Bankruptcy & Foreclosures

‘Tis the season for giving thanks, eating way too much, and big-buck spending. Gift giving may be traditional for this time of year, but what about all of the things we spend money on that we don’t really need? Retailers are quite crafty about how they position merchandise and offer specials designed to lure consumers into making spontaneous purchases.

So what can we do to stay focused in our spending this holiday season? In a blog post by Dayana Yochim, 5 Ways to Stop Buying Stupid Stuff, some great advice is presented.

Ignore the source

Every dollar is worth a dollar, no matter if it comes from an ATM, a great aunt, or the laundry hamper. Yet people show more restraint with earned funds than they do with “found money” — things like tax refunds, work bonuses, and inheritances.
Sweat the big stuff …
Oddly, we’re more thoughtful with large-sum unexpected windfalls than we are with smaller amounts. However, many people have a blind spot when it comes to spending earned money on big-ticket items.
Consider the biggest slices of your spending pie and practice cost consciousness where it counts: vacations, transportation, holiday and home expenses, cute shoes. That said, don’t dismiss outright those seemingly small money decisions. A few percentage points of interest on your credit card or checking account or paying a few bucks more per stock trade may not sound like much, but they add up.

Comparison-shop with skepticism

On the lookout for the rock-bottom price? Put on your blinders. In an oft-cited experiment by two Berkeley business school professors, shoppers given the choice between two microwaves — a low-end and mid-range option — split nearly equally down the middle, with 43% choosing the more expensive oven. But when a pricier alternative was added to the mix, the majority of shoppers (60%) decided the mid-range microwave was the best deal.
Academics call this “extremeness aversion” — wary of alternatives at both ends of the price spectrum, even the bargain hunters decide to trade up. The resulting budget creep occurs on everything from cars to cameras to coffee.
To avoid this Jedi money mind trick, focus: Weigh the merits of each product independently. Pick your must-have features and a target price range. Compare like with like — and erase from your mind the alternatives that don’t fit your criteria.

Keep separate tabs

“What’s another $[fill in the blank] when I’m already spending $[fill in the blank]?” Contractors, car salesmen, and electronics store clerks bank on this kind of faulty thinking. In the context of a larger purchase, somehow $300 cup holders and $3,000 Corian countertops start to make sense.
Don’t let upgrades and add-ons pad your tab. Instead, consider each option separately and ask yourself if you’d pay $[fill in the blank] were you shopping solely for that item.

Leave home without your credit card

It’s easy — too easy — to pay with plastic. That’s why the price of credit card convenience is higher than that of cash. Yes, even if you pay your credit card bill in full every month.
Studies show that people spend more — and more stupidly — when no actual cash changes hands. We succumb to impulse buys (an estimated 59% of grocery store purchases are not planned) and even tip more at restaurants when we put the tab on plastic.
Pay in cash only and you’ll likely see a dip in your daily expenditures. Imagine the results after an entire year. Now that’s a rewards program Visa and MasterCard can’t match.

The $480-a-month bottom line

So how much is it worth to test-drive one of these five tips for the next four weeks? Well, I answered that in bold-faced type a half-inch up. Here’s how I came up with it: Try an all-cash diet for one week, and you could shave 60% (the difference between the average debit/cash versus credit card purchase) off your grocery bill alone. That’s $480 a month for the average family of three.

To read this excellent article in its entirety click here.

I am a big advocate of the Internet as indicated by the fact that I’m here writing this blog. I have in recent posts discussed everything from using the Web to get the best credit card and mortgage rates to waiting until Cyber Monday to purchase gifts online but Rich Duprey has recently penned up a post that even got me to stop in my proverbial tracks.

What happens if your online broker goes broke? Hmm, that’s a scary thought on its own but even worse when you take recent events into consideration. E*Trade (Nasdaq: ETFC) investors watched as their shares dropped nearly 60% in one day because of an analyst’s suggestion that the brokerage firm’s subprime mortgage exposure may lead to a run on accounts.

Rich goes on to present the following advice:
Make sure your broker is a member of the Financial Industry Regulatory Authority, which requires members to carry SIPC insurance. The U.S. Securities Investor Protection Corp. is a federally chartered private corporation that protects investors from their brokers going bankrupt, just like the FDIC protects your bank deposits.

Maintain good records. Make sure you’re receiving timely statements from your broker and that they’re accurate. While the SIPC covers you for $100,000 in cash and $500,000 total, you need to prove to the SIPC what you’re owed. They’ll compare what you submit with what’s in the broker’s books. And, no, you can’t get around the $500,000 limit by opening multiple accounts unless the accounts are in “separate capacities” (e.g., opening up an account in your name, a trust account, or a joint account). So says the Interactive Brokers (Nasdaq: IBKR) website.

If you’re nervous about having all your money tied up with one brokerage, spread your money across multiple brokerages while staying under the $500,000 limit on each account.

Find out if your broker carries insurance above and beyond the SIPC insurance. E*Trade, for example, claims additional protection of up to $150 million on its website.

Don’t panic. In the four decades since SIPC’s founding, it has “advanced $505 million in order to make possible the recovery of $15.7 billion in assets for an estimated 626,000 investors.”

As an Internet junkie, I will take these tips to the bank! The entire article can be read by clicking here.

Well, the week is finally upon us where in addition to heaping helpings of turkey and football overload, many shoppers turn in early to prepare for the day that follows. Black Friday has been an unofficial tradition for years as an opportunity for retailers to capitalize on the fact that many Americans kick off a long weekend for Thanksgiving. Once Turkey-Day is behind us, the collective mindset of the buying public shifts gears to focus on Christmas.

What’s interesting is that another shopping tradition has been slowly gaining ground since it was introduced in 2005. They call it Cyber Monday and if you take a moment to think about it, it makes sense. The origination of this second shopper’s melee is again taken from the idea of the long Thanksgiving weekend and the spillover that must certainly accompany workers to the office on Monday morning (once reunited with their trusty computer).

What Black Friday does for the brick and mortar stores, Cyber Monday aims to do for online retailers. While still quite a young tradition, many retailers are getting in on the action. With gas prices reaching epic proportions, it is probably not a bad idea to consider alternatives to the all-day mall hopping that is so often associated with the day after Thanksgiving.

I recommend giving the official Cyber Monday site a browse as they conveniently list of all the retailers participating as well as the deals offered. Click here to give it a look.