Ten Giant Wastes of your Money

Do you waste money? Do you misuse it to the point that you might as well set it on fire? Do you have money to burn? I am sure you don’t think you do. No one wants to waste money but we often do unknowingly. There are more money wasters out there than I can list in the blog. After you have read my top ten ideas for how we waste money, I encourage you to pass along your own ideas. I will compile them and put your ideas into a future blog. You can respond to this blog or send them to GMeyer@meriwest.com.

1. Unused memberships for which you are still paying. Gym memberships, online gaming, dance clubs, fraternal organizations, etc. These memberships take money from us every month. If we are not using the advantages of these memberships, why are we still paying for them?
2. The social life is cool, but at what cost? One or two nights a week out drinking and carousing can cost you $30-$50 a night depending on the bar. It’s not all booze because when you are out drinking you invariably want to go out to eat. Who’s going to run home and fix pasta after four drinks? Besides, all those cool people at the bar are not at your home!
3. Regularly eating lunch in restaurants or take out. How much does it need to cost before you decide to start making your lunch at home and taking it with you? A cheap lunch of a deli sandwich and a soda can run $7 today, much more if you want something more elaborate. If I eat out four times a week all year long how much does that cost at my (low) average of $7 per day? Try nearly $1,500! It runs about a third as much to bring your lunch regularly.
4.  Style. Addicted to style and fashions? Do you have fashion magazines coming to your door? Is the next thing from your fav designer the next must have fashion addition? Cool your jets. This is a problem for men and women. You can be helped; you just have to admit you have a problem! Now, repeat after me, “I am addicted to fashion!”  Good, now get some counseling!
5. Gas hogs. Have you checked the gas mileage on your car lately? A ten mile per gallon difference, going from 20 mpg to 30 mpg, can be a $1,000 savings at $4 per gallon! (based on US resident avg. mileage of 15,000 miles annually)
6. Cable Premium Services. Do you still have HBO, Showtime, Starz, Cinemax, and the Movie Channel? It may be costing as much as $50 monthly/$600 annually to maintain these movie channels. Is it worth it? A subscription to  a streaming video provider is much cheaper!
7. Tired of paying for cable? Did you know your local broadcast TV stations still broadcast on the air? Modern flat screen TV’s have digital tuners built into them. A $10 rabbit ear  style TV antenna from your local electronics store connected to your Flat Screen can bring in a lot of programming; 54 stations in San Jose alone without a cable box or a satellite dish! Local television stations now broadcast in digital, meaning they have a lot more programming available. What was one channel prior to the advent of digital broadcasts is now 3 or 4 different channels. You want more? Consider internet TV. There are a variety of inexpensive internet TV devices ($100 or less) that work with your high speed wireless internet to bring you 1,000 channels of programming such as Youtube, the major TV networks, and most cable networks. Your Smart TV or BluRay DVD player may have this access built in to it. If you have a fast internet connection and an antenna on your TV, you might be fixed and be able to tell cable and their rising monthly fees good bye. Typical cable bills can be >$100 monthly. Would that look better in your savings account?
8. Still getting the newspaper at home? If you have the internet and a smart phone, is the newspaper necessary? Every news item in the paper was a news item 24 hours ago on the internet. Why do you want old news delivered to your door?
9. Do you buy extended warranties? When you check out of electronics stores with your gadgets, you are often asked if you want the extended warranty. These are unnecessary as the manufacturers generally have pretty good warranties to begin with. The extended warranties have a laundry list of exclusions that often prevent you from using the warranty as it was originally intended. Extended warranties are seldom used and make a lot of profit for the store where you purchased your item.
10. You don’t maintain a budget. You get paid and have no idea where your money goes because you don’t track it or pay attention to it. You hope that payday comes soon as you may be running out of money. That’s no way to live your life! Build a simple budget and use it to control your spending. You will save some money!

Get out last month’s checking account statement and see where your money went. How much was your cable bill? How much did you spend eating out? What was your gasoline bill for the month? You may find some fine incentives that can help justify one or two lifestyle changes that can help you save a few dollars here and there. The only question remaining is, are you ready to make that change? I am sure your savings account and your wallet would be happier. 

College Students Using a Credit Card

The best way to use a credit card is only for emergencies. A blown transmission is a good example. Not everyone has $2,000 to fix it when it goes. But that transmission is an integral part of your car and your car is an integral part of your economic development; i.e. it gets you to class and to work on time. So fixing that transmission quickly and being able to pay it off over time may be very important for many students.

This brings me to my second point beyond emergencies, use your card to only purchase assets; not liabilities. The transmission is an asset to your car. Liabilities? Vacations are a liability. When you pay for a vacation on a card, you are only deferring the costs. After the vacation, you only have memories. Pizzas, movies, concerts, fancy dinners, fashionable splashy clothes and such are drags on our monthly budgets if we decide to place them on our card. These things have virtually no value after we pay for them and have the experience of the movie etc. You want to go to a concert or a movie? Save your money for it. Make it a special part of your budget. Paying for it with saved money is much more satisfying.

Use the card to purchase assets. Your school books are an asset to your education. If you use your card to buy household items, use it for furniture like a couch. Then you are buying an asset for your house. Then, when you sit on that couch and write out your checks for your bills, you are sitting on your asset. J (A little banker humor.) But, think about it, if you suddenly fall on hard times, you can sell that couch and pay down your card. You can’t sell the memory of a concert or the taste of a meal from three months ago.

Also, whenever one uses their credit card, consider how you will pay it off before you charge it!

Here are some other ideas fresh from my blog:

1. When establishing your first credit, consider using a secured credit card; a card where you have to make a deposit in a savings account in order to establish and maintain the card. The money on deposit is your collateral for the credit. You now have an additional incentive besides maintaining our credit to be on time with your payments; your own money is at stake. Meriwest Credit Union offers this type of Secured Visa Card. Info on our Secured Visa Card is here.

2. Another secured type of credit option is the credit union share account loan. Most credit unions have this. You make a deposit to an account and then take a loan out against the funds in the account. As you pay it back on time, your CU lets the credit bureau know and it helps get you get established in managing credit. Secured Share Account Loan info is available here.

3. When you get your first credit card, do not celebrate. There are those who like to go out and get a quick pizza or a movie when their new credit card arrives. A new credit card is not a good excuse to go out to spend and celebrate.

4. Avoid gas cards issued by Shell, Chevron, and other oil companies. Those who are new to credit are often unaware that gas purchases on oil company cards have to be repaid monthly. Only repairs and major purchases, (tires, transmissions, etc.) can be paid over time.

5. Check your credit report annually at AnnualCreditReport.com to verify your current outstanding credit and prevent identity theft. Do you see a card on your report you didn’t order or apply for? If you are reviewing your report annually, you can take action fast and stop identity theft.

6. It seems simplistic, have a budget and plan your spending. A good budget can keep you from using your credit cards to supplement your monthly budget and help you pay off the debt you already have. 

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Our next Free Financial Education Workshop will take place Dec. 11th at our Main Office. 

Credit Myths and Repair
6:30pm to 7:30pm
5615 Chesbro Ave
San Jose CA 95123

Please RSVP with Greg Meyer at gmeyer@meriwest.com or 408-365-6328

5 Behaviors of Highly Effective Savers

Today's blog is a guest blog from the team at Debt.Org. Special thanks to the writer, Alanna Ritchie.

Managing personal finances successfully requires more than understanding numbers and having good accounting skills. In order for debt management solutions to be effective in helping you get out of debt and stay that way, they must be supported by changes in behavior.

Adopting five behaviors of highly effective savers can help to ensure that once you gain control over your debt and finances, you'll be able to keep that control in the long-term. Try incorporating these behaviors into the way you operate your personal finances, as well as your life in general, and you'll be sure to see positive results:

Set Incremental Goals

Setting a huge, generalized goal may end up overwhelming you, rather than moving you forward. Take that big goal – to get out of debt, perhaps – and break it into smaller, very specific steps with a workable, realistic time schedule. For example, when preparing for an upcoming big expense, set a weekly goal for saving for it.

Be a Good Record Keeper

Keeping track of what comes in and what goes out assists you in understanding the effects of your financial choices. When you are working to regain control of your finances, being a good record keeper will show you the positive results of your efforts, supplying even more motivation to keep up the good work.

3.       Own Your Situation and Your Choices

If creditors are pressing you or your credit card interest rates have skyrocketed, the bottom line is that such things are a natural consequence of your past behavior. Accept it, own it and deal with it, rather than being angry at the people calling or your credit card company. It will reduce the stress in your life and help you to be more focused on what has to be done. Maybe think of joining a credit union. They normally have fewer fees, lower interest rates on loans, more services and higher dividends on deposits than banks.

4.       Prioritize Properly

Place long-term well-being over instant gratification. Expand your vision beyond what you want in the moment to what you hope for and really need in the future by putting money in savings before you spend any for pleasure. Apply this concept to credit card use. Make financial choices—like putting money in savings or making a credit card purchase only if you know you will be able to handle payments—with the future in 

mind.

5.       Evaluate and Adjust as Needed

Effective savers are good at evaluating their own behaviors and situations and making the necessary improvements. They strive to be honest about their weaknesses and work hard to improve them. That is because they keep their goals and the big picture clearly in mind.

When you make these behaviors a part of how you manage your life and your finances, you'll be able to make the most out of the opportunity that debt settlement or other debt-related solutions offer you. All the work you do to eliminate debt will be wasted if you don't supplement the effort by developing behaviors that will keep you from returning to that position again.

Alanna Ritchie is a content writer for Debt.org, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College.

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Our next Free Financial Education Workshop is this Wednesday. Credit Myths and Repair will explain the top ten myths of managing credit. We will address balances, payments, collections, and judgments.  The workshop is fun and informative. You will learn more about credit than you had ever imagined!

Credit Myths and Repair

6:30 PM - Wednesday, August 28th. 

5615 Chesbro Ave, San Jose CA 95123

To RSVP, please contact gmeyer@meriwest.com or call 408-365-6328

Incoming Freshman: Easy Stuff for Managing your Money

Cool, you have graduated high school and have moved on to an institution of higher learning aka a university or community college. Maybe you’re self funded, parent-funded, or using a variety of grants and/or student loans to make your ends meet. Over the next four years, you will likely be handling more money than at any other time in your life so far.

As you start your classes, you will find there are a lot of demands on your wallet. Books and tuition are a large part of this demand. But it is managing your living expenses and personal entertainment that calls for the most attention. Take some advice and don’t throw money out a window!

1. Open a checking account at a credit union.
• Why a CU? No monthly service charges. Reduced fees. More Free ATM’s.
• Use your online banking to track your checking usage. Don’t be afraid to check your balance daily on your phone, laptop, or tablet, it’s free!
• Open up a savings, too. Set up a small amount to automatically transfer to the savings monthly. You may not miss the money but it will be there when you need it. $20 a month can be a lifesaver down the line.
2. Organize: Create some files for your important documents and statements. The basics will include:
• College File: This file has your documentation for your financial aid; loans or grants. It should hold the receipts for your tuition payments.
• Banking File: This file has all your bank statements (if you are not using your online banking). If you have a credit card you are managing, the statements would go here as well.
• Bills: This file is where your monthly/quarterly records of bills shall be filed away; i.e. rent, cable bills, cell phone, heat/electricity.
• Find a locking cabinet at a yard sale or second hand store to save your documentation. A simple lock is often all it takes to keep honest people honest and discourage would be identity thieves.
3. Budget: You have a limited amount of money each semester from your student aid grant or loan receipts.

·        Use any money left over after paying your tuition and book expenses to help pay for your living expenses. That money left over after paying your school expenses is not a bonus to be spent at parties and spring break. It is what you have to feed and cloth yourself.

·        Take the amount and break it out in even amounts for the next few months until your next aid payment is expected.

·        Plan for your expected expenses by creating a budget for each month. You don’t have to wait until October to create the budget for October.

·        Saving money should be the second item in your budget after paying your rent. See #1.

4. Avoid owning a car. This may sound crazy in “Car Culture” California, but in the big picture, owning a car is a major expense.
• Paying for gas, insurance, maintenance, and repairs can put a major crimp in your happy fun time at college.
• Colleges like San Jose State are close to all manner of stores and restaurants. There are lots of great shopping and eating options within easy walking or bike riding distances.
• Besides, municipal transportation passes/bus passes are so much cheaper than gas, tires, and car insurance!
5. Don’t get talked into applying for a credit card. You don’t need it.
• Of course, if Mom or Dad set you up with a card that you will manage together, that is a different matter. That card is in your possession for emergencies more than likely. Emergencies involve medical issues, police issues, fire, or floods. Running out of beer or pizza does not constitute an emergency. There is no such thing as an emergency night at the movies or an emergency concert.
• Manage the card well and, if your name is on the account, you will build a strong credit record while you are enrolled in college.
• Mismanaged cards don’t just get you into expensive credit card debt at high interest rates, it can affect you emotionally through depression and that can affect your studies.

Some of these suggestions may make your life easier. Some of them may save you money. The final word is that only you can make decisions and manage your finances. No one will do it for you. Do it right and you will thrive. I don’t like to think about the alternative! 

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Our next free financial literacy workshops are coming August 21st and 28th. 

• The 21st we will have our Real World Budgeting Class for Teenagers. The class is held here at our main office in our Training Center at 6:30pm. Click her to RSVP! 

• The 28th we will be offering The Myths of Credit and Credit Repair. This class will also be held here at our main office in our Training  Center at 6:30pm. Click here to RSVP!

Over Your Head Financially? Here are your top ten indicators...

 1. Carrying a balance on a credit card. If you are not paying them off, you are paying interest. If you could shift all the interest you paid on your consumer credit cards to your retirement account, how rich would you be? 

2. You use payday loans to make ends meet at the end of the month. Bad consumer! 

3. You’ve been turned down for a consolidation loan. This is a sure sign you are already over-extended and that your debt-to-income ratio is too high. Time to budget your expenses and start paying down what you owe! 

4. You’re hiding your spending behavior from family members. This red flag indicates that you are aware of your personal finance problems, but are unable to acknowledge it. Fighting with your spouse is a related indicator as financial troubles often lead to domestic trouble.

5. You finance your vehicle for more than five years. This may be a clear sign that you’re buying more vehicle than you can reasonably afford.

6. You get more than one late notice per year. On occasion, everybody may let a bill fall through the cracks and forget to pay it. But if you find yourself getting multiple late notices for bills, especially for utilities, then that’s a signal that your finances may be in serious trouble.

7. You get more than one bounced check per year. Again, most folks have had an occasional overdraft of their checking account. But if this happens more than once per year, it’s usually a sign of trouble.

8. You need a co-signer to get a loan. Those without a credit history can ignore this warning sign. However, for everyone else, the need for a co-signer indicates that banks no longer find you credit worthy.

9. You find yourself borrowing from your family and friends. We have heard that borrowing from friends or family is a surefire way to sow the seeds of discontent — especially when you fail to pay the money back.

10. You lack an emergency savings account of at least three months living expenses. Those who are living from paycheck to paycheck can be completely derailed by even the most modest unexpected expenses, such as the need for major car repairs.

Credit: Credit Unions are providing their members and the public with more financial education classes than ever. This is done for free as a community service to their neighbors. Yeah! 

Debit: Over the past year, several national banks have raised fees on their checking overdraft and non sufficient funds transactions. Boo! 

Our Next Financial Workshop:

May 22nd - Preventing Identity Theft -6:30pm
Meriwest Credit Union Main Office at 5615 Chesbro Ave, San Jose CA 95123
RSVP with Greg Meyer at gmeyer@meriwest.com or call at 408-365-6328

The Long Shadow of Bad Credit in a Job Search: How does your credit effect your ability to find a job? This story, from New York Times Business Day section, will give you some insights into how hiring managers view your credit report. Click the link and learn! 

 

Len Penzo - One of the great financial bloggers! Check out his blog here: LenPenzo.com

Happy Valentine's Day! Save your Money!

On Valentine’s Day, we tend to spend money on our significant others. Like many holidays, it is conspicuous for its spending. We buy flowers, jewelry, chocolates, and meals all in the hopes that he or she will be our Valentine. They say you have to “Spend money to make money.” I wish there were an easy rhyme that goes along with spending money for your Valentine’s date! How about “Spend money to get a Honey?”  

A dozen roses can cost from $40 to over one hundred depending on where you get them. Today, many restaurants are advertising special deals for Valentine's Day. Several are advertising $150 complete four course meals for two. Maybe I'm cheap, but for $150 they should change the oil in my car, too!

Couples do a lot of things together; they dance, they dine, and they drink just to name a few. But one of the most significant things they can do for themselves is save money. There was an old saying that “Two can live as cheaply as one.” For obvious reasons we know that is not true, but two can live together cheaper than two living apart. What do I mean? The sharing of Expenses.

When we get married or decide to share our home with someone, we can realize some significant savings in our expenses. By combining our budgets, we can find ourselves with a lot of extra cash. We share rent with someone. We also share our utility bills such as cable and electricity. Buying our ingredients and cooking most of our meals at home rather than eating out can almost make it seem as if two can eat as cheaply as one. The challenge is to take the savings amount of each of these categories and invest it in a savings or money market account. Couples need to have commitment, discipline and focus to do this.

Spare change is always good. We might have a savings plan and budget our spending, but there is always spare change in our pockets. Save that change and turn it in annually for a nice savings surprise. I average $250 annually in accumulated coins from my pocket. I have been told that is low!

These are adhoc methods of saving. The best way is to have a plan and a goal for your dollars. A simple goal of $50 in savings deposited each month at a savings interest rate of 3.5% can turn into $3,282 in five years! (Rates are low now, but with inflation, they will be going up in the future.)

Do we need two cars? Selling one car can save you a payment, insurance, gas, maintenance and repairs on it. Get a monthly fast pass for the local metro and bank the rest!

But there are also a lot of compelling reasons to save:

Young couples typically get invited to other couples’ weddings and showers with gift obligations. Savings can offset some of the expense of this compulsory gift giving.

Appliances break! Hair dryers, curling irons, razors, microwaves, toasters, blenders, mixers, etc can break and need replacement. How many women can go without a hair dryer or curling iron for even a day? How many men can go without a coffee maker or microwave? These are expensive to replace and can be trouble for your monthly budget. Save money for their replacement. 

Cars breakdown. Tires go flat, hoses leak, batteries go dead, and belts break. A broken transmission can cost you over $1,500! Just owning a car is a good reason to save. 

Is there someone the couple loves who lives far away? A grandparent, parent, or other favorite relative? Suppose that relative became gravely ill? Would they want to see them? Emergency travel is another good reason we save! Considering the expense of traveling, this may only be possible thru savings. (or the dread use of credit).

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Our next financial workshop is for teens: Reality Based Budgets - The Post College Simulation
February 20th at 6:30 PM at our Main Office 
Meriwest Credit Union
5615 Chesbro Ave
San Jose CA 95123

Please contact gmeyer@meriwest.com to RSVP for the workshop.

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