Borrowing Money from Family

Borrowing money from family has kept people out of the cold for thousands of years. It hasn’t always taken the form of borrowing money directly but the family structure has offered food, shelter, jobs, and loans to brothers, sisters, parents, and all manner of family members.

Lending money to people you know is always tricky, a loan can wreak havoc on a relationship. Add family dynamics in on top of that and borrowing money from family members can cause tensions for years down the road.  However, as I mentioned at first, family bonds are an important part of our society so I wanted to look a little at why it is we sometimes borrow money from our brothers and sisters.

Money Skills
Everyone in your family has different skills; some people are skilled carpenters, talented teachers, knowledgeable doctors, brilliant attorneys, computer geeks, etc.

Some of us are really good at managing our money and others never did learn the skill. It’s like learning to play the piano, two siblings can take lessons together. One might get really good and go on to play for the rest of their life while the other isn’t interested and can’t even put a few notes together.

Of course, the difference is that money management is a vital skill that can make your life much easier, or harder, depending on how well you learn it.  So you can certainly argue that everyone SHOULD learn best money practices but the fact is that not everyone does.

So while it doesn’t matter much 15 years down the road if your sister is a much better piano player than you, it obviously makes a huge difference in your daily life if your money skills are much weaker.

Swapping Skills
Often times in families we’ll share our skills with each other. We may ask our dad to fix a lamp, our father-in-law to help build a patio, or our brother to fix our computer.

For example, I’m not the best fixer-upper and really appreciate it if my dad or father-in-law can fix something around the house for us.  My area of expertise is writing computer software, so if they need help with their computer, email, or something along those lines I’m happy to help.

So if your brother can come work on your deck or your cousin will come fix you computer why can’t you go help a family member in need to manage their money?  In some relationships this will work but in others it probably wouldn’t fly. This is because money is a sensitive subject and there are a HUGE number of emotional triggers tied to it.  You can read the book “Why Smart People Make Big Money Mistakes” to help understand why you and your family make the money decisions that they do.

Swapping skills to help your family manage their money may work in some cases but if family members won’t let you see inside their financial bubble then your money skills won’t do them much good.  However, since you do know how to manage your money you’ll likely have some saved up so your parents or siblings may come to you and ask to borrow money.

Money Advice
Even if your brother or cousin does give you a peek at their finances, it doesn’t mean that they’ll listen to any advice you have to give.

For example, my dad is a family practice physician and has given out his fair share of medical advice to our family over the years.  Recently he talked to me about how I should lose some weight and even helped me calculate a plan on how many calories to eliminate per day.  I know he’s right and he gave me the information I need to drop some weight but I have yet to implement it.  It certainly isn’t the first time he’s given medical tips to his family that were heard but not followed.

The same goes with money, you can explain savings, budgets, and debt until you’re blue in the face but if they don’t listen and take action there’s not much you can do.  Of course, since you know so much about money, you may be one of the first people they turn to when they’re looking to borrow money.

Lending Money to Family
So if your brother or sister has horrible money skills and won’t take your advice, what can you do?  Unfortunately, there’s no good answer; we’re torn between helping our family and letting them learn their lesson and hoping they’ll change their ways as a result.

If you do decide to lend money to family, it’s often best to make it a formal contract by using a peer to peer lending service like Lending Club or Prosper to facilitate the loan.  You can read more about those options and some other things to consider when lending money to family.

Posted on June 17th, 2010 in Debt, Family, Loans | 12 Comments

Written by Ben Edwards · Filed Under Debt, Family, Loans 

Get Your Car Ready for a Roadtrip

Summer road trips can be a lot of fun, driving across country with friends or family is an experience you won’t likely soon forget.  Getting your car ready for a road trip can help make it a more enjoyable experience by hopefully avoiding any car problems on the way.

One thing many people don’t think about when going on a roadtrip are the hidden costs of wear and tear on your vehicle.  Many times the immediate cost of driving is cheaper than buying plane tickets for your whole family but you are putting miles on your car.

Below are 10 things you can do to get your car ready for a roadtrip and help prevent those extra miles from turning an expensive roadside emergency.

1) Check your Tire Pressure.  The appropriate level should be listed in your manual and usually on a label inside yor driver’s door. Properly inflated tires won’t save you as much as driving a fuel efficient car but they can help.  One other way to save some money on gas is to use a gas credit card.

2) Align your Tires.  Having your tires aligned will reduce uneven wear and make your tires last longer.  If you’re about to put hundreds or thousands of miles on your tires, an alignment will give them a longer life.

3) Rotate your Tires.  Rotating your tires every 5000 miles also will distribute the wear on your tires and make them last longer.  Even inflated and aligned tires can still have uneven tread usage, rotating your tires will prolong their life. 

4) Brake Check. While the mechanic has your tires off, have them check your brakes.  If your rotors or brake pads need replacing, now’s a better time to do it than the middle of your road trip.

5) Check Coolant Levels. Driving for long periods in the hot summer weather will really heat up your car and can do some major damage to your engine.  Repairs for an overheating car can be expensive, when I was younger my car overheated and cracked the head gasket.

6) Change Engine Oil. Depending on the age of your car and the oil you use, oil changes are recommended every 3K – 5K miles.  Even if you had your oil changed recently, it’s smart to check your oil level before you leave on a road trip. New engines are very expensive, if you don’t have enough oil in your car you could end up spending thousands of dollar on an engine.

7) Check Windshield Wipers & Fluid.  Being able to see where you’re going is a pretty important detail when you’re driving.  Replace old wiper blades and fill up the windshield wiper fluid so you can keep you windshield clear in summer rain storms.

8 ) Fill Power Steering Fluid. Have you ever tried to steer without power steering, not very safe. Power steering fluid is necessary to make the steering system operate, make sure it’s full.

9) Add Brake Fluid. If your brake fluid is low, you can add more in the resivoir under the hood.  If you haven’t had your brake fluid flushed in the last 30,000 miles ask your mechanic about it.

10) Check Transmission Fluid. Keeping your automatic transmission fluid clean will help your transmission last longer.  Car makers used to recommend changing it every 60K miles but now they’re suggesting you do it more often, more along the lines of 30K miles. 

Hopefully these tips will help you avoid any unpleasant or costly emergency repairs in the middle of your travels. Have fun on your road trip!

Posted on June 16th, 2010 in Cars, Travel | 6 Comments

Written by Ben Edwards · Filed Under Cars, Travel 

Find a Locksmith Without Being Scammed

Locksmith scams are designed to take advantage of you when you’re vulnerable, locked out of your car or house.

Apparently locksmith scams are a big problem around the US, typically they quote you one price when you call, then charge you double or triple once they’re done with the work.  It sounds like a basic bait-and-switch trick but some companies have created systems that allow them to cheat and decieve people on a larger scale.

These companies advertise local locksmith services in print media and online but when you call the number, your call is routed to a central phone directory.  The operator gives you a price quote and then dispatches a local locksmith to your home or car.

What you don’t know until it’s too late is that the local locksmiths they partner with will charge you exorbitant prices, twice or three times what you were quoted on the phone.  Of course, many people balk at paying that much when they were quoted a much lower rate.  At that point, some of these scammy locksmiths get very aggressive about insisting you pay.  Many times they’ll threaten to call the police if you don’t pay.  Another common technique is to follow you to the ATM and stand behind you while you withdraw the hundreds of dollars they charged you.

The tricky thing about these scams is that they get you in a time of need.  For example, you locked your keys in your car or someone broke into your house and you need to put in new locks.  Of course, not all locksmiths operate like this but there have been a growing number of similar scams over the last few years.

I wasn’t actually aware this was a problem until I read about people’s troubles finding a locksmith in the monthly Angies List magazine.  They offer a few tips for avoiding locksmith scams:

  • Before a locksmith begins work, ask again for an estimate of services and parts.
  • Beware of locksmiths who won’t provide identification or specific information about their employee.
  • One of the simplest ways to get a lock open is to drill it out, but it’s also the most expensive for you.  Be wary if their first suggestion is to drill it out, most experienced locksmiths won’t need to go to this extreme.
  • Ask the locksmith about their state license.
Posted on June 15th, 2010 in Home Owner | 3 Comments

Written by Ben Edwards · Filed Under Home Owner 

American Express Blue Cash Bonus

Blue Cash from American Express is one of my favorite credit cards, as you probably know if you’ve been reading this site for a while.

Our Blue Cash card comes up any time I mention credit card rewards because we use it to earn hundreds of dollars cash back each year.  Of course, if you already own and use the Blue Cash card you might tune out every time I bring it up because you’re already earning the rewards and there’s nothing else you need to know about the card.

This time might be a little different.  If you’re a card member, you can actually get paid to let other people know what you think of the card.

Blue Cash Bonus

For the next few several months, American Express is giving you $25 for each person you recommend the card to that likes what they see and sign up.  The Blue Cash bonus comes in the form of a credit on your AmEx statement and takes a month or two to show up.  The people you refer can’t simply apply, they also have to be approved in order for you to get the credit card bonus.

American Express doesn’t put a limit on the number of people that you can refer so you could earn more than $25 if you told a few friends and a few of them liked the card and became cardmembers.  American Express has also set it up so that the people you refer get a bonus as well.

$25 Credit Card Signup Bonus

People you refer who apply and get approved also get a credit card signup bonus of $25 after they make their first purchase on their card.  So each new person you refer earns you $25 and them $25, not too shabby.

Because credit applications are a private process, American Express won’t give you a list of who was approved or denied for the Blue Cash card.  You’ll only get a notice that one of the people who applied was approved and that you’ll be getting a $25 statement credit.

How to Refer People

If you’re a current Blue Cash cardmember, look for an email from American Express with a referral link at the bottom.  You’ll have to login to your account (so make sure the email is from American Express and isn’t a scam email) and then you’ll see the form below. 

americanexpressbluecash

You enter in your name and email plus the name/email of people you’d like to refer.  It’s not shown here but you can also include a message to send to them as well.

If you haven’t gotten an email from American Express, you can also try using the link below. It will take you to your account login page and then should send you to your referral page – Blue Cash Referral

Posted on June 14th, 2010 in Credit Cards, Deals | 3 Comments

Written by Ben Edwards · Filed Under Credit Cards, Deals 

World Cup Goals

Watching the US play in the World Cup got me thinking about goals.  Not just the ball in the back of the net goals, but also financial goals that we set for ourselves.

One goal of mine is to attend the World Cup at some point in my life.  I grew up playing soccer; I really love the sport and in my high school years spent a lot of my free time playing the game.  I lived in Germany at the time so not only did I get to play on and against some German teams I also was also immersed in the German passion for the game.  I can only imagine that being at the World Cup, where so many passionate and devoted fans from around the globe gather to watch the best in the world play soccer, would be an amazing experience.

Of course the plane ticket, game tickets, hotels, food, and vacation time would all add up for a pretty hefty price tag for a trip like that.  Given the current financial constraints of our family spending all that money would certainly hurt our progress towards other family goals.

Of course not everyone wants to go to the World Cup but I imagine we all have something similar that we’d love to do that carries a big price tag. What’s your “World Cup” type goal and how do you prioritize it against all your other goals?

In addition to that question, I’ll also leave you with a round up of some interesting personal finance articles from the last week:

Insurance

Investing

Career

Personal Finance

Real Estate

Financial Advice

Posted on June 13th, 2010 in Personal Finance | 2 Comments

Written by Ben Edwards · Filed Under Personal Finance 

Seven Habits of Financially Healthy Couples

This week is our 10 year wedding anniversary and after writing about how to prepare financially to save your marriage from money problems I also wanted to share some habits that have helped us successfully manage our money together over the last ten years.

These are in no specific order and in case you’re wondering I’m not writing this just to earn points with my wife, these habits actually work.

1) Listening

The key here is finding out what the other person’s hopes and dreams are.  There are probably one or two things they really want in their life that could drive your financial decisions over the next decade or two.  For example, they might want to:

  • Start their own business
  • Have three kids
  • Stay at home with the children
  • Move to a different town
  • Buy a different house
  • Go back to school
  • Change careers
  • Get a big promotion

Listening to what the other person really wants and making a plan for how to achieve it is HUGE.  This sets the expectations of what you both can and can’t afford and how you have to mange your money together in order to achieve your hopes and dreams.

2) Communicating

You can think of listening and planning as the high level, strategic habit and communicating as the in-the-trenches, make it happen habit.

This is where you talk regularly about how you’re going to spend your money ahead of time.  Life never goes according to plan, so as the need to spend money comes up, we clear any big expenditures with each other before we make them.

3) Trust

Trust makes communicating much easier.  If you have a plan for what you want out of life and how you’ll spend your money to get there, being able to trust your spouse to spend accordingly makes life much easier.

Think of it this way, if your spouse had to call you each time they wanted to spend even 50 cents, it would drive you both crazy.  If you can trust them to make 80–90% of their spending decisions on their own and only have to discuss the really big decisions then everyone is much happier.

A lack of trust is certainly a HUGE problem. Watching and questioning every penny your husband or wife spends is a recipe for regular and unpleasant fights.

4) Compromise

Even if you both have the same end money goals, you’ll occasionally have a difference of opinion on whether a certain purchase is in line with those goals.

If there’s something big I don’t think my wife should spend money on, or something small that she spends on regularly, I’ll let her know.  The delivery is important, I bring it up in a way that doesn’t put her on the defensive but lets her know it’s bothering me and I want to talk about it.

Or sometimes it’s something she’s been thinking about spending money on that she brings to my attention and I don’t think it sounds like a good idea.

The important thing here is to be open to discussion, to stay calm, and be aware you’re not always going to get what you want.  There’s not enough space here to go over the best practices of negotiating and compromise but you can get a good handle on it with the book “Getting to Yes”.

5) Specialization

Each of us specializes in certain aspects of money in our marriage.  For example, my wife is awesome at finding great deals on kids clothes and toys at garage sales and places like Children’s Orchard.  Since she’s the main spender in the family, she’s good at finding deals and making our money go farther.

Personally, I hate shopping and would rather be doing almost anything other than shopping so it’s  a good fit for us that she has a knack for it.

On the other hand, I enjoy messing around with finances and creating systems so I setup our online bill pay picked the best online savings accounts, and found the best rewards credit cards for all the money we spend.

Of course, the way you split up things may be different but the important point is to find the things you and your spouse are good at and enjoy.

6) Hard Work

Both my wife and I work hard to make and mange money for our family.  If one person is busting their butt and the other person is relaxing on the couch then I predict a fight.  Of course, we all need time to relax and unwind, especially if it’s been a tough day, but if one person is consistently working harder than the other then sooner or later you’ll be fighting over money.

Working hard doesn’t have to mean working to earn money.  For a while we both had full time jobs, once we had kids my wife switched to a part time job but she still worked hard even when she wasn’t at work.  Even though my wife was laid off recently and won’t be bringing in any money, she’ll still be working hard to raise our two kids.

Hard work can take it’s toll physically and mentally, it’s important to be there to support each other when your spouse is having a rough day or a tough week.

7) Honesty & Forgiveness

Even if you listen, and communicate, and trust there will be times when you or your spouse makes a mistake that makes one of you mad.

The key here is to admit when you make a mistake, nobody is perfect.  These habits are best practices; they’re easy to read about but harder to consistently put into action.  You’re going to mess up and so will your spouse.  If you simply apologize and move on then it’s water under the bridge and you can get on with your life. 

If you are stubborn and won’t say sorry, or if you get hung up on your spouse’s mistake and won’t let them live it down, then you’re in for a nasty day or nasty week.  It’s much easy in the long run to forgive them for their mistake.

Of course, if it becomes a regular thing you’ll have to go back and work on the listening and communicating but give them the benefit of the doubt at first and don’t turn every mistake into a big money battle.

Happily Ever After

Hopefully you find some or all of these habits useful in your marriage.  Money can’t make you happy in your marriage but if you handle it poorly it can certainly make you and your family unhappy.  Personally, I would prefer happily ever after : )

Posted on June 12th, 2010 in Marriage Money, Personal Finance | 9 Comments

Written by Ben Edwards · Filed Under Marriage Money, Personal Finance 

PayPal Student Account Card Giveaway

Luckily student debit cards are a little more than our little ones need right now but someday we’ll need a way to keep an eye on their student checking accounts while letting them learn about managing money.

PayPal Student Account

One of our options down the road will be the PayPal student account.  To use it, you setup and fund a regular PayPal account and then link a student account, where you can set spending limits.  Then you order your kid a student debit card and you’re able to see how they spend their money.  They can’t spend more than the maximum amount you set and you can setup automatic transfers into the student account over time.

Student Account Giveaway

PayPal is giving away $50 to a parent that wants to give the student account a try for their kid. To enter into the giveaway leave a comment below about one of the worst money moves you made as a kid.  One person will be selected at random and put into touch with PayPal.  They’ll give the winner access to a student PayPal account with a $25 balance and once you’ve submitted the order for the student debit card another $25 will be deposited into the account.

You can link more than one student card to your PayPal account but the giveaway just applies for one student account.  The giveaway runs through 6/15, if you win I’ll need your email address to forward onto PayPal.

Again, if you want to enter, leave a comment below about the worst money move you made when you were a kid.

Posted on June 7th, 2010 in Personal Finance | 7 Comments

Written by Ben Edwards · Filed Under Personal Finance 

Credit Card Reviews Site

A little over a year ago I added a section for credit card reviews, where I look at things like rewards points, card costs, and unique card features from companies like Discover, Chase, American Express, & Citibank. 

I actually added on the credit card reviews so I could learn additional technology skills (PHP & web services) when I was looking for a new job.  I submitted the code from the card reviews section as part of the interview process and ended up getting the job so I must have done something right : )

Last month we took a look at cards from Citi, American Express, Chase, and some cool VISA cards from the Pentagon Federal Credit Union.  I won’t go into detail about each of the cards, you can read about them on the site, but I’ll talk a little about some of them.

PenFed Rewards Cards

Unfortunately, not everyone can apply for the three PenFed credit cards, they’re offered by the Pentagon Federal Credit Union and mainly for military and certain government employees and their families.  The PenFed Premium Travel Rewards and PenFed Platinum Cash Rewards offer some pretty good rewards points that give other rewards cards a run for their money.  If you’d like to give them a try but don’t meet the membership criteria, you can also qualify if you join the non-profit, National Military Family Association.

Other Cards

The Citibank card I referred to above was the Citi Forward card.  It’s only been around for a little over a year and has a good rewards program for entertainment purchases and offers 0% on balance transfers. I also mentioned it recently in the list of cash bonus cards that offer you an incentive for opening a new card.

Another card with an interesting rewards program is Zync from American Express.  This card is actually a charge card, not a credit card, and has a neat approach that lets you customize how you use the rewards points you earn.

Last but not least is the Chase Sapphire card.  You’ve probably already heard of this one because of all the TV commercials they run or my post on the Chase Sapphire bonus.  Obviously the big sign-up bonus is worth noting but another plus for the card is the flexible rewards program, via Ultimate Rewards.

June Card Reviews

There are a few different card reviews lined up for this month so far.  Over the next few weeks we’ll look at the American Express Delta Reserve, the Citi Platinum Select, and the Citi Diamond card.  It’s going to be a busy month, full of anniversaries and birthdays so that may be all that we get to this month.  I’ll probably do another summary of the card reviews once they’re all published.

Posted on June 6th, 2010 in Credit Cards | 2 Comments

Written by Ben Edwards · Filed Under Credit Cards 

USAA Insurance & Finance Reform

We’ve been a USAA customer for years and have always been happy with their service.  One thing we like about the company is that at the end of most years, we get a USAA dividend check.  Since they’re a privately owned company, not publicly traded, they give money back to the policy holders instead of to investors.

A while back we got an email from USAA letting us know that the financial reform bill has something known as the Volcker Rule that was going to impact the way they operated.  The email said that if the legislation passed unchanged it would:

* Prevent USAA from managing the association’s portfolio as we have for the past 87 years.
* Jeopardize our ability to continue offering many of our competitive products.
* Limit our ability to return money to our members. Last year, USAA returned $1.2 billion to our members in the form of distributions, dividends, and bank rebates and rewards.*

The email asked us to contact our Senator and ask them to amend the Volcker rule to take into consideration companies like USAA.  Then a week ago we got another email message from USAA indicating the customer feedback actually had an impact:

“Thanks to the more than 750,000 e-mails and phone calls generated by USAA members, employees and friends, there is now widespread and bipartisan understanding that an amendment to the Volcker Rule would be good for consumers.”

The way I understand it, USAA supported the Merkley-Levin amendment, which would have allowed insurance companies like USAA to continue its insurance business without being subject to the Volcker rule restrictions on a holding bank.  From what I gather although Merkley-Levin didn’t make it in the Senate bill there is still ongoing political negotiation on the Volcker rule and Merkley-Levin amendment so it’s too early to say whether the push from USAA was ultimately effective or not.

I imagine many financial companies were lobbying for changes to the finance reform bill.  With each one making a case for their specific needs I’m sure it’s difficult for legislators to discern where true needs lie and what the best actions would be to correct areas where there are potential problems. 

If USAA is required to follow the restrictions they’re fighting against then their thought is they’ll see higher costs and have to raise member rates.  I don’t know if these changes will end up effecting USAA or if our rates will increase or not but it will be interesting to see what impact the finance reform bill has, intended or otherwise, on consumers.

Posted on June 4th, 2010 in Insurance, Personal Finance | 2 Comments

Written by Ben Edwards · Filed Under Insurance, Personal Finance 

Summer Money Review

Summertime is finally here and last month we covered two summer-related topics, college graduation and putting your house on the market.

College Graduates

We looked at two things that seniors should be thinking about, insurance for college graduates and the importance of credit scores for college graduates.  We also went over some of the best jobs for college grads and offered up a variety of money tip for grads.

Selling Your House

As you might have read, we put our house on the market recently.  We went back and forth over whether a real estate agent was worth the money and finally decided to use one.  Then we had to deal with finding a realtor and figuring out how to prepare our house to sell.  As I filled out our Sellers Disclosure I wrote up some tips on how to sell your house faster by fixing up certain problems before putting it on the market.

Career

Our family had some interesting job experiences last month.  When my wife lost her job, I covered a variety of things you can to to prepare for being laid off.   Losing your benefits can really stink, many times you don’t even realize how much employee benefits are worth until you lose them.

We also covered some entrepreneurial career topics, one of our friends launched thier consignment sale business and the husband shared his lessons learned starting a business.  I also made a video with a peek into the side business of a former co-worker who makes extra money selling Legos.  He makes enough to pay his mortgage each month, I still can’t get over that!

Personal Finance

Along the summer theme there were some ways to save money on summer vacation and a discussion of hiring a contractor vs doing it yourself for those big summer projects like building decks, putting in patios, and adding a fence.

If you’re a fan of cash back cards like I am, I wrote up some tips for getting the most out of your credit card rewards points.  Speaking of credit, I also talked about how close many of us are to major debt without even realizing it and how to avoid drowning in debt. 

Our bank rolled out person to person, micro payments using a service called Popmoney so I took a look at different ways you can send money with your phone.

On the investing front, Smart Money released their annual broker survey so I asked how you choose an online broker.   I also took a look at a ShareBuilder stock market investing survey that seems to show consumers outlook on investing is getting better.

Cash Bonuses

Throughout the month I pointed out a number of bonuses that are going on this summer, here they are:

June & July
I’m still working on the schedule for Money Smart Life for the rest of the summer so you’ll have to stay tuned until I have it figured out. Thanks for reading last month, we’ll come up with some good stuff for the rest of the summer. I’ve been working for a while on several personal finance projects that I think some of you will find pretty useful. I’m excited to share them with you, I’ll tell you more once they get closer to being finished.

Posted on June 3rd, 2010 in College, Home Owner, Personal Finance, Real Estate | Comments Off on Summer Money Review

Written by Ben Edwards · Filed Under College, Home Owner, Personal Finance, Real Estate 


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