and get a scrubber to clean it.

So, here's what I do (it only takes 1 minute to clean):
  • put a cloth or sponge wet with water, windex, disinfectant, etc into the microwave
  • turn the microwave on high for 1 minute
  • be careful of the HOT cloth! - wipe the softened food off the microwave with the cloth
Whatever you use to wet the cloth with will leave its scent in the microwave, so be sure the cloth is clean and you like the scent you are using.

Sunday, December 10, 2006

Has anyone Heard of myLot?

I found out about myLot on a thread that was offering tips on making money on the web. Has anyone made any money using it?

I've only been reading there for 2 days, but I have already found some interesting conversations going on. They have a Living Frugal area at the site, and it's fun to respond to some of the questions that are posed. Reading there also gives you ideas for posts you might want to write about in your own blog.

I don't expect to make much, if any, money using myLot, but it can be an entertaining way to spend some spare time.

Don't use Credit Cards - or should I?

I have a dilemma.

For over a year, I scrimped, sacrificed, and did without in order to pay off my credit card debt. I am now debt free.

The next logical step is to cut up all my credit cards (I've already cut up most of them), and stop using credit, right?

Well, this is where I have the dilemma. I have 2 credit cards that give cash back, and I'm torn about whether I should continue to use them for everyday purchases.

On the one hand it seems silly to NOT get the cash back on items I am going to buy anyway. Why not get a discount on necessities, if you can? Isn't that the frugal mantra?

Isn't the definition of frugal money management paying as little money as possible to meet your needs?

When I used these cards, I deducted the charges in my check register and always paid the balance off by (or before) it's due date. So, it's not like I was charging purchases, just making the minimum payment, and incurring interest. I spent quite a bit of time making sure the charges were accurate, and paid on time.

On the other hand, my brain repeats the mantra "credit cards are dangerous, don't use them." "Use cash," my brain (and Dave Ramsey) insists.

Now, this is a bit narrow-minded, I admit. I do tend to have a one-track mind once I make a decision about something. But, there is a valid point here.

If you never use a credit card, you can never get into credit card debt. If you don't use credit cards, there is no need to worry about a mistake or oversight, no trying to jump through hoops to meet the criteria for the cash back (only certain stores qualify), no concerns about the due date changing from month to month, no temptation to charge something you don't have the money for (but it's a really great deal and you can save a lot money buying it now).

In short, if you don't charge it, you don't have to fight an entire industry that is working it's hardest to get interest and fees from you. And, you don't have to fight you-as-your-worst-enemy syndrome.

So, I'm stuck. I actually called a credit card company to re-issue cards (I had cut them up) for my account. Now, I'm wondering if I made the correct decision.

What do you think? Is the hassle and risk of using a credit card worth the cash back offer?