Jill Russo Foster

Tips for Successful Personal Finances

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Budgeting for 2011

Have you made a resolution to stick to your budget in 2011? So far this year, I have overspent in my budget category of snow removal I am sure I am not alone What do you do when it’s only January 20 and you have overspent? You have some tough decisions to make.

You have several options If you decide that you want to continue having your snow removal done by someone else, you could find another way to pay for this expense You would have to give up something else that would free up the money for more snow removal You could do it yourself, if you are physically able You can access your emergency savings account Remember that savings account that I have been asking you to build up so you have one year’s worth of expenses to spend on life’s “what if’s” now could be one of those times.

Budgeting is only as good as your projections and sometimes we project too little That is why you need to be flexible with your budget, so that when you have unexpected expenses or more costs than you have planned, you can deal with it Overages in one category mean shortages in another Determine what you can lessen to have the extra money for the overages Build that emergency savings for those overages so you have a cushion to fall back on Because you never know how much snow we are going to get in a season.

Increase Savings and Reduce Expenses in 2011

What are your New Year’s financial resolutions? Is it to save more? Reduce your expenses? We all have good intentions in January, but what happens to them in the coming months?

If your resolution is to save more, start by saving a small amount each week The amount should be something you think you can easily do without a problem If you are thinking that there is no money left over after you pay your bills to do this, you are thinking about this backwards Savings needs to be your first priority and not your last Take the amount you can afford to save weekly and take it off the top, before you pay your bills This way, you will ensure that this will happen Lots of people don’t keep their resolutions because they goals are too much for them.

If you have never succeeded in making this resolution in the past, start small By small I mean start with $5 per week If you can do this easily, then increase the amount for next month Then increase again and again until you get to an amount that you were originally thinking you wanted to save in the past This is much easier for you to accomplish with baby steps than if you said I want to save $100 a week and then fail to do so You are building your success with small steps and sticking with your resolution.

To reduce your expenses, think baby steps again Look at one category of spending and figure out a way to reduce that category by 10% Once that is done, go on to the next.

Resolutions / goals are something that you can do any day of the year There is no need to only do them in January of each year Remember, anything that you want to accomplish will take effort on your part.

Getting the Deals When You Need Them

Do you see those online daily deals for discounted merchandise and wish you knew about them before they sold out? Did you buy something to find out later that you could have bought it for less on a website? It seems as if many retailers are offering them I see them from office supply stores, utility companies, credit card companies (so you use that credit card more) and I am sure that I miss most of them They seem to be like the grocery stores that offer the really great deal on a few products to lure you in They know that you will buy more once they get you to the store.

If you are looking for something specific and want to see if you can purchase the item at a discount, then you may want to look into these daily deals Remember, it’s not a bargain if you buy something because the price is so good that you can’t turn it down Retailers (and websites) are counting on you to make that purchase since it’s such a great deal But, it’s only a deal if you were looking for that item before you saw it Don’t impulse shop.

Since there are so many, how are you to keep track? There are a couple of websites that will help you with this www.Woot.com, www.DealCatcher.com and www.DODTracker.com will consolidate deals from numerous retailers in one location That way, you don’t have to track many different websites to find the item you are looking for, or worse yet, finding the deal when it’s already sold out Shop wisely and within your means.

Holiday Returns – Restocking Fees

We are in our second week of December Most of us are already thinking about the holidays and gift giving Many stores are luring you to spend with statements like “we’ll refund your money if you are not completely satisfied” and “tryit and you can return it for a full refund” I bet you have heard these offers before It might sound good, but you need to be aware of restocking fees (No, these don’t have anything to do with your Christmas stocking.)

Retailers charge restocking fees to cover the cost of selling an opened package at reduced prices For example, if you bought a computer and opened the box and then returned it, the retailer cannot sell that item as brand new Therefore, you might be charged a restocking fee That seems fairly reasonable to me Many retailers are adopting restocking fees You could see it on mattresses, automobiles and other items that don’t have package restrictions.

Restocking fees can be expensive, as much as 25%.First, ask the store what the policy is and ask to have it in writing before you make the purchase Once you fully understand the policy, then determine if you want to make your purchase at that retailer If the purchase is for a gift, you might want to consider a gift card instead, so that the recipient doesn’t have to deal with the restocking fee.

Holiday Shopping Tips

The holiday season is in full swing Were you one of those out there at midnight shopping on Black Friday? It’s easy to spend money during the holidays We shop to make the holidays special for those we love and also to look good and feel good during the darkest month of the year.

If you’re worried about spending too much, think about these things before you shop.

  • Do you really need the item? If not, don’t buy it.
  • Can you (or the person you are giving this to) live without it?
  • Do you have the cash to pay for the item? You don’t want to charge items that you can’t afford to pay off when the bill arrives.
  • Is this a good price? Do your research ahead of time to know that you can buy it for less.

This year with the economy we are in, I would suggest that you do some planning before you tackle the holiday season First look at your list are there people that you can eliminate buying a gift for? Maybe you could spend time with that person creating new memories instead of buying an item off the shelf For the people on your list that you will be buying for, think long and hard to determine what amount of money you have to spend This should be an amount within your budget (not on credit cards that must be paid off later) Your holiday budget should include all the items you have to buy, such as hostess and/or food gifts for parties, tips for the service people in your life, additional gas and holiday clothing for yourself.

If you’re going to buy something (especially during the holiday season), do it wisely and within your budget Let the joy of the holidays extend in January by avoiding the stress of January credit card bills Remember, a bargain isn’t a bargain if you’re buying something you don’t need.

New Bank Fees – Watch Out

Has this economy made you look more closely at fees and unessential services? Earlier this year, the Credit Card Act was enacted to help consumers That was good for you, but your creditors lost sources of income They want to take that money back The next wave of consumer fees is about to begin (or may have even started).

Banks are upping their fees Here are some examples:

Do you have totally free checking? That’s probably going to change You will need to keep more money on deposit to qualify for free checking.

Do you prefer to make your deposits and payments in person? There could be a fee to use a bank teller.

Do you receive paper statements and cancelled checks by mail? The bank may start charging you for that.

Do you have overdraft protection? Previously, you only paid a fee when you used the service That’s changing My bank now charges $1.50 per month for the privilege of overdraft protection Some banks are even charging you to link your savings and checking together for overdraft protection, along with the additional fee for actually using the service.

Want to open an overdraft protection account for the first time? That could cost you a fee as well.

Banks are implementing these changes to increase their revenue, so watch your statement closely (you should be doing this anyway) Read the inserts in your statements Call to question new fees, and if you’ve already been charged, ask for reimbursement.

If your bank account is costing you too much money, find out what you can do to avoid the new fees If all else fails, take your bank accounts elsewhere There are still banks with good lending and investment practices These banks don’t need to overcharge their customers to make money.

Automatic Bill Payment: Should You Use It?

Whether you pay your bills online or with a check, you’ve probably seen the automatic bill payment option It’s a great service for the companies you pay, but is it a great service for you?

Each company lists all the advantages of the service: your bills will be paid on time, you’ll never miss a payment, and you’ll never have late fees Yes, those are great advantages But they don’t mention the down sides.

You won’t be able to check your statement before the payment is made.

This is a definite downside You might even get in the habit of not checking your statement at all There might be charges you need to dispute: maybe a purchase wasn’t yours, maybe a new service charge was added to your account, maybe there was an increase in fees.

On credit cards, you only have a limited amount of days to dispute a transaction Once that time is up, you can’t be reimbursed Or, if the cost of a utility increases (after a promotional period), you may want to make other arrangements as soon as possible.

If you choose the automatic payment service, take the time to look over your statements as soon as they arrive.

A Payment Could Overdraw Your Account.

Many of our accounts have fluctuating balances Utility charges change with the seasons and credit card spending increases on holidays and vacations Do you keep enough money in your account to cover all your payments, regardless of the amount?

Here’s an example: August was an unrelentingly hot and humid month in some states Many people left on the air conditioning all month only to be shocked by the size of their electric bill They didn’t realize that the rate per kilowatt would increase as their usage increased, which made the bill go even higher than expected Some people thought they’d end up paying $100 more for August, but ended up paying $200-$400 more How many people keep enough in their checking account to handle a $500 electric bill? Not many.

If you choose the automatic bill payment option, keep extra padding in your checking account and check your bank balances frequently.

Automatic bill payment works great for some people Choose the option that works best for you As always, take steps to protect your personal finances.

Can you minimize college expenses?

There isn’t anything that you can do about the cost of tuition once you have chosen your school But, you can plan for other costs: the books, room and board, technology, supplies, medical, and entertainment.

Books

Books are necessary for college, but can you lessen the costs? Yes! With the Higher Education and Opportunity Act that went into effect last month, assigned textbook prices must be printed in the course schedule This is a big win for your budget In the past, most people didn’t know the price until they got to the college book store It gives you the opportunity to price shop for the textbook I suggest looking for used or rented text books Check out www.Chegg.com or www.BookRenter.com.

Room & Board

You might be thinking that room and board are a fixed expense, and that’s true for freshman But, most colleges allow you to live off campus after your first year That opens up some new options More roommates equates to more savings If you want multiple roommates to really cut down on costs, you could consider a house rental If you don’t want roommates, you could look for a room & board arrangement These would be local homeowners who are looking to rent out a spare room Prepared meals and access to laundry may be included as part of the agreement If you want an on campus option, look into becoming a Resident Adviser RA’s typically get a room and board reduction but check with your school to confirm.

Technology

It’s a given that you will need a computer But do you need a printer? If you do, check the back-to-school specials Remember, printers require paper and ink Shop around for supplies, don’t just rely on the campus book store You may also find that you don’t actually need a printer in your room Ask questions and see what’s available on campus There could also be an inexpensive printing service off campus, like FedEx/Kinko’s.

Supplies

Think about what you need, as well as how much you need You can minimize expenses by not overbuying Your entire family may empty a bottle of shampoo in a month But when it’s just you, a single bottle could last a whole semester or longer Make a list, talk it over with other people, and revise your list as needed Then shop for the best deals before you head to school Prices may be higher in the town or city near campus.

Medical

Something you may not think about, but should, is medical insurance If you parents have insurance, you can probably be covered by them But, do they have in-network insurance? That means that you can only be seen by select doctors or medical centers Do they have those options near your school?

Entertainment

Most people have some form of entertainment to help them relax But, entertainment can be expensive That’s why a lot of college students learn how to play card games, like Eucher Or, they start kicking the soccer ball around in unofficial games of football These types of games are free But, you should plan on enjoying some paid events, whether it’s attending the games, seeing movies, or going out with friends Plan ahead and budget how much you’re willing to spend each week on entertainment Use cash, and don’t bring your debit card with you when you go out It will help prevent overspending.

All your little expenses will add up Give them thought and research ahead of time to save yourself a considerable amount of money.

Jill interview in the New York Daily News

Back to school season and it’s time for the other big talk: money

BY Jean Chatzky
Monday, August 23, 2010, 4:00 AM
Original Article Link in the New York Daily news
PDF Version

Back to school season in my house, and likely in yours, means a long to-do list. Stock up on school supplies and clothes. Organize binders. Send everyone to bed a little bit earlier. I know: You’re busy.

But this year I want you to add one more thing to your list: I want you to talk to your kids about money. Many parents are intimidated, yet what you need to teach them is not something they’re likely to learn in school.

“Parents tend to feel that they’re not comfortable with the information, that they don’t have enough expertise or that they themselves have made mistakes,” said Laura Levine, executive director of the Jump$tart Coalition for Personal Financial Literacy in Washington. “But it’s important to understand that kids really do see them as a primary source of information about money.”

When it comes to teaching your kids about money — just like when you’re helping them study for a test — you can’t expect to know it all. I don’t, nor do I pretend to. When one of my kids asks me a question that I don’t have the answer to, we look it up together and discuss what we find. It’s so much better than putting the discussion off altogether because the earlier we start teaching our kids financial basics, the less likely they are to fall into traps.

To encourage people to talk, I’ve joined with American Express to create resources for the first National Money Night Talk, set for Sept. 16.

To take part, parents pledge to talk to their kids about saving, budgeting, credit cards and credit scores. Visit moneynighttalk.com for free tool kits I created to give you the talking points, questions, answers and exercises you and your kids can do together. There’s one for middle school-aged kids, another for high schoolers and another for college students.

Here are a few key concepts to keep in mind when you have your talk.

HOW MUCH TO SHARE

A reason many parents shy away from a big money discussion is that they don’t want to share their own financial information — salaries, debts — with their kids. That’s okay, you don’t have to, but you also don’t want to send the message that money shouldn’t be discussed, said Jill Russo Foster, author of “Cash, Credit and Your Finances: The Teen Years.”

“I’ve taught classes and asked how many kids know if their parents own or rent their home. If they don’t know, I send the question home and I’ve had parents who wouldn’t answer. I’m not asking you to tell them how much you make each week, but this is a basic question,” Foster said.

I like real-life examples, but it’s okay to pick ones that aren’t so personal. Kids want to know how much it will cost to live on their own. Pick ones you feel comfortable discussing: How much you spend on groceries each week, the phone bill, the cost of a MetroCard and the percentage of your salary you try to save.

THE GREAT RECESSION

Today’s teens know they’re experiencing tough times. Maybe a parent or a friend’s mom or dad lost their job, or there were foreclosures in the neighborhood. They may be wondering about the impact on you and your family but have been reluctant to ask.

This is a good way to work in lessons about living within your means, saving money and creating an emergency fund in case of a layoff, unexpected expense or emergency.

SET AN EXAMPLE

This year, try a different approach to your back-to-school spending: Tell your kids you’ll be spending a set amount of money. (Decide how much you can afford before the talk.)

Together, make a list of what you need to buy. Then pick a day to go shopping and let them budget their money.

If they pick out a pair of $100 sneakers, help them figure out what they still need to purchase — and whether they can afford the pricey kicks.

Your Money columnist Jean Chatzky is financial editor of NBC‘s “Today” show, a contributor to “The Oprah Winfrey Show” and the author of seven books, including, “Money 911: Your Most Pressing Money Questions Answered, Your Money Emergencies Solved.” Check out her blog and learn about her Debt Diet Online at jeanchatzky.com.