Start Your Christmas Gift Fund in October to Avoid Holiday Debt

Although we haven’t even seen Halloween yet, let alone Thanksgiving, it’s not too early to start budgeting for Christmas.

Make It Easier To Save
Are you paid twice a month?  Then you have 6 paydays between now and Christmas.  If your paycheck only comes once a month there are just three money days before the end of the year!

If you can save a portion of each paycheck between now and the end of December you’ll have built up a Christmas gift fund to pay for the load of presents you’ll shower on friends and family over the holidays.  It’s easier if you start saving small amounts early, rather than wait until the end of November and panicking about how much money you’re going to need; or worse just putting it all on your credit card and trying to pay it off in January.

How Much Should You Save?
The amount you spend on gifts is of course a personal choice.  One way to look at it could be to decide you’ll spend money on Christmas presents as a ratio of your disposable income. For example, if you have $500 left after expenses each pay period you could decide to set aside 30% of that for gifts.  The grand total that you’d save by the end of December would be your gift budget. 

The nice thing about this approach is that you have no reason to put it off.  Since you don’t have to figure out what you’re going to get each person and build a budget you’re less likely to procrastinate and delay your savings.  The other benefit is that it ties your spending to the amount you earn.

Another approach is to make a gift list of everything you’d like to buy, tally up the total, and set that as your Christmas budget.  Although saving as a percentage of your earnings is a simpler approach, itemizing your present wish list may be a little more realistic.  I imagine you’d tend to spend more overall with this approach but if you can identify the expenses in advance and save for them then that could be the better approach for you.

Avoid Holiday Debt
I can tell you right now some of the radio commercials you’ll hear come next January.  “Have a Holiday debt Hangover? Come down to XYZ Credit and consolidate your loans.”  They’ve got the ads lined up and ready to run.  Do you really want to have to go down to XYZ Credit and consolidate your loans next January? 

It will be the start to a new year, a time you can begin again fresh.  Why ruin it with a load of holiday debt?  Start planning now for your Christmas gift spending and you’ll be much happier in the new year, or at least less broke : )

Who Will Pay for Baby Bonds and How?

One of the best tips for building financial assets is to start early. Some people are fortunate enough to have family give us some seed money when we’re born.  Others of us are lucky to have money savvy parents that start saving for us when we’re young and pass that money sense on.

Of course, there are many people that don’t get that head start.  What can be done to help them? Hillary Clinton is proposing a “Baby Bond” program that would give every child born in the U.S. $5,000.  The idea is that they could use it to pay for expenses later in life such as college, a first home, or a business venture.

I think it’s an interesting proposal, putting the power of compound growth to work from the moment a person is born.  Letting people see the benefit of saving early and watching it grow. Of course there are many questions such as who would oversee and distribute the funds and what criteria would exist for cashing them in.  But before we answer any of these questions, I think we should first ask how we’re going to pay for it. An ABC news article makes the following cost estimate:

“Presuming that approximately 4 million children are born in the United States each year, a $500 “baby bond” would only cost roughly $2 billion per year. A $5,000 “baby bond” would cost the government $20 billion per year.”

Thanks to a variety of reasons the Federal government is already in massive debt.  Are we willing to commit to spending another twenty billion dollars a year when we don’t know how we’re going to pay for it?  I think after hammering out all the details to account for fraud, oversight, etc. it could really help give people a leg up but where will the money come from?  Is the government going to cut spending somewhere else, raise the money somehow, or just go deeper into debt?

Preferred Customers Specials – Sales Tactic #6


Remember the high school cafeteria where all the coolest kids sat at their own table?  You wouldn’t likely sit there without an invitation, what some people wouldn’t give for an invite like that.  Hopefully we’ve all grown up some since high school but everyone likes to feel special and a preferred customer invitation can still be hard to turn down.

Retailers love to pull out the Preferred Customer tactic when gunning for sales. A common approach is to send out a letter or email announcing a big sales event that is open to special customers only. “How did I become a preferred customer?”, you ask yourself.  “Oh well, who cares, I don’t want to miss out on preferred customer pricing”.

The truth of course is that retailers invite you because they prefer that you spend your money with them instead of someone else, making you a preferred customer. 

Warning Signs 
• Everyone Else Pays $100, You Pay $70  • Invitation Only
• Available Only for Preferred Customers  
• Use Your Preferred Customer Card

Tactic In Action
I received some sales letters from a local company a while back that epitomize the Preferred Customer tactic.  Here are some excerpts:

I truly appreciate your business. To prove it I’ve created an exclusive savings event just for you, something that WILL NOT BE ADVERTISED to the general public and will be available by invitation only!

Just mention this letter’s Special Financing and Savings and simply show your salesperson the enclosed card!

Because you’re a Preferred Customer, we want to offer you the price normally reserved for our Supplier Representatives for a LIMITED TIME only.  Supplier Pricing is the special low price offered to the representatives who sell supplies and services to us.

Offering Supplier Pricing to the public is a very rare event. On top of this special pricing, you can take advantage of Half-Off Delivery too!

What do you think?  Would this letter send you running as a preferred customer to the sale?

Protect Your Paycheck
At the bottom of the sales letter there is an interesting footnote:

“Because of the competitive nature of our business, some items may already be priced at or below Supplier Pricing.”

What I hear them saying is that they already offer the equivalent of Supplier Pricing on some items to the general public. If anyone can buy things at this price, what benefit is there to being a preferred customer?

In general it’s best to steer clear of Preferred Customer events.  They’re just a gimmick to get you into the store and give the retailer an opportunity to sell to you.  If you do attend one, remind the salesperson you’re a “preferred customer”. Tell them as a preferred customer you want special pricing below the advertised rates.  Chances are you’ll get a big fat NO.  If they’re willing to negotiate further then by all means take advantage of your preferred customer status : )

Sales Tactics
Preferred Customer is the 6th sales trick in the Sales Tactics Revealed series. Be sure to check out the first five if you haven’t already: Don’t Miss Out, You’ll Be Sorry, Buy Now, Pay Later, Rebate Ransom, and Sales Events.

Personal Finance Review – Working Too Hard Edition

I hate working over the weekend!  I hate working over the weekend! Did I mention that working over the weekend sucks?  The end of every quarter is a busy time at my job and this quarter was worse than normal for my team so I was stuck there late Friday and spent all day Saturday working.  The bad thing about working over the weekend for salaried employees, other than wasting away a day of your life, is that you don’t get paid any extra for your effort.  It’s easy to see why the movie Office Space resonates with so many people.  I’m gonna need you to come in on Saturday……

Despite working too hard, I managed to find some time to catch up on a little personal finance reading this weekend.  Here are some that I enjoyed:

-Give Me Some China. Give Me Some India. Give Me Some Chindia! @ Suns Financial Diary

-The Causes and Consequences of the Subprime Mortgage Financial Crisis @ The Digerati Life

-Where Exactly Is The “Pressure” To Spend? @ Money, Matter, & More

-GM and the UAW Tentatively Agree on New Contract @ Generation X Finance

-Dear Politicians, Please Adjust Roth IRA Limits for Areas of High Cost of Living @ Lazy Man & Money

-8 Personal Finance Lessons I Learned From Monopoly @ Blueprint for Financial Prosperity

-12 Investing Mistakes I’ve Made (and How You Can Learn From Them) @ Get Rich Slowly

-Q&A: Dave Ramsey and Debt Reduction @ Five Cent Nickel

-Giving Makes You Wealthier @ Free Money Finance

-Thoughts on Maxed Out @ Mighty Bargain Hunter

-33 Ways To Save Money And Reduce Debt: Illustrated Debt Snowball @ No Credit Needed

-Today is Better Than the Day Before @ Brip Blap

-NetBank Fails, Taken Over By FDIC and ING Direct @ My Money Blog

-Downsizing Your Home to Save Money @ Blogging Away Debt

-The One Hour Project: Construct Your Debt Snowball (Or Something Like It) @ The Simple Dollar

Thanks to Blunt Money for including Should Healthy People Pay Less for Health Insurance in the Carnival of Personal Finance and to PGA Auctions for hosting the Carnival of eBay Sellers and including the eBay Market Research post.

Would You Rather Pay More Taxes or Pay More for Health Care?

Those Canadians have it made! Or do they?  I’ve talked with two Canadians recently about their health care system and taxes and neither one of them seemed too pleased.

With the rising cost of health care in the US, having medical services funded by the government sounds pretty nice at first.  Here is a summary I found of the Canadian health system.

“Canada’s health care system is a group of socialized health insurance plans that provides coverage to all Canadian citizens. It is publicly funded and administered on a provincial or territorial basis, within guidelines set by the federal government.

Under the health care system, individual citizens are provided preventative care and medical treatments from primary care physicians as well as access to hospitals, dental surgery and additional medical services. With a few exceptions, all citizens qualify for health coverage regardless of medical history, personal income, or standard of living.”

Of course universal health care comes at a cost.  The income taxes in Canada are much higher than they are here in the US.  In fact the Canadian I visited with last night became an American citizen when his mother married a Texan and has no plans to move back to Canada simply because the high income taxes there. The other Canadian I talked with owns a business and said he’d gladly pay more of his own money for health care if it meant lowering taxes.

What do you think?  Do you prefer the current US system or would you rather see universal health care coverage at the cost of higher taxes?

United We Stand, Divided We Fall

Most things are easier when they’re done with the support of a group.  Group collaboration and support are easier now than they used to be due to the communication medium of the web.  Nancy, from Debt Consolidation Care emailed me a while ago to let me know about the community they’ve built online to help people with debt problems.

According to the main page there are 91204 members, that’s a lot of people in debt : (  The site offers videos, calculators, and articles on debt in addition to the forum of people all dealing with debt.  They also feature a list of personal finance sites, one of which is Money Smart Life!  Nancy offered to add Money Smart Life to the list if I’d let my readers know about the community.

When a person signs up on the site they can elect to be referred to a debt counseling company in their area.  If I signed up, I wouldn’t use this feature simply because I’d want to research the available options myself and contact who was the best fit for me. Fortunately, the only debt we have is our mortgage so it’s not a place I’d hang out but it seems to be a good resource for those that need it. 

Six Ingredients for Generating Passive Income

Who doesn’t want to spend more time doing what they enjoy and less time working for money? After reading about both active income and passive income recently I came up with a list of things that can help you move towards generating passive income.

The Idea
You need either a great new idea or a great way to package and distribute an existing idea that hasn’t reached its potential. If you don’t have either one, don’t despair.  If you are observant and curious your list of potential ideas or twists on existing ideas will grow over time.

Always ask lots of questions and regularly give yourself time alone to think(driving to work, early morning walks, lunch break in the library, etc).  Stay in touch with the media whether through newspaper, radio, or the Internet to keep a steady flow of new information mixing into your idea pool.

The Courage
Eventually you’ll need to try one of the ideas on your list.  Courage will be required because doing something new can be daunting, in addition to the fact your first idea could fail.  Courage will keep you going when you doubt yourself and will help you try the next idea on the list when the first one flops.

Many successful entrepreneurs fail at several ventures before they find one that works for them.  Think of it this way, the things you learn and groundwork you lay working on the projects that fail will give you the experience you need to run with the idea that finally takes off!

The Time
We humans can only absorb, process, and act on a certain amount of information in a given day.  It seems there is never enough time in the day to do everything we need to get done.  So, how can we pursue our ideas if we don’t have sufficient time? 

One way is to utilize the time of others.  It might mean partnering with another person or hiring someone to perform specific tasks.  Timothy Ferriss gives some good examples of in his book, The 4 Hour Work Week.  He had an idea, got it up and running, then hired people to keep it going while he travels the world.  Okay, technically its not passive if you’re still working 4 hours a week but that’s passive enough for me : )
The System
One thing that enabled Tim Ferris to leave his business in the hands of others was the system that he developed for getting things done in the company.  He doesn’t have to be present because he has processes established and documented he can hand to an employee and walk out the door. 

Your system might be the partners and processes you use to distribute an eBook, movie, or CD you create.  It could be the training program you offer to teach people how to sell your product or perform your service. It might be the franchise you establish.  It could be the  software you build to automate a job.  Once established, you let the system do the work instead of you.

The Friends
Raise your hand if you haven’t had at least one stupid idea in your life. Friends are a great sounding board for your ideas to help weed out the ones with problems you hadn’t thought about.  They can offer suggestions and if you work well together they could even become business partners. Plus spending all your free time working on new ideas can get old, it’s nice to have a little comic relief now and again.

The Money
Notice money is the last thing listed. Sure you need some to get started, but lack of money shouldn’t be a barrier to progress. You don’t have to get venture capital funding to pursue your passive income ideas.  So where do you get it from then?  You can choose to either make some extra money, I’d recommend selling on eBay, or spending less and saving some of what you earn in your day job.

Enjoying Your Time
There is definitely work that goes into generating passive income. Jonathon offers a formula that helps determine just how “passive” income actually is.  Despite the work up front, once you have your system in place you’ll hopefully be able to spend more time doing the things you enjoy and less time working for money.

How To Make Money Off of Halloween

Halloween has become one of the most profitable seasonal events around.  How can you get a piece of the $6 billion industry this year?

1) Buy Costumes on Clearance after Halloween
Places like Spirit Halloween setup shop in empty store fronts in September and jam them full of Halloween merchandise.  The day after Halloween they drop their prices considerably.  They remain open for a few more days to sell as much as they can on clearance, then pack it all back up and ship it off to a warehouse until the next year. Load up on cheap costumes after Halloween this fall and list them on eBay next September.

2) Halloween Video Profits
Get out your video camera and capture kids being frightened out of their wits or adults making fools out of themselves at costume parties this year.  If you get some really good footage you can upload it to a video site like Revver or MetaCafe and make a little money every time someone views your movie. Revver recently announced they’ve paid out $1 million to their video producers and affiliates over the last year.

3) Create Your Own Halloween Products
Create your own Halloween design and offer it for sale on  You can customize shirts, baby clothes, or hats and bags in Halloween style and make a little money for each item that sells.

4) Create a Halloween Affiliate Site
There are a lot of people spending a lot of money online the few weeks before Halloween.  You can setup a Halloween affiliate website and get paid a commission for every person that buys a costume through you.  Of course there are many sites for people to choose from so you’d need to make yours unique in some way. 

For example, I recently registered, a site that will feature only comfortable costumes. What fun is it to spend the night at a Halloween party in an uncomfortable costume? If you’re going to pay the money to buy a costume, why not buy a comfortable one?  Of course, now I just have to find the time to setup the site : )

Plan for Success
Like most seasonal events, making money during the season requires planning ahead and preparing for the big rush.  With Halloween only a month away there’s not much time to waste so get started on your Halloween idea today! What other ways can you think of to make money off of Halloween?

Going Steady with Your Boss – 20 Reasons Your Job Is Like a High School Relationship

Several decades ago, people built a career-long relationship with their employers.  Now-a-days companies are all about the bottom line and our employer relationships are more like bad high school crushes.  How many of these 20 reasons can you relate to?

1) Every person has an image of their ideal job in their head; many people spend a lot of time searching for the ideal job but never find it.

2) Somehow all your friends seem to know when you’re in the market and everyone knows this “perfect job” that they want to set you up with.

3) The interview is like the initial phone call. You don’t have enough time to really get to know the employer and what they’re all about in an hour.  Based on what you learn in that short time you set your first day(te) and hope for the best.  If it doesn’t work out, oh well, there are other fish in the sea : )

4) The early relationship is only based on mutual benefits. You’re attracted to their salary and benefits and your knowledge of AJAX or DB2 is what really excites your perspective employer.

Honeymoon Phase
5) The first day(te) is the most exciting part of the relationship.  Everything is brand new.  There isn’t any hard work, you’re still spending all your time learning about the employer, not arguing about client requirements and whose needs are more important.

Reality Check
6) Once the honeymoon phase wears off those quirky habits of your co-workers stop seeming so harmless and start becoming annoying.  Eventually you feel comfortable enough with them to let them know what you really think of their habits.

7) At least one weekend a month is ruined by “quality time” with your job, paging you for extra work or working overtime to help “maintain customer relationships”.

8) It never fails, your clingy job always comes up with something it wants you to do at 5:30 on Friday afternoon instead of going out on the town.

Green With Envy
9) After a while every day(te) starts to feel the same.  You start to wonder, where did the passion go?  You catch yourself sneaking peeks at sexy jobs on

10) The grass is always greener.  Did you hear about John?  He hooked up with this awesome new job with a bombshell company.  They have cool new technology and hot stock options!

Self Doubt
11) You make yourself believe you can change your job.  Sure you don’t like the way things are but if you “talk about it” with your boss you just might be able to salvage the relationship.

12) You think about venturing out after other jobs but aren’t ready to risk it.  You already have a decent catch, if you leave now, where will you get your health benefits?  What will you tell your friends when they ask which job you’re working steady with?

Death Throes
13) You begin complaining about your job behind its back to your friends.

14) You really want to check out the other available jobs but you can’t at work with your boss hovering over you and the proxy server blocking your view of job sites.

15) You start lying to your job because you can’t bear to spend another day(te) doing the same boring thing with the same boring people.  You call in sick an hour before the day(te) begins so you can spend time looking for other jobs.

Break Up Worries
16) You can’t decide whether you should ask for your ring back, I mean your two weeks banked vacation, when you leave.

17) You feel guilty when you think about leaving the relationship.  Senior prom, I mean the end of the quarter is coming up.  What will they do without you there?  They need you, maybe you should stick around at least a while longer.

18) You start to doubt your decision to move on.  What if I don’t like the next job?   What if I miss the old one?  Will they take me back if I admit I was wrong?

19) You decide that today’s the day to end it but you chicken out part way through the day(te).  You just couldn’t find the “right moment”.

20) You feel SO GOOD after you finally break it off!  You wonder why you didn’t do that a long time ago!  You can’t believe you stayed with that loser job for so long!  Now, on to find the next job and start the same dance all over again :(

Personal Finance Review – New Pavestone Patio Edition

As our son becomes more mobile, we’re spending more time in our backyard chasing him around.  This has given us the idea of installing a new patio behind our house.  The current plan is to use the Pavestone system to lay a 13 x 16 patio. 

Never having done this before, we headed to Home Depot this weekend full of questions.  Unfortunately the Pavestone experts were gone for the day so we’ll have to check back with them next week.  We did pickup a planning brochure and a multi-media CD with some planning information.  Has anyone ever used Pavestone for a patio before?  Any suggestions or tips you could offer that would help us get it done faster, cheaper, or with fewer mistakes : ) would be appreciated.  Here are some money articles I enjoyed this week:

-Top High-Yield Savings Accounts: Interest Rates And Some Thoughts @ Money, Matter, & More

-“Are You a Better Investor?” @ Suns Financial Diary

-A Lazy Portfolio @ Lazy Man & Money

-12 Ways To Beat Inflation: Don’t Let Rising Prices Get You Down @ The Digerati Life

-Transferring Assets Upon Death Through a Will @ Generation X Finance

-Vanguard Reduces Barrier to Entry for Voyager Services @ Five Cent Nickel

-ETF 101: 5 Reasons ETFs Trump Mutual Funds @ Free Money Finance

-Coolest Credit Card Loyalty Rewards @ Blueprint for Financial Prosperity

-A $503,000 typo? @ Mighty Bargain Hunter

-Financial Advisers and Stock Brokers: What’s the Difference? @ Consumerism Commentary

-Day 21 of 33 Days And 33 Ways To Save Money And Reduce Debt: Focus @ No Credit Needed

The Accidental Investor @ Paid Twice

-Smart and Simple Financial Strategies for Busy People @ Get Rich Slowly

-How To Build A One-Person Million-Dollar Web Business… By Age 17 @ My Money Blog

-The One Hour Project: Thoroughly Research A Stock @ The Simple Dollar

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