Secret cash advances worry wife

If spouses have separate credit card accounts, should they be accountable to each other? Also: How card issuers view cash advances.

Now even God takes credit cards

From churches to courts to Salvation Army kettles, more and more places allow you to keep your cash and pay with plastic. These 9 might surprise you.

Selling your gold? Don’t get taken

With the price of gold as high as it’s ever been, more people are rummaging through their dresser drawers, safe-deposit boxes and anywhere else they can to trade their forgotten bling for a thick wad of cash.

Minimalist Money: 6 Steps to Simplify Your Financial Life

This is a guest post from Leo Babauta of the simplicity blog, Zen Habits. Leo also recently started a new blog about minimalism, mnmlist.com.

Finances are one of the most complicated things in many people’s lives … and yet, they don’t have to be. With a little effort, you can simplify your financial life and end the money headaches most people face.

I consider myself a minimalist. As such, I shy from all kinds of complexities. I look for ways to simplify. I like worry-free solutions — I like to forget about it, so I can focus on things that are more important to me.

Here’s how I simplified my financial life:

Step one: I opted out of consumerism.
This is the first and most important step. If you’re a long-time GRS reader, you already know all about this — if you’re new, dig through the GRS archives for some great stuff about frugality and the consumerist mindset.

Too often, we get into the mindset of buying, of attaining more, of shopping for pleasure or stress relief or finding self-worth, of impulse buys. This is a mindset that comes from years of exposure to advertising, and it’s hard to stop. Start by becoming more conscious of it, and by telling yourself that you will no longer find pleasure in buying and having material things.

When you find yourself with an urge to buy, stop and breathe. Put the item on a 30-day list and don’t buy it until 30 days after you put it on the list. Usually the impulse will dissipate. Give thought to every purchase and ask yourself, “Is this really necessary? Can I live without it?” Try to live only with what’s necessary and get happiness from doing things — from spending time with people, from creating — rather than from material goods and spending.

Step two: I saved up an emergency fund
Before you can find financial peace of mind, you need an emergency fund, otherwise you’re always going to be living on the edge, from paycheck to paycheck. Every unexpected expense that comes up will derail everything I recommend below. This point has been driven home many times on this site, so I won’t belabor it. But start here: Save up at least $500 by putting $50-100 per paycheck towards this fund, and gradually build up to $1000 or more.

To do this, cut out unnecessary expenses. Look closely at your spending, including regular payments you might have forgotten about, and see what can be cut. There’s always something:

• magazine subscriptions
• monthly payments for services you don’t really need (including online services)
• buying books when you could use the library
• cable television
• a bigger car than you really need
• gourmet coffee when you can make your own at home
• a bigger home than you need
• storage space when you could just sell your stuff
• clothes and shoes when you already have plenty
• gadgets and computer purchases you don’t really need
• going out to lots of restaurants or bars or clubs or other expensive entertainment when you could stay home or do fun things without spending much

Put the money you cut into your emergency fund until it gets to at least $500.

Step three: I got out of debt.
Again, this has been well-covered here at GRS and elsewhere. But it’s important — otherwise, minimalist finances will be difficult to achieve. Debt payments are not essential — you shouldn’t have them in the first place. But until you pay them off, they’ll be headaches.

After you’ve saved at least $500 for your emergency fund, put most of your extra income towards debt payment, one debt at a time, until you’re all paid up. Maybe put a little each paycheck towards your emergency fund.

This step will take the longest, but it’s well worth it. And you can do the other stuff on this list immediately, without having to complete this step first.

Step four: I use cash, not credit
I’m a big fan of cash, and a big credit card hater. Credit card bills are a blight on most people’s finances; they make it too easy to spend money you don’t have, and then you end up paying tons in interest and fees.

Sure, it’s possible to use them responsibly, but in most cases, it’s an unnecessary temptation. Ditch the credit cards and use cash and (sometimes) Visa or Mastercard debit cards. These are better only allow you to spend money you already have.

Cash is great because you can withdraw a pre-determined amount each month, and you always know how much you have left. With credit cards, it’s easy to spend more than you have budgeted; to stay within a budget you’ll have to constantly track your expenses. No need to track expenses with cash — you can see you only have a little left. Try the envelope system for cash: Put designated amounts of cash into separate envelopes for groceries, gas and other spending.

Step five: I automated my finances.
I don’t like worrying about bills, so I’ve made my finances automagical. I have all my income automatically deposited in my checking account, and I’ve set up automatic payment for all bills. Some are done by automatic deduction, when possible, and others are done by using the online bill-paying system of my bank, set to recurring monthly payments. Other bills — my rent, for example — I’ve paid in big chunks, six months to a year in advance. I also make savings transfers automatic, and when I was in debt, those payments were automatic as well.

It helps to have a sizable emergency fund so you can make payments like this and not worry about whether there’s enough in your account for all of your automatic bill payments. I’ve actually split my emergency fund into two:

• Most is in an online savings account.
• The rest is in my checking, so I always have a comfortable cushion in my checking account.

It takes a little while to get automated finances just right, but you can start today by setting up automatic deposits and deductions and bill payments. It’s nice, because your finances also become paperless.

I recommend putting a reminder in your calendar to check on your bank accounts once a week, just for peace of mind. Otherwise, you can now forget about finances.

Step six: I don’t buy unless I need it — and have the money.
This is such an old and common-sense piece of advice that it’s almost embarrassing to put it here. But it’s important.

Once you’ve done all of the above, you’re debt-free with a good emergency fund and automatic finances. But what about purchases from that point forward? Should you buy a bike if you want to commute by bike? Should you buy new furniture? The answer is two-fold:

1. Don’t buy it unless you really need it, and
2. Don’t buy it unless you have the money already. Not “if you have the money next month or next week”, but only if you have the money in hand.

It’s as simple as that.

Avoid debt as much as possible. The last car I bought was used, and I was able to pay cash for it (with a trade-in). I hope to buy my first house completely with cash (or at least mostly with cash).

Don’t buy it unless you need it — and only if you have the money. If you follow these two rules, you’ll never have to worry about finances again. You’ll be able to bask in the glory of your worry-free financial life — and laugh in the face of humanity.

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Related Articles at Get Rich Slowly:

• PearBudget
• Live Simple – Tactics to Improve Your Life
• How to Organize Your Finances in Four Easy Steps
• Have More by Choosing Less
• Put Yourself on a Debt Diet

How Much Should You Have in Savings?

A couple of weeks ago, we had a fine discussion about how much we should save for retirement. But how much should we have saved for today? How much should we have in cash reserves?

As I write my own book, I’m reading (and re-reading) dozens of other money manuals. While perusing Bert Whitehead’s Why Smart People Do Stupid Things With Money, I came across his table of “minimum base liquidity”. (Whitehead is a highly-educated financial advisor. He uses terms like “minimum base liquidity” instead of “cash on hand”.)

Whitehead writes:

After making the commitment to save 10% of their income, the next question most people ask is, “Where should I be investing these savings?” The first goal is to have adequate cash reserves.

Many financial pundits in the media say everyone should have cash reserves equal to 3 to 6 months of income. For most middle-income people, that is simply a pipe dream…With our clients, I use a different and more realistic approach.

To Whitehead, adequate cash reserves differ depending on your circumstances. His “different and more realistic approach” uses a tiered system:

• If you are an employee with a regular income, you should have 10% of your annual income in savings.
• If you are self-employed or your income fluctuates (through commissions, for example), you should have 20% of your annual income in savings.
• If you are retired, you should have 30% of your annual income in savings. (I’m assuming this means retirement income since if you’re retired you don’t have employment income.)
• If you’re in danger of losing your job, you should have 40% of your annual income in savings.

Whitehead draws a distinction between cash reserves and emergency reserves. I’m not exactly clear on what he thinks each is for. I get the impression that the cash reserves — the “minimum base liquidity” — is merely the minimum Whitehead believes we should have on hand to aid in our cash flow. This should also be used for occasions when the car breaks down or the roof leaks.

As insurance against severe emergencies, Whitehead recommends maintaining “emergency liquidity” equal to twice your cash reserves. (He also says to hold this money in retirement accounts, not savings accounts.)

Though I find certain elements of Whitehead’s plan confusing, I do like his tiered approach to saving. It makes sense to me that not everyone should save the same amount. Our circumstances and needs are different. As always, do what works for you.

For more information, borrow Why Smart People Do Stupid Things With Money from your public library.

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Related Articles at Get Rich Slowly:

• Don’t Just Save Your Quarters — Save Your Dollars, Too!
• SmartyPig: A Goal-Oriented Savings Account
• Ask the Readers: When Is It Okay to Spend Your Savings?
• Money Market and High-Yield Savings Accounts
• Certificate of Deposit (CD) Rates

Federal Housing Agency Low on Cash

For the first time in its history, the Federal Housing Administration (FHA) will see its cash reserves fall below the two percent minimum mandated by Congress. DailyFinance explores what options the FHA has to raise cash.

GM Rescinds White-Collar Pay Cuts

General Motors Co. has rescinded white-collar pay cuts it made last spring as it desperately tried to conserve cash and avoid filing for bankruptcy protection.

Green Sherpa: An Online Cash-Flow Management Tool

A couple of months ago, I posted a list of 16 alternatives to Microsoft Money. GRS readers left nearly 200 responses evaluating the various personal finance programs available on the web and for the desktop.

One feature that many users crave is the ability to project their future cash flow. While it’s important to track where your money’s gone, some folks find it valuable to predict where money will go in the weeks or months ahead.

Last week, I received a press release from an outfit called Green Sherpa touting their new personal-finance tool. Green Sherpa:

• Uses a check-register format to track your transactions.
• Automatically categorizes your spending.
• Allows users to edit transactions and categories as needed.
• Supports split transactions and bank reconciliation.
• Allows users to set and track financial goals.

But the feature that caught my eye (and the reason I’m writing this) is Green Sherpa’s ability to project cash flow. This sounds like something that might be useful to certain GRS readers. Here’s how the website describes the functionality:

With Green Sherpa, budgets are a thing of the past, literally. Budgets only represent an AVERAGE, or IDEAL, month. In reality, cash flow is more fluid than that. Green Sherpa’s Cash Flow Projection feature allows you to create a forecast of future cash flow based not only on your historical spending but, more importantly, on your future PROJECTED expenses and income. This feature lets you enter one-time anticipated expenses, or create more complex structures such as bi-weekly or bi-monthly schedules.

I could see this tool being very useful for certain people, especially those who struggle to budget with an irregular income. If your income is variable, a cash-flow management tool can help you stay on-budget.

So, what’s the catch? Though nearly all of its competitors are free, Green Sherpa costs money. You can sign up for a 14-day free trial, but after that it’s $7.95 per month ($5.95 per month if you sign up for a year at a time).

Some of you will be happy to pay $7.95/month in order to obtain a good cash-flow projection tool. Not me. I’ll stick with desktop Quicken for now.

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Related Articles at Get Rich Slowly:

• Ask the Readers: How Do You Manage Your Money?
• Can One of You Afford to Quit?
• The Green Issue: Kiplinger’s Tackles the Environment
• The Power of Positive Cash Flow
• Saving and Investing: An Introduction to Financial Statements

3 Ways to Turn Trash Into Cash

The Government’s “Cash for Clunkers” program may be history, but the idea lives on.

The Department of Energy recently launched a Cash for Refrigerators program to encourage consumers to replace their old appliances with new, energy-efficient ones. Babies “R” Us now offers a 20% discount on cribs, strollers and other pieces of baby gear to customers who bring in used ones.

Is a reverse mortgage right for you?

On the face of it, a reverse mortgage sounds like a no-lose deal for older homeowners. A lender gives you what amounts to a cash advance on your home equity — no minimum income or credit score required. And you don’t have to pay it back until you move or die, when the proceeds from the house sale typically will be used to close out the loan. But in fact, reverse mortgages have some serious drawbacks. Here’s what you need to know.

Trade in Your Baby Gear at Toys R Us

On the heels of Cash for Clunkers and riding the tide of heightened interest in product safety, Toys R Us is making an unusual offer: Bring in your used cribs, car seats and other baby products and get a discount on new ones.

Dave Ramsey Isn’t Keen on Cash for Clunkers

Now that Cash For Clunkers has come to a merciful conclusion, I thought it would be fun to post this video of get-out-of-debt guru Dave Ramsey explaining on his FOX Business show why Cash For Clunkers was such a horrible program. Check out the clip below, courtesy of Hulu.

Dave Ramsey Isn’t Keen on Cash for Clunkers

Now that Cash For Clunkers has come to a merciful conclusion, I thought it would be fun to post this video of get-out-of-debt guru Dave Ramsey explaining on his FOX Business show why Cash For Clunkers was such a horrible program. Check out the clip below, courtesy of Hulu.

625,000 Clunkers and Counting

The U.S. Department of Transportation had received 625,000 applications from dealers for Cash for Clunkers vouchers totaling $2.58 billion as of Monday morning, the DOT said.