8 Ideas for Surviving Back-to-School Shopping (Without Taking out a Second Mortgage)

Do you have children heading back to school? Most families will spend a couple of hundred dollars on each child. If you have a college freshman, you may spend several hundred dollars.

According to the National Retail Federation, back-to-school and back-to-college spending ranks as the second biggest shopping season for retailers after the winter holidays.

How can you rein in back-to-school costs? Consider these eight ideas:

1. Shop your drawers and cupboards. Chances are you have many unused or gently used supplies that are perfectly good.

2. Make a list. After you have compiled the supplies you already have on hand, craft a list of what else is needed. If your school sends a supply list, use that as a guide. The trick to reining in costs is not to stray. Stick to your list.

3. Set a spending limit. Let your children know the limit in advance of shopping. Parents can be easily swayed by their children’s choices and wants, and end up spending more than they planned. Your child can help make decisions on which items are the most important and which can be skipped.

4. Hand over the money. Give your child the total amount you are going to spend in cash. This is a great financial planning lesson. There is only a finite amount of money, so your student will need to figure out how to purchase everything she needs with the amount of money she has available. This is will help her figure out what is most important.

5. Have the kids contribute. This is another great lesson in financial literacy. Your child would be responsible for using his own money to purchase certain items, such as paper, notebooks, erasers and other basic supplies. You can help him set a budget and determine priorities.

6. Focus on the big items. If your student needs more expensive items, such as a computer or bedding for a dorm room, put your energy into finding the best deal for those items. Saving fifty cents on pencils is not as significant as saving a couple hundred dollars on a computer.

7. Contact roommates. College students can coordinate their dorm room furnishings with their roommates. One person can bring the refrigerator, the other the TV. Look for used items.

8. Follow your favorite stores on social media. This works especially well for clothing. Choose three or four stores and follow them on Facebook or Twitter to get advance notice of sales and coupons.

 

Back-to-school shopping doesn’t have to be a budget buster. Approach it with a plan, you’ll be able to control the cost.

 

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

 

 

Mind Over Money: Fascinating Insights Into the Psychology of Money

When your friends do a favor for you, should you pay them?

When choosing a pain reliever, should you buy a name brand or the generic?

If you are working as a waiter, how can you get a bigger tip?

These questions are examined in Claudia Hammond’s book, Mind Over Money, The psychology of Money and How to Use it Better. When I picked up this book, I thought it would be a self-help book addressing readers’ financial problems. Instead, this book is a fascinating window into humankind’s complex relationship with money.

Hammond examined the results of 263 experiments and research studies in psychology, neuroscience, biology, and behavioral economics to explain why humans react to money and money-related issues the way we do.

The studies Hammond uncovered explain why:

  • We should spend money on experiences, not things.
  • Praise is a better motivator than money.
  • Money wards off the fear of death.
  • Being poor can lead people to make poor financial decisions.
  • A high price is not necessarily a sign of quality.
  • Why enough money is never enough.

And much more.

You will need to read the book to learn what research tells us about these more serious topics, but to answer the lighter ones posed at the beginning of this article, Mind over Money tells us:

  • We should not pay our friends when they do favors for us. Introducing money can transform the interaction. The friends start to compare the amount you are paying them to what a professional would earn. Or they will compare what you are paying them to what they earn at their regular jobs. Hammond says, “The upshot is that a task they would have happily done for nothing, as a genuine favour (sic), they do less happily for a small payment.”
  • Taking a brand name pain reliever may seem to make your headache disappear faster. But, brand names and cheaper generics contain the same active ingredients. The only real difference is the price. Why do people report their headaches disappear faster when they take the name brand pain reliever? Hammond says “price seems to be working like a placebo effect, somehow convincing us that we are actually experiencing a greater reduction of pain with the more expensive brands.”
  • If waiters want larger tips, they should lightly touch their customers on the arm as they present the bill. This was the conclusion of a study by two French psychologists, Nicolas Guéguen and Céline Jacob. Hammond says Guéguen and Jacob’s “research was inspired by studies in the 1980s that had found that if you ask someone to do something, they are more likely to say yes if you touch them on the arm at some point.”

Hammond did sprinkle tips and tricks throughout Mind Over Money and included a four-page final chapter summarizing the take-aways from the research she presented in the book. My favorite is #4: “Don’t go on a wine course. If you learn too much about expensive wines, you’ll start caring about what you’re drinking. If you don’t, cheap wine will carry on tasting good, especially if your friends lie to you about the price.”

Mind Over Money, The psychology of Money and How to Use it Better © 2016 by Claudia Hammond is published by Harper Perennial. List price is $15.99.

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

 

 

 

 

Addressing the Human Side of Money: Financial Therapy

Financial therapy is a new and growing area of financial assistance.

Whereas financial advisors and financial planners consult on how to invest, protect and grow money, financial therapists address the more human side of personal finances. They help clients work on the underlying emotional issues that keep them trapped in money struggles, be it overspending, under-saving or carrying too much debt.

There are many factors influencing our relationship with money including how our parents handled money, our own early experiences and mistakes, and our beliefs. Financial therapy can help clients examine their unfinished emotional business around money, allowing them to have a healthier relationship with it.

It delves into the past to help clients adjust the core beliefs underlying their behavior with money.

Financial therapists are mental health practitioners. They have had years of study and supervised practice, and have passed a licensing exam.

Financial therapists shouldn’t be confused with financial coaches. Both aim to assist people with financial issues and habits. Coaching, however, focuses more on the present and the future. It concentrates on the client’s current goals, and helps the client overcome blockages and obstructions to achieve more than he would alone. Financial coaches have also received training, but not as extensive as therapists. They are not health practitioners.

Neither financial therapists nor coaches can provide investment advice unless they are also registered as an investment advisor with the SEC or their state.

Could you use some help sorting out your money concerns? The article “Do You Need a Therapist or a Coach” by Bill Cole, provides a good overview of the similarities and differences between financial therapists and coaches, including a list of nine signs that one needs a therapist. Click here to read this article.

For advice on selecting a financial therapist, the article “Here’s How to Know If You Need a Financial Therapist” by Kate Ashford offers some advice. Click here to connect to this article.

To learn more about financial therapy or to locate a financial therapist, visit the Financial Therapy Association at www.financialtherapyassociation.org.

To learn more about financial coaching or to find a financial coach, visit the Association for Financial Counseling and Planning Education at www.afcpe.org.

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

 

Financial Software for Teenagers? I Say Yes!

Considering I am a daily money manager, it won’t surprise you that teaching my daughter money skills is a high priority on my parenting to-do list. From an early age, my husband and I gave Gabrielle a weekly allowance. The purpose of the allowance, in addition to giving her pocket money, was to provide an opportunity for her to make money mistakes when the consequences were minor and to learn from those mistakes.

Eventually she started earning money from babysitting, pet sitting, odd jobs, and, this year, tutoring. There were also gifts from grandparents at birthdays and holidays. Eventually it was time to get the money out of Gabrielle’s bedroom and into a bank. I helped her open checking and savings accounts. She learned how to write checks, keep track of her debit purchases, view her transactions on line, and transfer money between her accounts.

Gabrielle also developed her own accounting method. I can’t tell you what it was exactly, but I do know it involved a vast spreadsheet and lots of time recording all of her transactions. As her homework load, social life, and number of paying gigs all increased, she complained about not having time to attend to her money. I suggested she try a financial software program which could potentially save her time. As Gabrielle will be heading off to college – and into greater independence – in another year, now seemed like a good time to show her a money tool she can use for life.

I purchased Quicken Starter Edition for her and spent a Sunday afternoon teaching her the program. This was actually fun. Having grown up with computers, Gabrielle was a quick study. She swiftly grasped categories and subcategories, transfers between accounts, and customizing each register. She loves downloading transactions from the bank and the quickness of data entry. And, she is having fun exploring the variety of reports and learning how to customize them.

Watching Gabrielle explore Quicken, I thought every teenager could benefit from learning a financial software program. Even when a teenager isn’t interested in tracking her spending, she most likely is quite computer literate. (Who taught you how to use your smart phone?) The programs and apps available now make recording transactions and paying attention to spending a snap. If a teen has some income and a bank account, now is a great opportunity to teach him a valuable skill.

In addition to Quicken, apps to consider include Mint, YNAB, Personal Capital, Mvelopes, and others. All can be used on a smart phone or tablet. Wherever the teen is, so is a picture of her available cash and recent spending.

Many of these programs include investment tracking. While most teens may not need this function at this point in their lives, the key features these apps offer are cash flow management and budgeting.

I recommend letting your teen choose which program to use. And let him make it his, separate from Mom and Dad.

Here are some articles that review the many personal software apps available:

The Best Personal Finance Software by Reviews.com.

The Best Personal Finance Software of 2017 by Top Ten Reviews.

The Best Personal Finance Services of 2017 by PC Magazine.

Top 5 Best Personal Finance Software Apps for Mac, Android, iPhone, Online, and Desktop by AdvisoryHQ.

Best Personal Finance Software by The Simple Dollar.

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

 

Do You Have Too Many Credit Cards?

Note: This is a guest blog by my colleagues, Rebecca R. Eddy and Gideon Y. Schein, of Eddy & Schein in New York and Los Angeles.

 Managing credit card debt can be a challenge for anyone. It is common for Daily Money Managers to find clients dealing with a number of extra credit cards. Unfortunately, with all of the promotional deals and pre-approval offers that come to one’s mailbox, it is very easy to amass a large number of credit cards and the situation can quickly get out of hand.

Recently, Eddy & Schein was called to help a client manage his finances. Frank had 13 different active credit cards, including department store cards with high interest rates. Some were getting paid regularly, others were being left, but most were not being paid in full and were collecting interest.

The first step was to identify the scope of the issue. A list of all the cards was compiled, identifying for each the outstanding balance, the due date, and interest rate. Frank was then asked to identify which two cards he wanted to hold onto. As part of the discussion, Frank was encouraged to get rid of his department store cards and he agreed. Next we slowly proceeded to pay off and close down his other cards. Once his credit card bills were in order, and their number was manageable, Frank was able to pay his bills on time and no longer carry interest charges.

Here are 6 Tips for Managing Multiple Credit Cards

1. Assess: Are there too many?
• We recommend having just one or two credit cards. If there is an American Express card, it is a good idea to also have a Mastercard/Visa card, which may be accepted where American Express might not.
• It is also helpful to have a backup card for use in case the primary card is misplaced or stolen.
• Consider which cards provide the greatest benefit.
• Can you get rid of cards from gas stations, department stores, etc.?
• Which cards have the best rewards?
• Which cards have the lowest interest rate?

2. Reduce if possible. If you want to close down some credit card accounts, there are things to consider:
• Which cards have automatic payments on them?
• Can you move all automatic payments onto one card?

3. Make a list of all automatic payments and keep the list safe so you know which companies to contact and update charge information if the credit card is replaced due to the card expiring or being stolen.

4. Maintain a good credit score.
• Put the credit card in a safe place but do not close the account. One of the elements of a good credit score is based on having a ratio showing your large capacity to borrow versus a low amount owed by you.

5. Track charges on your statements.
• People who commit fraud are able to get credit card numbers without having the actual card, so confirm that all charges are valid.
• Are there unnecessary charges such as credit fraud insurance on multiple cards?
• Has a donation to an organization accidentally become a recurring charge?

6. Be aware that some credit card companies will close cards without an explanation.

Special thanks to Eddy & Schein for use of this blog. Please feel free to contact them in New York at 212-987-1427 or in Los Angeles at 626-395-7572, or visit them online at http://www.eddyandschein.com.

 

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

 

 

Is It Worth Buying a Home Warranty?

Many people like to purchases warranties on big ticket items such as cars and appliances. Warranties are also available on homes.

A home warranty is a type of insurance providing service, repair or replacement on specific items in a home such as heating, air conditioning, electrical systems, garbage disposals, built-in appliances, and plumbing.

Contractors may offer warranties on newly constructed homes. Sellers may pay for a policy to facilitate the sale of their house. Homeowners also purchase them for their existing homes.

Should you purchase a home warranty?

Before you do, understand how these programs operate. Many consumers don’t understand they do not exist to refurbish your house.

  • Home warranties promise only to keep major systems and appliances functioning. They do not promise to purchase new appliances or install new major systems.
  • The warranty company decides whether to repair or replace the broken system or appliance. Since replacement is the most expensive, it is always the last option.
  • When you have a repair, you will also pay a service visit fee which could be as high as $100 per visit. This is in addition to the annual cost of the warranty.
  • The warranty company, not the homeowner, decides which contractor will make the repair.
  • Warranties cover only normal wear and tear. They do not cover problems that existed before the warranty went into effect.
  • If the company believes the system hasn’t been properly maintained, it may refuse to make the repair. 

If you are considering renewing or purchasing a home warranty:

  • Read the fine print before you sign up. You want to be certain you understand what the policy covers and what it doesn’t. Some policies, for example, will only make repairs. There may be many coverage exclusions.
  • Look for a home warranty company with a long-term history in your area.
  • Compare different warranty programs for coverage levels and deductibles.

Although this Angie’s List article was written in 2009, it has good information and tips on selecting a home warranty program.

An alternative to purchasing a home warranty is to set aside the money you would have otherwise spent on the warranty. Put these funds in a designated bank account. If you have an issue, you can then decide whether to repair or replace. If you repair, you can then choose your own contractor.

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

 

When Parents Reject Your Ideas

Trying to help parents with their finances can be frustrating. We may see clearly what we think our parents should do, yet they may refuse.

When it comes to parents and their money, adult children need to tread lightly. Parents may resent their children’s interference. They may fear they will lose their independence. We need to remember, our parents are adults and have the legal right to make their own decisions about all aspects of their lives including housing, health care and money. Yet when you fear for your parents’ health and safety and they refuse to budge, what can you do?

Here are lessons I have learned in my years working with clients of all ages. (Fifty-year-olds can be just as stubborn as ninety-year-olds.) 

Breathe deep, muster up patience, and expect some things will take time. While you may clearly see what Dad should do, if that action is not on his to-do list, it may take time for him to be willing to make a move. Perhaps he doesn’t understand why he should take a specific action. Or he may resent you “sticking your nose” into his business. Maybe he has a private, unvoiced emotional reason why he won’t agree to act. People need time to think about and accept changes, especially ones they did not initiate. You, meanwhile, need to be patient. 

Drop the subject. Bring it up again later. Ask about the objection to your idea. When I began working with Beverly, I found many undeposited dividend checks around her house. Most were too old to deposit. I suggested she arrange for direct deposit to her checking account. I received an immediate and strong, “No!” I dropped the subject and brought it up again a few weeks later. Again the idea was rejected. The third time, I asked Beverly about her objection. I learned she had a negative experience with companies auto drafting bill payments from her account. Once I understood this, I was able to clarify the difference between auto-deposits and auto-drafts. Beverly was then willing to consider direct depositing the dividend checks.   

Explain the consequences. Ann had dementia. Her daughter saw she was struggling and asked her to hire me to help with paperwork and bill paying. Initially Ann rejected the idea. Her daughter was able to tell Ann she feared if Ann did not accept help to pay her bills, eventually her utilities would be turned off and she would be forced to move to assisted living. Thinking assisted living was the dreaded nursing home of her parents’ generation, Ann reluctantly agreed to accept help. With assistance, Ann was able to remain in her home a few more years. 

Present your ideas as something to think about, rather than orders and ultimatums. Then give your parent time to process and think. Peggy owned rental properties. She was also in the early stages of dementia. When the rent checks arrived, she hid them in books to keep them from being stolen. It was a treasure hunt to find them each month and sometimes I needed to call the tenants and request replacement checks. Rather than telling her she had to have the checks sent to me so I could deposit them, I asked Peggy to consider this idea. I explained although the books may seem like a safe place, the checks were getting lost. She needed the money in her checking account to pay property taxes and other bills. It was also unfair to the tenants to not have their checks deposited quickly. After she had time to process this information, Peggy agreed to have the tenants send me their checks. Each month I presented her with a photocopy of the rent checks and a deposit slip. 

Consider whether it is best to leave things alone. David, who was in his 90’s, was sending $2,000 a month to his sixty-something year-old son. At the same time, David’s assets were quickly dwindling. Clearly, it made no sense for David to be giving away money to an adult who was close to his own retirement. Yet David would not consider discontinuing the checks. He worried his son could not otherwise afford his expensive medications. When I stepped back and looked at the overall situation, I decided to let it go. David was ill and wasn’t expected to live much longer. He felt strongly about giving his son money. In the end, he lived only another nine months.

Most of my ideas take time (sometimes months) and loads of patience. What if your parent doesn’t have the luxury of time? First, be clear on whether your parent truly needs to act now or whether it is your wish for him to make a move sooner. If he really does need to move quickly, ask your parent’s advisors for help. His accountant, attorney or investment advisor may be able to intervene. Many seniors have a trusted advisor with whom they have a strong relationship. Often the senior will listen this professional.

The names of individuals mentioned in this blog have been changed. This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

 

Be Smart About Money This Week

This week is Money Smart Week®.

Created by the Federal Reserve Bank of Chicago in 2002, Money Smart Week® is a national education campaign designed to help consumers better manage their personal finances. This year the dates are April 22 to 29.

Money Smart Week is the collaboration of hundreds of organizations across the country including businesses, financial institutions, schools, libraries, not-for-profits, government agencies and the media. They come together once a year to stress the importance of financial literacy.

Do you seek advice on:

  • Managing student debt?
  • Better managing your money?
  • Understanding the importance of credit and how it works?
  • Challenging errors on credit reports?
  • Budgeting?
  • Teaching your children about money?
  • Investing or planning for retirement?

These are just a few of the topics that will be covered in free educational seminars and activities from April 22 to 29. The programming is offered to all demographics and income levels.

To learn about events in your area, participate in webinars or access online resources, visit http://www.moneysmartweek.org. or do an internet search on “Money Smart Week 2017.”

You can test your financial literacy at these sites:

 This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

 

A Tale of Two POAs

This is a tale of two agents by power of attorney.

Our legal and financial advisors tell us we need a durable power of attorney for finances. With this legal document we name an “agent” who will manage our finances should we not be able to ourselves.

Some people name one agent. Others name an agent and a successor agent. I recently witnessed how the difference played out for two separate families.

Caroline named her daughter as her agent by power of attorney. Her daughter, Lilly, assisted her until Lilly had a personal crisis and had to resign. Since Caroline had not named a successor to her daughter, a social worker helped Caroline find a professional willing to serve in this role. Although Caroline had dementia, her advisors determined she had the capacity at that time to understand and sign a new POA document. As most new POA documents do, this one revoked all previous powers of attorney.

Now, a few years later, Lilly is able and willing to resume serving as her mother’s agent.  Caroline’s dementia, however, has advanced to the point where it is clear she would have no understanding of what she was signing, even if she could sign her name. Caroline thus cannot reappoint her daughter as her agent. While Caroline is now oblivious about the situation, her daughter is distraught. Lilly wants very much to serve as her mother’s agent as she believes this was Caroline’s wish. But, due to the advanced stage of her dementia, Caroline cannot sign another POA document.

Bess’ family had a different experience. In her power of attorney document, Bess named her daughter, Jean, to serve as her agent. She also named a successor, her grandson Jack, should her daughter decline to serve. Jean was serving as her mother’s agent when a tragedy struck her immediate family. Jean needed to step down. Jack then assumed this role and attended to Bess’ financial affairs. The transition was smooth.

A few years later, Jean was able to serve as her mother’s agent once again. Since both she and Jack had been named in Bess’ POA original document, when Jack stepped in to serve, a new POA document, revoking all previous ones, did not need to be written. Thus Jean’s appointment was still in place when she was ready to serve again.  She and Jack shared the responsibility until Bess’ recent death.

Since I am not an attorney, I cannot provide legal advice. I can, however, tell you the experiences of two different families and let you draw your own conclusions.

None of us can look into a crystal ball and predict what will happen in the future. But we can learn from others’ experiences and do our best to make our plans and wishes as solid as possible.

Some people named co-agents. Seek the advice of legal counsel to determine what is best for you or your loved ones. The names of individuals in this blog have been changed to protect their privacy. This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.

 

Too Good to Be True: The Bill Paying Scam

Just as I completed my last blog about protecting yourself against scams, I came across this warning from the Federal Trade Commission (FTC):  The FTC warns con artists are targeting church communities with a bill paying scam.

Since assisting clients with bill paying is one of my services, I was greatly concerned.

The FTC says swindlers claim a government program will pay your monthly bills for an up-front fee. Unsuspecting church-goers fall for this scheme. They learn about it at church, and, since they trust their church, believe it is a legitimate program. Their church leaders don’t understand it’s a scam.

The scammers charge an up-front processing fee and ask for personal and bank information so they can pay your bills electronically. Instead of paying your bills, however, the thieves now have enough information to clean out your bank account and steal your identity. In addition, you still owe money for your bills, may incur late fees, and have lost the fee you paid to the scammer.

If you are pitched a bill paying service that requires an upfront fee, be extremely suspicious. There is no government program that will pay your bills for a fee. There are legitimate government programs available for eligible people who need financial assistance to pay medical, energy and other necessary bills.  Recipients of these funds need to apply for these programs. And, the aid programs won’t charge a fee.

If you desire a service to help you send your bill payments, seek one out. Ask your trusted advisers such as attorneys, investment advisors and accountants, for recommendations. Daily money managers (DMMs) assist clients with bill paying. You can find a DMM by visiting the American Association of Daily Money Managers (AADMM), whose members are required to follow a code of ethics. (Disclosure: I am on the board of AADMM.) A good DMM will work to help you identify scams. If you can’t locate a DMM, a business bookkeeper may be willing to assist you.

Before your hire a daily money manager or any bill paying service, ask:

  • How long have you been in business?
  • What professional insurance do you carry?
  • To what professional organizations do you belong?
  • What is your professional background?
  • What are the standards of practice and code of ethics to which you adhere?
  • Do you have any professional certification or designation? (AADMM offers a voluntary Professional Daily Money Manager {PDMM} certification to its members.)
  • Do you take continuing education courses?
  • What are your fees and how will I be charged?
  • Can you provide a professional reference list?

Scam artists are extremely creative, trying to steal our money and identities when we are least suspecting it. Targeting members of a faith community is abysmal. The whole scam business – targeting any and all individuals – is appalling. But, as long as they make money, the con artists will continue. It is up to us to be vigilant and suspicious when approached with an offer or service for which we did not seek, which sounds too good to be true, or requires an up-front payment.

By Robyn Young

Money Care, LLC

 

Resources

Federal Trade Commission (FTC) The Federal Trade Commission, the nation’s consumer protection agency, works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. A wealth of information is available on its website.

FTC article, A Government Program That Pays Your Bills?

Legitimate government sites that connect you with assistance programs

American Association of Daily Money Managers (AADMM)

Protect Yourself from Scams: Stop and Think by Robyn Young

Beware of E-mail Scams by Stephanie Raccine

 

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.