Saving Money
Steve Wheelock holds up his Discover Card along with his American Express, Bank of America and Capital One Visa credit cards in San Francisco in this June 2011 file photo. Adding your children as authorized users on your card can help build their credit scores, but make sure it doesn't hurt yours. (Paul Sakuma/AP/File)
Credit scores: Can another card user hurt your credit rating?
Helping your spouse or kids establish credit by “piggybacking” on yours is a nice thing to do. But is it wise? Here’s an email I recently received…
Is my credit being affected by adding my young adult daughter as an authorized user on my credit card? She doesn’t actually have a card in her possession, nor is she using it in any way. But they told me she would benefit from my monthly payoffs of the card. I wonder now if I am also tied to her credit in any way. Although not bad, there just isn’t much to go on as of yet. She is very responsible and hard working and quite trustworthy. However, I’m not naive enough to know that none of us can predict the future. What do you recommend?
Thank you!
– Trish
Here’s your answer, Trish!
First, don’t worry about your daughter’s credit (or lack thereof) hurting or otherwise affecting yours. When you allow someone to become an authorized user on your account, they’re linked to your credit, but you’re not linked to theirs.
While allowing your daughter to take a ride on your credit history is a nice thing to do, and it certainly can’t hurt, don’t expect miracles. Since your daughter isn’t liable for the bill – it’s still your sole liability – the boost to her credit may not be as great as you think.
Here’s what credit reporting agency Experian says on the subject. It’s about adding a spouse, but the idea is the same…
Including your wife as an authorized user will help her establish a credit history.
Authorized user accounts are included in a credit report and can be considered when making lending decisions. However, an authorized user has no responsibility for repayment of the debt. For that reason, they often have less bearing on a lender’s decision, and may not be included in some credit score calculations.
Although authorized user accounts are not always included in credit scores, they will result in a credit history being established and eventually can help your wife qualify independently for her own accounts.
In addition, in order for an authorized user to benefit from someone else’s credit history, there should be a credit card issued in their name. You say, “she doesn’t actually have a card in her possession,” which I’m reading as: A card exists, but she doesn’t physically have it. If so, that’s good. Without a card issued in her name, FICO – generator of the most widely used credit score – won’t count it when they compute her credit score.
What would be more beneficial to help your daughter establish credit is to have a joint account with her. That means you establish a credit account using both of your credit histories, and she’s equally responsible for the debt. Obviously, these types of accounts are potentially more problematic, but if you treat it the same way as you are the current account – allowing her no access to the card – it should be relatively low risk.
Keep in mind, however, that if she does end up with a credit card in her purse, your credit will be vulnerable if bills go unpaid. As a joint account holder, she has full access and full responsibility for the debt. Which means there’s nothing preventing her from simply calling the issuing bank and requesting a card. So you’d want to do this only in situations where you feel comfortable that won’t occur.
What if the unthinkable happens? As a joint account holder, you can call the issuer and close the account to new purchases, then cancel the account. (See my recent post Ask Stacy: Can I Get My Sister Off My Credit Card?) But as anyone who’s had a credit card knows, it doesn’t take long to rack up some serious debt. So tread cautiously.
Stacy Johnson is the president and founder of Money Talks News, a consumer/personal finance TV news feature that airs in about 80 cities as well as around the Web. This column first appeared in Money Talks News.
Mark Alterman of North Easton, Mass. uses an outdoor grill island behind his home in this 2002 file photo. Grills can be great Father's Day gifts, but consider what type of grill will best fit the lifestyle of the dad in your life. (Dina Mayer/The Christian Science Monitor/File)
Father's Day gifts: 5 tips for buying a great grill
The first day of summer is June 20, but the first day of grilling season is definitely Memorial Day.
According to grill-maker Weber, more than 70 percent of owners will light the grill this weekend. While not as popular as Independence Day (90 percent) or summer birthdays (76 percent), chances are you’ll smell some sizzling burger and steak coming from your neighbors’ backyards.
According to Weber, three-quarters of grill owners use theirs at least weekly during grilling season. Here’s what to do if you’re considering buying or upgrading…
1. Think about when you’ll use it
If you plan to grill throughout the year, and especially on weekdays, you might not always have the flexibility or patience to wait on a charcoal grill to heat up – and the less you use the grill, the less you’re getting your money’s worth. You may want to consider gas or electric instead.
How often you grill might also matter when it comes to the grates – porcelain-coated, cast-iron grids are easiest to clean, resist rust, and usually last the longest. Stainless steel grids are rust-resistant too, but food might stick to them.
2. Don’t keep up with these Joneses
This advice goes for many things, including grills: Forget what your friends and neighbors have. Instead, think about what you need based on the kind of cooking you plan to do.
A giant grill capable of cooking a side of beef and sporting features like a warming tray, a steamer, infrared cooking, and fuel and temperature gauges sounds pretty cool. But it costs a lot more to buy and more to heat, meaning it’s going to be more expensive to use than a smaller, simpler grill. Plus, bigger cooking areas make it harder to distribute heat evenly, which means you may have to pay more attention to placing food on the cooking surface. It’ll also take longer to clean and require more storage space.
3. Ignore the hottest grill
BTUs are a heavily-advertised way to measure a grill’s heating ability, but they’re not as important as other factors. The BTU measurement is related to the size of the burner, so a comparison of BTU ratings between different-sized grills doesn’t make sense. Instead, look for the ability to distribute heat evenly, as well as more burners – which allows you to control the temperature on different parts of the grill.
4. Watch for stainless steals
As mentioned in the video, there’s a big difference between cheap stainless and quality American stainless steel. Pure stainless will last longer, clean faster, look better – and cost more. Bring a magnet when you go shopping so you can test it. If it sticks, that’s not high-quality stainless. (If you’re not set on stainless, consider a porcelain-coated grill. It’s easier to keep shiny.)
5. Lower your fuel costs
If you buy a propane grill, it’s cheaper to get your tank refilled at a refill station than swapping your tank at one of the racks in convenience and grocery stores. But gas is still cheaper than charcoal, so if that’s what you’re going for, always check for coupons. In both cases, being ready to cook as soon as the grill’s warmed up will save you money, since you’ll waste less heat.
Electric grills can be an even more efficient option, and you’ll never have to shop for fuel deals: Just plug it in. But barbecue aficionados will complain that electric-cooked food lacks the flavor traditional grills add.
Another big summer expense you might want to save on? Leisure travel. Check out "20 Ways to Save Big on Your Next Vacation."
Brandon Ballenger is a writer for Money Talks News, a consumer/personal finance TV news feature that airs in about 80 cities as well as around the Web. This column first appeared in Money Talks News.
In this April 2012 file photo, Mike Cline, Samsung home appliances representative, cleans a washer at a Lowe's store in Omaha, Neb. According to Colley, appliances are worth investing a little more money in, because pricier energy-efficient models will recoup that investment over time. (Nati Harnik/AP/File)
Ten things worth splurging on
“You get what you pay for.”
While that expression certainly seems logical, in modern life it doesn’t always – or even often – work out that way. You can pay big bucks for name-brand aspirin, for example, when sitting next to it on the drug-store shelf is a generic brand with the same ingredients for half the price. You can buy any number of items sporting designer labels only to discover the hard way the designer had nothing to do with the design or the quality: They just licensed their name and collected a check. You can visit an expensive restaurant and have a terrible meal.
In short, when it comes to “getting what you pay for,” it feels like the exceptions often outweigh the rule. Maybe that’s why there are so many articles and sites devoted to saving on virtually everything you buy.
But there are situations in life when being penny wise can be pound foolish. (By the way, if the phrase “penny wise, pound foolish” doesn’t make sense, this expression is British: The “pound” is England’s version of a dollar. Right now, it equals about $1.56.)
So how do you know when paying extra is worth it? It’s an inexact science, but it boils down to whether you’re actually going to get a better product or experience for the extra money.
1. Tools
Whether you’re in the kitchen or the garage, inferior tools aren’t going to get the job done. You’ll either spend longer to finish a project or not get good results. Take kitchen knives for example – a high-quality knife slices fruit evenly. A low-quality knife turns strawberries into mush.
But you don’t have to pay retail prices to get good tools. Find a brand name you trust and look for it on sale. Overstock stores like Tuesday Morning, T.J. Maxx, and Marshalls often carry brand names. I just bought a Le Creuset Dutch oven at Tuesday Morning for 35 percent less than the retail price. Or scour the Internet – plenty of sites sell brand-name tools at a discount. Check out:
- Overstock.com
- SmartBargains.com
- ToolOrbit
2. Cars
In the video, Stacy talks about his used Mercedes. Conversely, I own an unsafe and barely running clunker. The difference? Stacy bought a high-quality used car. I bought the cheapest vehicle I could find.
Look for a car rated highly for safety and reliability, with low maintenance costs. Sites like Edmunds.com have tons of information on every make and model. Then find one used. On average, cars depreciate 45 percent in five years, according to ABC News. Let someone else pick up that tab – and buy their car for less.
3. Professionals
Whether it’s a doctor or a mechanic, it’s worth paying for experience. When you’re hiring a professional, start with referrals from friends, and create a short list of possibilities. Once you find two or three professionals you think you can trust, ask for estimates – then go with the cheapest price. Check out "The Right Way to Pick a Doctor."
4. Life experiences
When I’m older, I hope to look back and remember all the fun I had – not all the nice shoes I owned. So I’m willing to pay a little more sometimes to eat at a fancy restaurant or visit a unique place.
Some of my favorite vacation memories are from a cruise I took with friends. But with cruises, or pretty much anything else, you can still find a deal if you look for it. For example, check out "10 Things to Know Before You Book a Cruise," "20 Ways to Save Big on Your Next Vacation" and "How to Cut Your Restaurant Bill in Half."
5. Where you live
Where you live matters. I bounced all over New Orleans for years because I rented based on price and not location. Now I’ve found my ideal neighborhood. I still got a deal on my rent, but I do pay more than I did to live in less-desirable neighborhoods.
And that’s the secret. Find the neighborhood you love first and then worry about the price. There are all kinds of ways to get cheaper rent or buy a home for less. Check out "5 Tips to Save on Rent" or "5 Dumb Moves Homebuyers Make."
6. Quality services
Paying more sometimes gets you better service. I once had cell phone service with Verizon Wireless. Any time I called or went into the store, I got great customer service. Then I switched to another company to save $30 a month – and the customer service is a nightmare.
When you’re looking for a service – whether it be cell phone providers, cable companies, or your dry cleaner – look for a highly rated company. Check out the company’s Better Business Bureau review or read a consumer review site like Epinions.com.
Once you find a trusted company, check their website for special deals or simply call and ask. Many companies are happy to give out deals to new customers.
7. Electronics
While off-brand electronics may work fine at first, they won’t last as long or come with as good of a warranty as many name-brand electronics. Fortunately, electronics retailers love having sales and the Internet is full of bargains. Often, you can find high-quality electronics on sale cheaper than the regular price of lesser-quality ones. For deals, check out our deals page, as well as:
- Newegg.com
- TechBargains
- Slickdeals
8. Pet Care
Giving your pets the right food and medicine can greatly extend their life. And if you’re like me, you get joy from treating your pup with the pricey doggie jerky every once in a while.
But that doesn’t mean you can’t save some money on the better-quality stuff. You can find deals on everything from organic dog food (it has a higher meat count than the commercial stuff) or flea medications. Check out "9 Sites for Saving Money on Pet Supplies" and "6 Tips to Save on Pet Medical Expenses."
9. Appliances
Energy Star-certified appliances typically cost more up front, but they’ll save you on utility bills for years (or even decades). But there are several ways to get a great deal on high-efficiency appliances – like buying floor models or shopping during the big sale seasons (in the fall). Check out "9 Tips to Save on Appliance Purchases for more ways to save."
10. Home improvements
Done right, home improvements can raise the value of your house. Done wrong, you’ll end up paying more to repair the shoddy work. It pays to hire the right contractor and buy good materials.
But you can still save some money. For example, revamping what you already have, doing small jobs yourself, and visiting building supply auctions can save you hundreds. Check out "23 Ways to Lower the Cost of Home Improvement" for more tips.
That’s our list of things when quality can potentially trump price. But what about you? Are there things you’re willing to pay extra for, or do you always try to find the lowest price on everything you buy? Sound off on our Facebook page!
Angela Colley is a writer for Money Talks News, a consumer/personal finance TV news feature that airs in about 80 cities as well as around the Web. This column first appeared in Money Talks News.
Robyn Wyckoff smiles at her family and friends attending her graduation from the University of Tennessee Health Science Center last month in Memphis, Tenn. Graduates applying for credit cards should look for one with no annual fee. (Kyle Kurlick/The Commercial Appeal/AP/File)
Credit cards: Top 5 cards for grads
As high school and college seniors around the country don caps and gowns, something aside from a diploma is waiting for them: increased financial independence. Whether they plan to enter the workforce or pursue a more advanced degree, soon-to-be grads will be responsible for more of their own expenses. In other words, it’s time to get that first credit card.
Convenience, rewards, and low interest rates factor into this recommendation, but credit-building should be their main objective. Graduates’ credit standing influences not only their loan and credit card terms, but also their insurance premiums, ability to lease a car or an apartment, and even their likelihood of getting hired in certain fields.
A credit card, if used correctly, essentially serves as a fast pass to a higher credit score. Every month, usage information is relayed to your major credit reports (Experian, Equifax, and TransUnion), and if this information reflects on-time payments and low credit utilization, your credit score will rise.
Not every credit card is suitable for young adults. Getting a credit card with no annual fee should be a college or high school grad’s top priority for two reasons: 1) Budgets are typically tight at this stage in life and 2) the rewards and interest rates available won’t justify paying a premium. One last thing before we get to the cards: If you’re under 21, in order to comply with the CARD Act you’ll either need a cosigner or sufficient independent income/assets to make at least monthly minimum credit-card payments.
We compared more than 1,000 credit cards and identified the following five offers as being the best for grads this spring:
- Discover Open Road Card for Students: Gives you 2 percent cash back on your first $250 in combined gas and restaurant purchases each month, 1 percent cash back on everything else with no spending limit, and 0 percent on new purchases for nine months. It does not charge an annual fee.
- Citi Dividend Platinum Select MasterCard for College Students: For the first six months, this card gives you 5 percent cash back on utilities as well as purchases made at supermarkets, gas stations, drug stores, and convenience stores. Thereafter, you get 2 percent cash back on rotating spending categories and 1 percent on everything else. It also offers 0 percent on new purchases for seven months and does not charge an annual fee.
- Journey Student Rewards from Capital One: Offers 1.25 percent cash back when you pay your bill on time and does not charge an annual fee.
- Capital One Cash Rewards for Newcomers: Provides 2 percent cash back on travel purchases as well as 1 percent on everything else and does not charge an annual fee.
- Orchard Bank Secured MasterCard: While this card offers neither rewards nor a low introductory interest rate, it is an option for graduates who want to make sure they'll be approved for a card. The card requires a refundable security deposit. The fact that this deposit serves as the card’s credit line also means graduates can increase their available credit at will and build credit faster. The Orchard Bank Card has one of the lowest fee structures on the secured credit card market, charging no annual fee during the first year and $35 thereafter.
In deciding which offer to apply for, keep in mind that as long as you have a valid college e-mail address, you should be able to get a student credit card. That’s obviously a good thing, considering the superior terms offered by the student-branded cards listed above. The particular offer you choose depends on which has the rewards that best match your spending habits and whether you have any upcoming big-ticket purchases that warrant a 0 percent introductory interest rate.
If you don’t have a college e-mail address, your choice is between the Orchard Bank Secured Card and the Capital One Cash Rewards for Newcomers. The latter is obviously more attractive, but if you are worried about getting approved because of existing student loans or a limited income, the Orchard Bank card is a much safer bet. It also prevents overspending given that your credit line mirrors the refundable security deposit you place in opening the card.
No matter which card you choose, make sure to use it responsibly. This enables you to move into the next stage of your life assured that you’re setting yourself up for a solid financial future.
– Odysseas Papadimitriou is CEO of Card Hub, a website that helps consumers compare all types of credit cards, including student credit cards.
In this 2010 file photograph taken for eHarmony, eHarmony success couple Martin, left, and Morwenna Sanders, of Bristol, England, ride in a pedicab parade to celebrate the company's 10th Anniversary in New York. EHarmony is one of the more expensive online dating sites so it may not be the best option for first timers. (David Goldman/EHarmony/AP/File)
How to save on online dating
Remember when Meg Ryan met Tom Hanks in an AOL chat room? In the 1998 hit movie You’ve Got Mail, they fell in love online. The rest is romantic comedy history.
Today online love is big business. In 2009, 22 percent of heterosexual couples and 61 percent of same-sex couples met online, according to CNN.
As a single woman myself, I decided to try three of the biggest and best-known services – but to find a bargain, not a mate. I wanted to find out which online matchmaker offers the most bang for the buck (no pun intended.) After a month of dutiful searching, here’s what I found.
1. eHarmony
Cost: Ranges from $19.95 per month to $59.95 per month.
Background: eHarmony claims it’s responsible for 5 percent of U.S. marriages, but the lengthy application process was responsible for giving me a headache. To sign up for eHarmony, you answer a series of basic questions, followed by a lengthy questionnaire eHarmony uses to develop your “personality profile” – 307 multiple-choice and fill-in-the-blank questions in total. I spent more than two hours rating my intelligence, love of video games, and frugality on a scale of 1 to 5.
My biggest gripe with eHarmony is the cost. You get a discount if you sign up for a year: $19.95 a month for a basic plan, billed in three installments. Shorter contracts are billed much higher…
- 12 months – $19.95 per month
- Six months – $29.95 per month
- Three months – $39.95 per month
- One month – $59.95
To add insult to injury, you’ll have to stay on top of your account unless you want to get charged again. From eHarmony: “In order to ensure uninterrupted service, all eHarmony subscriptions will be automatically renewed 24 hours before they expire.”
After you get through the grueling sign-up process, eHarmony is a decent site, but I didn’t find many matches. Searching only returned 65 profiles within my age group and personality type – in the entire country. Other age groups returned more matches, especially 35 to 45.
Conclusion: If you’re older than I am, and don’t mind high fees and long questionnaires, this might be for you.
2. Match.com
Cost: Free to browse, up to $34.99 per month for full access.
Background: Match.com also has a lengthy application process, but unlike eHarmony, the majority of the questions are basic interests and lifestyle choices. So instead of grading my charitable nature on a scale of 1 to 5, I spent half an hour listing movies I liked and coming up with my personal motto. (I chose, “It never got weird enough for me.”)
You can sign up, create a profile, and receive messages for free. But if you want to respond to messages and have full access to the site, you need to order a basic subscription. If you want all the perks, you’ll have to sign up for a “value plan.” The prices look like this…
Basic plans:
- One month – $34.99
- Three months – $19.99 per month
- Six months – $16.99 per month
Best value plans:
- Three months – $22.99 per month
- Six months – $19.99 per month
I chose the free subscription. My friend chose a basic plan. The only difference I noticed: She was able to send messages to other members first, while I had to wait for members to contact me before I could respond. The “value plan” gives you a highlighted profile, and your profile will be one of the first emailed to new members. But that wasn’t worth the extra cost, in my opinion. I did find an even distribution of age groups on Match.com.
Conclusion: You get what you pay for, and free means waiting for someone to find you. So a basic plan is probably worth it.
3. OkCupid
Cost: Free for most services, $9.95 a month for a few advanced features.
Background: With OkCupid, starting your profile requires answering only a few questions, and photos are optional. I signed up in 10 minutes. But if you want an accurate match, you can answer any number of user-submitted questions – and there are hundreds of them to choose from. My friend has answered 1,301 questions, and there are still more to go. OkCupid compares your answers with the other user’s answers and gives you a “match percentage” based on the number of similar answers.
OkCupid isn’t the easiest site to navigate. But it does have one thing going for it – you can use any feature on the site or the app for free, although that means dealing with ads and tracked viewing. OkCupid‘s privacy policy explains they “track your use of our site” and “the information we obtain in this manner enables us to customize the services we offer our website visitors to deliver targeted advertisements.” But for $9.95 a month, you can browse anonymously and ad-free. I didn’t pay for that – wasn’t worth it to me.
Overall, I like OkCupid. I did get more “OMG! Ur hawt!” messages on OkCupid than I did on Match.com or eHarmony, which implies a younger audience. And what can you really expect from a free dating site? I did, however, have a few decent conversations.
Conclusion: If you’re just testing the whole online dating thing, start with OkCupid. You’ll get a feel for browsing through thousands of profiles and sending messages – and you may actually meet someone.
My results
While I didn’t have a You’ve Got Mail moment, I did make a few new friends. And that was worth signing up for, especially free. What would I pay for meeting the love of my life? Hard to say. But for me, it’s not yet worth an outrageous monthly fee on the off chance it happens.
Another option might be to look for love closer to home.
Angela Colley is a writer for Money Talks News, a consumer/personal finance TV news feature that airs in about 80 cities as well as around the Web. This column first appeared in Money Talks News.
A money changer shows some one-hundred U.S. dollar bills at an exchange booth in Tokyo in this November 2010 file photo. According to Ballenger common money management mistakes can be big, like passing up retirement savings, or small, like paying for bottled water. (Issei Kato/Reuters/File)
10 money mistakes everybody makes
Two weeks ago, during Financial Literacy Month, USA Today ran an article suggesting my generation needs to get a clue about money. Citing studies showing most young people have “poor financial literacy” and leading with the story of a 29-year-old who can’t budget, the article says, “Today’s twentysomethings hold an average debt of about $45,000, which includes everything from cars to credit cards to student loans to mortgages.”
At 26, I’ve accumulated $14,878 in student loans – not that bad compared to other students I’ve met, but not good considering I borrowed to get a graduate degree that I probably didn’t need. That’s my biggest blunder so far, but when it comes to money, older isn’t necessarily wiser.
CNN tallied up the national average consumer debt at the start of the year: $210,236. Even if you take mortgages out of the equation, it’s still more than $36,000. And according to an April poll hosted by the National Foundation for Credit Counseling (NFCC), “When asked to describe the state of their personal financial situation, 80 percent of more than 1,400 respondents admitted their finances were in need of a major overhaul.”
How many of these mistakes have you made?
1. Paying much, earning little
Bad move: Paying 20 percent interest on a credit card while earning 1.25 percent on your savings.
Better move: After ensuring you’ve got an adequate cash cushion for emergencies, use low-earning savings to pay off high-interest debt. Exception: if there’s any chance you’ll lose your job, gather as much cash as possible.
2. Buying new when used would do
Bad move: Shelling out $20,000 to $30,000 for a new car.
Better move: Avoid a monster depreciation hit by buying used. Cars are made better today than in years past, which makes buying them used less risky.
3. Passing up retirement plans
Bad move: Not participating in your employer’s 401(k) or other retirement plan at work, especially if they offer matching money. Not only are you failing to save for retirement, you’re missing potential tax deductions and something rare in the financial world: free money.
Better move: Sock all the money you can spare into a tax-advantaged retirement plan like a company 401(k) or an IRA. Take advantage of employer matching contributions and tax breaks.
4. Being the first on your block to own the latest gadget
Bad move: Waiting in line, paying a premium, or worse yet, borrowing so you can own the latest tech bells and whistles.
Better move: Being first is an expensive pastime. Wait a few months and you can own a debugged version for less.
5. Paying retail for stuff you rarely use
Bad move: Spending big bucks on a ladder, lawnmower, snow blower, or other expensive hardware you’re going to use infrequently.
Better move: Borrow rarely used stuff from friends or family, rent it, or form a neighborhood co-op to share the expense, storage, and use among the people on your block. Going in on something with just one neighbor reduces both cost and clutter by 50 percent.
6. Paying extra for low deductibles
Bad move: Paying a lot more for car, home, or sometimes health insurance because it includes a low deductible.
Better move: Self-insuring by raising your deductibles to as high as you can comfortably afford. Raise your car or home insurance from $250 to $1,000 and you can cut your premium by 15 to 30 percent.
7. Buying books
Bad move: Paying $29 for a best-selling hardcover that isn’t as good as your friend said and that you found too boring to finish. Even if it’s great, how many times are you really going to read it?
Better move: Reading the copy you already paid for – it’s sitting on the shelves of your local library. And you might not even have to leave your desk to get it, because it could be available as a free download – see our article Thousands of E-books: Free.
8. Paying for water
Bad move: Spending $1.50 for a plastic cylinder containing an abundant and freely available natural resource: water.
Better move: Buying an insulated water bottle and filling it yourself. Don’t trust your local water quality? Purchase a home water filter.
9. Buying into brands
Bad move: Paying $8.50 for 100 name-brand tablets of acetaminophen.
Better move: Looking a few inches further down the same shelf and getting the 500-tablet bottle of the generic brand with the same exact ingredients for $11.99, thus saving 70 percent. Read "7 Things You Should Always Buy Generic" and stop contributing to some big company’s advertising budget.
10. Wasting savings
Bad move: Saving $500 a year being a little more frugal, then wasting it on a $2 coffee every weekday morning.
Better move: Whenever you figure out a way to carve a few bucks out of the budget, increase your savings by a like amount. Otherwise, you’re likely to fritter it away elsewhere – the financial equivalent of running in place.
What bonehead money moves have you made or seen others make? Add to our list by posting on our Facebook page!
-Brandon Ballenger is a writer for Money Talks News, a consumer/personal finance TV news feature that airs in about 80 cities as well as around the Web. This column first appeared in Money Talks News.
A colorful sky blends its colors across a calm sea just after sun down on Dauphin Island, Ala., Wednesday, May 16, 2012. If you want to buy into a beach timeshare this summer, buying directly through the owner and paying in cash could make it a cheaper purchase. (Dave Martin/AP/File)
Buying and selling timeshares: eight tips
Looking for a timeshare or vacation plan? You won’t have a hard time finding one. The American Resort Development Association says in 2010 – the last year the information was available – there were 197,700 timeshares at 1,548 resorts, and 8.1 million “intervals” under ownership. An interval is usually defined as one week at a vacation destination, sometimes two.
But while getting into a timeshare will prove easy, don’t expect the same when it’s time to get out. Timeshares often plunge in value. Plus, the resale business is riddled with scams and when economic times are tough, that’s the toughest time to sell.
Read on for more tips on both buying and selling a timeshare…
First, if you’re thinking of buying a timeshare…
1. Skip the developers
You can buy a timeshare for a fraction of its initial value – sometimes pennies on the dollar – if you buy through an owner rather than the development company. Use timeshare resale sites like The Timeshare User’s Group and My Resort Network to connect with motivated sellers.
2. Pay in cash
The interest rates on timeshare mortgage loans typically run higher than traditional mortgages – between 12 and 18 percent on average, according to Professional Timeshare Services. But the main reason cash is king is resale: Like a car, the vast majority of timeshares depreciate in value. Which means, like a car, a big loan means you’ll probably be upside down and unable to get out.
3. Understand the extra costs
You won’t stop paying for your timeshare at the closing. Most timeshares come with annual maintenance fees that run into hundreds of dollars annually. In 2010, timeshare holders in the United States paid an average of $731 a year in maintenance fees overall, ARDA says. And don’t forget travel: Plane tickets to and from your timeshare could also add hundreds to the cost.
4. Don’t buy with a plan to sell
Only buy a timeshare if you expect to hold onto it. Timeshares don’t appreciate – in fact, depreciation is the norm. It’s unlikely you’ll get more than your purchase price, and odds are good you may not be able to sell it at all. Before you even think of buying, read as much as you can, including the Federal Trade Commission’s Time and Time Again: Buying and Selling Timeshares and Vacation Plans.
Now let’s tackle selling…
1. Sell where you bought
In the video, Stacy suggests starting with the company you bought your timeshare from. Some timeshare companies have a resale program. Others may provide you with a list of interested buyers. But most won’t help you at all. These people are in the business of selling new units, not helping you resell yours.
2. Sell to other owners
Ask the timeshare company who has the “interval” in your timeshare before and after you. Offer to sell your time to those owners. They may want to buy the timeshare from you to extend their stay.
3. Use a local broker
A licensed real estate agent might sell your timeshare for you, but you’ll probably pay a higher commission rate than you would on the sale of a house or a condo. According to the ARDA, the real estate company may charge you a commission fee of 10 to 30 percent. Before you sign up with a real estate agent, ask about the agent’s marketing plan and experience. Don’t pay commission to an agent who will only post an ad online, since you can do that yourself. Look for a licensed agent experienced in selling timeshares.
4. Sell online
You can sell your timeshare online yourself. Some websites specialize in reselling timeshares. Check out:
- RedWeek
- The Timeshare User’s Group
- My Resort Network
- TransAction Realty
Post a free classified ad on a local buying and selling site like Craigslist or the online classified section of the local newspaper where your timeshare is located. By posting an ad in the timeshare’s location, you’ll attract buyers interested in that area.
If you need to sell quickly, use an auction site like eBay. Starting an auction on eBay costs $70 – including a $35 insertion fee and a $35 final value fee. The auction can run from one to 10 days. Here are some tips for writing that ad…
- Find your selling point: Research other timeshares and hotels in your area and find something your timeshare has that other vacation options don’t. Use that as leverage when you post an ad. Make your timeshare stand out and you’ll draw in more buyers.
- Price competitively: As Stacy pointed out in the video, timeshares in the same resort can be nearly identical. Check local ads for other timeshares for sale in your building and price yours lower. When buyers have several to choose from, they’ll obviously choose the cheapest unit first.
- Time your sale: List your timeshare a month or two before the start of the vacation season. That is when the majority of buyers will be looking and you stand a better chance of selling your timeshare quickly.
5. Watch out for scams
Timeshare resale scams are always widespread, but scammers really start coming out of the woodwork during tough economic times. In 2009, the Federal Trade Commission received 819 complaints about timeshare resale. By 2011, that number was more than 5,000, according to USA Today.
Horror stories abound. In an article called "Selling your timeshare? Look out for scammers," the Virginian-Pilot recounts a story of one couple called by a resale company that had a definite buyer for their unit – they even had a signed letter of intent from the buyer. All the owners had to do was send $375 to the company and the sale was done. They sent in the money, then never heard from them again.
Watch out for resale companies that offer to “take the timeshare off your hands” or want large sums of money upfront – they’re likely a scam. For other companies, do your research before signing up. Contact the Better Business Bureau to see if the company has any complaints against them. Compare prices with other resale companies and get everything in writing – including contract terms, marketing plans, refund policies, and costs – before you agree to anything.
And check out another useful FTC Web page: FTC Warns Consumers to Exercise Caution When Selling a Timeshare Through a Reseller.
Bottom line? If you want to buy a timeshare, make sure it’s something you’ll be able to use, enjoy, and afford for life. And if it passes that test, don’t buy it from a high-pressure on-site salesman. You’ll find plenty of hapless people like the one in Stacy’s story looking to get out and willing to sell cheap.
And if you’re planning on selling, tread carefully and keep your expectations low.
Angela Colley is a writer for Money Talks News. This article originally appeared in Money Talks News.
In this April file photo, a group of skim boarders walk along the shore at sunset at Aliso Creek Beach in Laguna Beach, Calif. Summer vacation season is coming, and being flexible with travel times and lodgings can save you big bucks on your trip. (Joshua Sudock/The Orange County Register/AP/File)
20 ways to save on your summer vacation
Summer vacations are on the rise again…as long as vacationers are getting a good value.
Choice Hotels International surveyed 2,199 people this week. Eighty-seven percent said they planned to take the same number of trips (or more) this summer than they did last year, while 9 out of 10 people said they’re looking for the best value in their hotel stay.
Surprisingly, when asked what customers consider to be a good value from a hotel, 75 percent ranked free breakfast as their No. 1 priority.
While I love free cinnamon rolls as much as the next girl, a continental spread isn’t the best way to save money on a vacation. Read on for more ways to go on vacation without going broke.
1. Be flexible with both time and place
You’ll save the most if you keep your vacation options open – and that includes both travel times and locations. For times, book in the off-peak seasons when popular destinations are cheaper – like booking a cruise in July.
For locations, you’ll pay less year-round for less popular destinations. We list six money-saving spots in "Cheap-But-Fun Travel Destinations for 2012."
And if you’re set on visiting a popular destination, you should still consider more than one. If you’re fixated on Disney World, you might miss a great deal on Universal Studios. Before you lock in New York, consider Chicago.
2. Compare transportation options
Don’t limit your transportation options to just flying or driving. Depending on the distance, day of the week, and time of year, it may be more cost-effective to take a train.
For example, the travel costs for a trip I’m planning from New Orleans to Chicago breaks down like this:
- Estimated driving cost: $554
- Cost on American Airlines: $394
- Cost on Amtrak: $234
Then there’s the new breed of luxury buses that operate in several states: cheaper than an airline, but with more legroom, free Wi-Fi, and other amenities. See what one looks like and learn more in "Can a Bus Beat a Plane?"
3. Book and fly midweek
If you do decide to fly, tickets are typically cheaper midweek. As Stacy mentioned in the video, most airline sales start on Tuesday and end on Thursday, and the two cheapest days of the week to fly are Tuesday and Wednesday.
4. Travel light
Some airlines – like Jet Blue and Southwest – allow you to check one or two bags for free, but most charge an additional fee for your luggage. Airfarewatchdog has compiled a list of airline luggage fees (they can cost as much as $38 for the first bag.) If you’re flying on an airline that charges, downgrade your suitcase to a carry-on. Not only is it cheaper, it’s easier to handle and there’s less risk of loss or damage.
Can’t carry enough clothes? That’s what laundromats are for.
5. Have a checklist
Make a checklist of everything you need before you pack and double-check it before you leave. If you get to your hotel and realize you forgot something important – like your cell phone charger or the SD card for your digital camera – you’ll waste money buying another.
6. Check your insurance
Travelers insurance and rental car insurance can save you a fortune if something goes wrong, but you don’t have to buy it independently. Both types of insurance are often covered by credit card companies, homeowners insurance providers, or auto clubs. Check what you already have before purchasing more.
7. Stay outside popular areas
Having a hotel room in the center of everything is convenient, but staying a few miles outside the city is often cheaper. For example, next weekend I could book a room at the Omni Hotel in Dallas, Texas, for $149 a night through Hotels.com – or I could stay a few miles away in Las Colinas, Texas, at the Wyndham for $64 a night. I’d save $85 a night staying in the suburbs.
And no matter where you stay, stay for less. Before you check in, check out our post "8 Tips to Save at Any Hotel – Even the Nation’s Trendiest."
8. Find cheaper lodging with vacation homes
Vacation homes cost the same (or even less) than hotels, but offer more than most standard hotel rooms – like full-service kitchens, washers and dryers, and bigger living spaces. So you can eat out less, stay in more, and never have to worry about a late-night trip to a laundromat. See our story "Vacation Home Rentals: 17 Tips to Save on Your Next Trip."
9. Sleep in a hostel
I’ve always stayed in hotels, but my friends prefer hostels when they’re traveling. Why? Because a hostel is dirt-cheap compared to most hotel prices. You’ll only get the basics, namely a bed and linens, but you’ll save a ton this way. For example, a private room in the India House hostel in New Orleans would cost $23 a night, or you could stay at the Best Western French Quarter Landmark Hotel for $180 a night.
Hostels aren’t listed on most travel sites. Instead, use a site like Hostels.com to find the going rates.
10. Consider house-swapping
Another lodging alternative – stay for free. If you’re willing to swap homes (temporarily) with someone else, you can stay in their house for free during your vacation.
Several sites allow you to view ads for available homes, and post your own, such as:
- HomeExchange.com
- The Vacation Exchange Network
- Digsville
Don’t assume that because you don’t live in a vacation destination, nobody would want to stay at your house. People choose their destinations for lots of reasons, from business to visiting grandma. See our story "Best Hotel Price You’ll Find This Summer? $0."
11. Dine out less
Dining out is my single biggest “extra” when I travel. During a three-day weekend in Austin, Texas, I spent more than $150 on food. Don’t do that. Instead, book a hotel room with an in-room kitchen, rent a vacation home, or do a housing swap and cook most of your meals.
12. Use discount food apps
If you do dine out during your vacation, use a restaurant-locating app to find special deals and the best prices. Some of my favorite apps include:
- Yelp Check-Ins
- LocalEats
- KidsEatFree
When you get there, split your meal in half, ask the waiter to box it up, and use the hotel’s mini fridge to store your to-go box. That way, you just got two meals for the price of one.
13. Turn your vacation into a tax deduction
Turn your vacation into a business trip and you can write off some of your expenses, including transportation, lodging, dining out, and even some cruises. Check out "8 Tips to Turn Your Vacation Into a Tax Deduction" for a how-to.
14. Take an alternative vacation
No one says your vacation has to include a pricey tourist destination. There are plenty of cheaper ways to get some down time. For example:
- Take a staycation in your own city and live like a tourist for a few days
- Go camping in a national park
- Visit your state’s capital for the weekend
- Visit friends or family (especially those with guest rooms)
15. Plan cruises carefully
The listed price of a cruise includes food, lodging, and on-ship entertainment. It doesn’t include tips, the cost of onshore excursions, or airfare – and those costs add up. Research all the associated costs before you book a cruise. If you’re not sure how to find the best deal, let a travel agent handle the arrangements for you.
16. Sightsee free
Popular tourist attractions are pricey, but there are plenty of places you can sightsee free. For example, in Louisiana, admission to the popular plantation homes costs up to $18 per adult, but the National Park Service hosts free walking tours of the French Quarter in New Orleans. Look for cheaper options before you start booking those pricey tickets.
17. Use multiple travel sites
Travel sites save you a ton of money but they don’t all have the same deals. Check multiple travel sites before you book. Like:
- Hotels.com
- Priceline
- Kayak
- Expedia
- Orbitz
- Hotwire
18. Take public transit
Rental cars and cab rides are expensive but public transportation is a steal. For example, in New Orleans a cab ride across town runs about $22, but a streetcar will take you the same distance for $1.25. Major cities post their public transportation routes online and many have integrated with Google Maps so you can look up routes from your phone on the go.
19. Ask a local
Want the real scoop on the best cheap food, fun and free entertainment ideas, or which souvenir shops aren’t a total rip-off? Ask a local. As a local living in a popular tourist destination, I can promise you, many of us are happy to help you have a good (and cheap) time.
20. Don’t pay for overseas phone service
If you’re traveling overseas, plan your calls before you leave. While the hotel will let you use their phone to call internationally, you’ll pay a hefty premium for it. If you’ll have Internet access in your hotel room, set up a Skype or Google Voice account before you go. If not, ask your wireless provider if they offer temporary international calling. Many providers offer global SIM cards or rent overseas-capable phones for a small fee.
Did I miss any money-saving travel tips? Sound off on our Facebook page.
Angela Colley is a writer for Money Talks News. This article originally appeared in Money Talks News.
In this October file photo, a man using a cellphone passes an AT&T store in New York. When you sign up for a cellphone or checking account, it's likely that you sign an arbitration clause, which means giving up the right to sue the company in the event of a dispute. (Mark Lennihan/AP/File)
What is arbitration? You sign away rights. Is that OK?
If you have applied for a checking account, cellphone, or credit card, you have probably signed away some of your rights.
You may not even be aware that you have. In many cases, consumers agree to an arbitration clause that forfeits their right to a jury trial or class-action lawsuit if something goes wrong.
That means that if your cellphone carrier overbills you, you can't take the company to court. If the credit card company isn't moving to resolve a dispute, a threat to sue probably won't get you anywhere. Instead, you've agreed to have your case heard before an arbitrator who will make a binding decision.
Is that a good thing?
Companies that use arbitration clauses claim that the process is fair, and that it is faster and less expensive than litigation. It's also quite popular.
Of the 265 types of checking accounts offered by the 10 biggest banks, all but 10 required accountholders to waive the right to a jury trial, according to a 2010 study by the Pew Safe Checking in the Electronic Age Project. For 189 of those accounts, they also had to agree to have the dispute settled before a private arbiter chosen by the bank.
In the wake of that imbalance of power, the Consumer Financial Protection Bureau last month announced plans to study the use of arbitration clauses in financial contracts. The CFPB will analyze the kinds of claims that consumers bring in arbitration cases, the prevalence of arbitration clauses in agreements for consumer financial products, and what kind of an effect arbitration has on consumers and companies.
When it passed the Dodd-Frank bank reform bill, Congress gave the agency the power to create regulations that limit or end the practice.
The CFPB wants consumers to share their experiences and opinions about arbitration as part of its inquiry. Comments must be submitted by June 23, 2012. Information can be found here.
The US Supreme Court has sided with companies in favor of binding arbitration in two recent court cases.
– Bill Hardekopf is founder of Lowcards.com, a credit -card information site.
A woman shops for clothes at a department store in New York in this 2010 file photo. Shoppers spend an average of $1,700 per year on clothing and accessories, but there are loads of ways to save.. (Shannon Stapleton/Reuters/File)
23 ways to save money on clothes
Americans spend $1,700 a year on clothing and accessories. If that seems like a typo, it’s not – it’s been backed up by studies from the Bureau of Labor Statistics and Bundle, a site that compiles data from credit card spending.
Here are 23 ideas on how you can dress for less.
1. Sell what you don’t wear
If you don’t wear it, drop it off at a consignment shop. When the shop sells your clothing, they’ll cut you a check for a portion of the profits. You won’t get the full amount, but you won’t have to do much work either. Stacy recommends going through your closet once a year. If you haven’t worn that sweater in 365 days, you don’t need it.
2. Shop thrift stores
In the video, Stacy found a pair of Lucky brand jeans for $12.99. Thrift stores sell gently used clothing at a deep discount. Many stores also have regular sales or a weekly special. A thrift store in my area has a “50 percent off anything with a yellow tag” sale every Wednesday. Just make sure you’re shopping at a true thrift store and not a vintage clothing store. The difference: Vintage clothing stores sell trendier older pieces at a markup. Thrift stores sell older and newer clothes at a discount.
3. Find coupons online
At Money Talks News, we don’t believe in paying retail, and you shouldn’t either. (Check out our deals page before you shop online or in-store.) On the go, use your smartphone to find clothing coupons before you check out. There are several great coupon locating apps for Androids and the iPhone. My favorites:
- Coupon Closet
- Coupon Sherpa
- Shooger
4. Check the tag before you buy
Read the label before you buy. If you buy a dry-clean-only silk skirt, you’ll keep paying for it every time you pull up to the cleaners. Stick to machine-washables and save.
5. Take care of your clothes
Remember that “machine-washable” doesn’t equal “indestructible.” Wash your clothes on the gentle cycle in cool water and even line-dry them – they’ll last the longest this way. For delicate items or clothes that might shrink, hand wash. Take care of your clothes and you’ll get years of use out of them.
6. Buy out of season
Retailers put out-of-season clothing on clearance to clear the stock from their stores. You can save a ton buying clothing when you don’t need it – like a coat in May or a swimsuit in December.
7. Shop online clearance sales
Don’t discount online retailers (and retailers’ websites) when you’re shopping for clothes. They follow seasons too with huge discounts – and a larger selection than most stores – on clearance items.
8. Repurpose old clothes
If you’re handy with a needle and thread – or even a pair of scissors – turn something you’re no longer wearing into something else. I cut the legs off my old jeans and turn them into shorts. My friends repurpose old shirts into tank tops and skirts. You can even make a purse out of an old sweater.
9. Don’t buy it because it’s on sale
Don’t buy clothes unless you really need them – even if they’re on sale. Thirty percent off isn’t a good deal if you don’t wear it 99 percent of the time.
10. Buy basics from generic brands
Your basics don’t need a designer label. Buy T-shirts, tank tops, and lounge wear from cheaper stores. I buy all my layering tank tops at Old Navy. My track pants I wear for errands came from Target. Simple cuts and solid colors don’t require a high-end designer.
11. Skip expensive workout clothing
Same goes for workout clothes. A pair of Puma running capris cost $55 – or you can buy them at Old Navy for $16.94. You’ll get the same workout whether you’re wearing a fancy yoga outfit or an old T-shirt and sweatpants. Check cheaper retailers like Target, Walmart, and Kohls for more affordable workout gear.
12. Proceed with caution at outlet malls
Outlet malls do have deals. They also have scams. In "5 Tips for Finding Outlet Store Deals," Brandon found that some outlet store clothing isn’t store overstock. The pieces were actually made for the outlet mall, meaning they’re lower quality. And those “75 percent off!” deals – they’re not actually 75 percent off. Read the fine print and you’ll see that is the discount on the suggested price, not the actual retail price. It’s more marketing gimmick than deal.
Check the labels on outlet store clothes. Avoid anything that says “factory line” and do the math on supposed deals before you buy.
13. Swap with friends
At the start of every season, my friends and I go through our closets and trade whatever we won’t wear. Last winter, I ended up with enough sweaters to last the entire season. Set up a trading day with your friends or family members. Then take anything you have left to a consignment shop. You’ll end up with new clothes and some extra cash.
14. Stick to simple garments
Trendy clothes cost more and have a shorter shelf life. You could spend hundreds trying to keep up with the fashion magazines, only to realize you no longer adore that peasant skirt six months later. Stick to classic styles and basic pieces that are always in style – jeans, polo shirts, T-shirts, and simple skirts.
15. Shop discount stores
I save a lot of money by shopping at T.J.Maxx, Ross, and Marshalls. Discount stores sell overstock and slightly imperfect pieces from other retailers for a fraction of their cost. Just check the clothes carefully before you buy them. I’ve lost money on spaghetti straps that ripped or buttons that popped off, but it’s rare.
16. Hem your own clothes
Tailor-shop pricing varies by area – where I live, it costs $10 to $12 to have one pair of jeans professionally hemmed. If I had all 14 pairs of my jeans professionally hemmed, I’d pay $168 on top of the cost of the clothes. Hem your clothes yourself and stop paying the professionals.
If you can’t sew, offer to swap jobs with a friend who can. I’m horrible with a needle and thread, but I can babysit. So I watch my friend’s kids for a night, and she hems my new clothes the next day.
17. Borrow what you only need once
If you only need to wear something once, borrow it from a friend or family member. You’ll save 100 percent and won’t have a useless dress or suit filling up space in your closet.
18. Don’t rent what you’ll wear more than once
If you can’t borrow it, buy it. In "Formal Wear: Rent or Own," Stacy recommends buying a tuxedo if you plan on wearing it more than twice in your lifetime. Stacy interviewed Andy Rizzi, a retail employee, and found that tuxedo rentals in his area cost $85 to $100 on average. Rent three tuxedos and you could spend $300. Buy from a discount store or resale site like Craigslist, and you could spend much less and own the tux outright.
19. Buy uniforms at discount stores
Work and school uniforms get expensive, but you can buy them at discount stores for a fraction of their cost. In my area, we have stores that sell school uniforms, scrubs, and overalls at deep discounts compared to the cost of buying them through your work or school.
20. Don’t skimp on swimsuits
When it comes to swimsuit shopping, it doesn’t pay to buy cheap knock-offs. A well-designed swimsuit will cost more upfront, but can last years. Three years ago I dropped $85 on a higher-end swimsuit. I wash it by hand and line-dry it after each use, and it still looks brand new. Check out "16 Tips to Find the Perfect Swimsuit for Less" – a complete guide to swimsuit shopping.
21. Shop the men’s and kids’ section
Women’s clothing is often priced higher than men’s and kids’ clothing. If you’re a woman looking for something universal – like a T-shirt or hoodie – check the racks in the men’s and kids’ sections first.
22. Treat clothes shopping like grocery shopping
I won’t go to the grocery store without making a list first, but I’ll blindly charge into the mall credit card in hand. That is the wrong way to go about it. The next time you shop for clothes, make a list of what you actually need and stick to it.
23. Buy clothes that fit now
Only buy something if you can wear it today. Buying something a few sizes too small because you think you’ll lose weight later is a gamble. Even if you do, you may realize you don’t like the way that shirt looks on you. Either way, you’ve wasted money.
Our goal was to create a complete list of ways to save on clothing. Do you have any tips? Sound off on our Facebook page and tell us!
Angela Colley is a writer for Money Talks News. This article originally appeared in Money Talks News.
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