Saving money is tough, especially when finances are tight and disposable income is at a minimum. For all of the recently laid off workers — employees of the state whose hours have been cut and other economically distressed individuals — that “rainy day” has arrived and I bet they all wish they had a larger emergency fund to draw from. Many families have gone from two incomes to one, creating a strain on the household finances. So what are some money saving ideas we can employ during a time like this?

Money Saving Strategies During Hard Times

1. Automate your savings.
The important thing to do is start small; make a plan and stick to it. Most banks offer an automatic monthly or weekly transfer from a checking account to a high yield savings account. This will force you to save money and in most cases it comes with the added benefit of a free savings account. “Keep The Change” from Bank of America is another popular automatic saving program that rounds up debit card purchases to the nearest dollar and deposits that remainder into a savings account.

2. Save your extra change.
Trying times like these call for creativity when it comes to money management. One easy way to start an emergency cash fund at home is with a technique I like to call “Give Me Five”. Whenever you make a cash purchase and you get one or more 5 dollar bills as change, tuck those away in a designated envelope and do not spend them no matter how tempting it might be.

3. Take advantage of low stock prices.
A struggling economy does have its advantages from an investor’s standpoint: just think of the opportunities that a downturn can present us. A lot of things of value may now be cheaper in price — for example, discounted stocks. Transferring funds from a low yield savings account to an online stock trading service can be a smart strategy and a great way to make your savings grow more rapidly. You will sacrifice some liquidity but you will increase you earning potential if you choose winning stocks. Save yourself expensive broker fees and account management costs by handling your portfolio yourself. There are plenty of stock trading tools online to help you make informed decisions about your investments, so be smart and turn your savings into income.

 
This guest post is brought to you by the folks behind Planet Wealth.

Money Saving Strategies During Hard Times is a post from: Banker, Saver

Sick of sneaky bank fees and extra charges? Here’s my own personal story on how I deal with these charges.

Tonight after work, I stopped by my neighborhood grocery store and picked up some items for dinner. I got into the checkout line and swiped my debit card with the confidence that comes from knowing I have money in my checking account to cover the purchase. A no brainer, right? Yes, but there have been times when I did not have this confidence because I was buying something at a bad time — either right before payday when I wasn’t sure I would have the money in my account that night (I notoriously don’t balance my checkbook) or when I knew for sure I didn’t have the money in my account, but used my debit card anyway, holding my breath that maybe the charge wouldn’t go through until the following day. I have paid the piper many times by not being careful with my debit card, racking up overdraft fees sometimes as high as $200-$300 a night.

Let’s go to the topic of fees and the onus of personal responsibility.

The Trouble With Bank Overdraft Fees

Why I get charged overdraft fees. This is stupid, I know. How difficult can it be to manage your money? I have gotten into more trouble with overdraft charges than I care to admit. I perpetually make mistakes: I don’t balance my checkbook; I misjudge how much money I have in my account; I have the Scarlett O’Hara syndrome (I’ll think about it tomorrow); and I have chronic “busyness.” I am always on the run, I take too much on, and sometimes I forget to think about money and my checking account. There have been many times, particularly when I was in law school, when I could have transferred money into my checking account and prevented overdrafts, but I didn’t have time to think about money, let alone transfer it.

It’s important to know what banks do to vulnerable customers. There is no doubt I am responsible for my money and the overdraft charges I accrue. But banks contribute to my problem as well: They make it easier for me to mess up, and they profit from me when I do. Every night, they send through the highest charge first. That surprises people. But if you have $200 in the bank, and that day you made purchases of $110, $65, $25, $12, and $10 (for example), they will send the $110 purchase through first, causing you two overdrafts on the $12 and $10 purchases.

Had they done it the other way around, sending the smaller purchases through first, you would have only had one overdraft on the $110 purchase. Sneaky huh? I have had multiple discussions with my bank about this, and they claim their customers want the highest purchases to go through first, because they are usually the most important, and they want to make sure those are paid. Huh? Nice excuse! In most cases, the banks are going to honor your transactions anyway (the amount of the purchase and the overdraft charges come out of your next deposit). And I don’t think customers, including me, want more overdraft fees than necessary. At $27-$39 each, they do major damage. More and more banks are now also charging what they call “sustained overdraft” fees, which can be another $30-$35, when the initial overdraft is not paid back within a few days.

How To Escape Bank Overdraft Fees Minus The Overdraft Protection

What can you do about this? Here is a list of things I’ve done to escape the bank overdraft fees:

1. Keep up with your money and use your debit card sparingly.

2. Check your online balance everyday and make sure you know what items are pending to come out that night. If you see you will be short, you can deposit money into your account that day.

3. Make sure you remember what time of the month the charge will hit your account, if you are signing up for something that will be billed monthly.

4. Have a buffer. You can also keep some extra money in your checking account — $200-$300 — to serve as a buffer against forgotten or unexpected debit charges. If you are buying gas or renting a hotel room or rental car, be aware that a hold may be placed on your account for a while, and plan accordingly to avoid getting overdraft fees.

Some recent surveys have shown that people would like to have a choice about whether they get this overdraft protection or not; it would be great for consumers to be notified at the point of purchase that they are about to go into overdraft. The Consumer Federation of America supports the creation of a Consumer Financial Protection Agency to advocate for these kinds of issues. Such an agency would aim to bring a couple of bills to the forefront, which would allow consumers control over overdraft fees and would extend the 36 percent interest rate cap (that armed service members already enjoy) to everyone.

Ultimately, when dealing with costs and fees, we need to start by making sure that we do our research and due diligence before picking out a bank or institution to work with over the long term. We all want to work with a bank that treats its customers right, whether it’s about easing the pain of overdraft charges or whether it’s about providing a great selection of savings accounts and credit cards to help manage our money better. On this note, you may want to go with a well known name. For instance, you could take a look at Bank of America or visit Discover Bank for more information about investing and saving money and see just how much they charge for various transactions.

Escape Bank Overdraft Fees Without Overdraft Protection is a post from: Banker, Saver

Lately, I’ve been reflecting upon my money savings.

Another sharp turn in life’s highway. Cruising along a fairly straight thoroughfare for years. Now we are finding ourselves climbing the road through the Continental Divide. Blind corners, steep mountains and unforeseen obstacles.

Money Savings and Pay Yourself First

I never used to listen to the number one advice of financial planners. How does that go again? Oh yeah, “pay yourself first.” Putting 10% of your take home pay into savings sounds like a lot, but even starting with 5% or less is okay, I have found. The biggest thing is to just start.

The easiest way to start paying yourself first is to have an automatic deposit set up. The day your pay check is deposited, your financial institution can automatically take your set amount of money and deposit it into your savings account. From there, all you have to do is watch it grow! Watch it grow and sleep better knowing you have some money set aside for whatever life throws at you.

Use Short Term Savings As An Emergency Fund

So, a few years ago we decided to put some money away into something other than registered safe retirement funds. Now I do know the purpose for this was for later in life, but alas, emergencies come and go and we can thank ourselves for having those funds available to see us through some tough times.

Our emergency fund is going to help us navigate this tough, rough and windy road from one side of the Rockies to the other. Health issues are tough enough to deal with without having monetary worries on top of them.

Build Long Term Savings For Your Retirement

Having that emergency fund is helping to make sure that we don’t have to touch our retirement savings. After all, we’re told just how important it is to “save tax-free”. If your employer offers a retirement savings plan, make sure you are contributing the maximum allowed. Try to put in whatever you can afford, making sure that you are contributing enough to be eligible for whatever your employer’s matching contribution is.

Have you done a recent check of your financial picture? Every couple of years, we should take a look at our entire portfolio, including insurance, and ensure we are still on course.

How much do we need to retire? My husband asked me that question about a week ago, not the first time, I should add. Well, at 49 years old, I guess that is a fair question for him to ask. And, one we should be asking our financial advisor. He would cringe at the question, because we should already know the answer and be well on our way to having accumulating that number.

Advisors will tell you that your retirement total depends on how much money you anticipate you will need to live on annually. If your lifestyle is such that you need $100,000 per year to live, then obviously, the amount of money you’ll need in retirement is far greater than if you were living on an annual income of $50,000. We always say that once the kids are out of the house, we will need far less money to live, but I somehow doubt that.

What do you want to be able to do in your retirement? Travel, help your kids buy a home, finish university? With all that time on your hands, will you take up an expensive sport or hobby you never had time for when you were working? Do you expect to stay in your present home? Is it paid for? Do you aspire to have a cabin/condo in a different area? So many things to consider.

Do You Have A Financial Map?

Our financial advisor asked us those questions ten years ago: at that time we had a 4 and 1 year old while paying for child support on two older children. Since then, our financial situation has changed considerably. We’re no longer paying out child support, with those older kids now in university and living on their own. The 4 and 1 year old are teenagers themselves involved in every imaginable sport and activity. One set of parents has lost their home to a fire and the others are aging and needing more physical help every year. Oh yes, and I almost forgot — my new health issues that will make me unable to work for the better part of a year. Yep, time to have another look at the financial plan.

Have we lost the map or just need to pull into a rest stop? All is good, taking a break thank you, and will be back on the road to retirement asap.

Money Savings: Short Term vs Long Term Savings is a post from: Banker, Saver

Having worked in a financial institution for seven years, I was amazed at how little consumers understand federal deposit insurance. I guess I shouldn’t be so surprised because I myself was not aware of FDIC insurance prior to working at my job in the financial industry. I just assumed I was one of the few who were ill-informed. Sadly no, many people aren’t aware that FDIC coverage exists.

So What Is FDIC Insurance?

Here is the formal description of the Federal Deposit Insurance Corporation (FDIC):

The FDIC is an independent agency of the United States government that protects the funds of depositors that are in FDIC-insured institutions. The FDIC was created in 1933 in response to the thousands of bank failures that occurred in the 1920’s and early 1930’s. Since the FDIC was put in place, nobody has ever lost any money that’s been covered by FDIC insurance.

Bank funds are insured up to $250,000 for each depositor. You should know that this is in effect until December 31, 2013, at which time, this will decrease back to $100,000 per depositor. However, certain retirement accounts (like IRAs) will still be insured up to the maximum of $250,000 per depositor after January 1, 2014.

Some quick facts to know about your FDIC insurance:

• Coverage is automatic, you need not apply, as long as your financial institution is FDIC-insured.
• FDIC guarantees CDs, savings accounts, checking accounts and other deposit accounts.
• FDIC doesn’t guarantee products such as life insurance policies, municipal securities, annuities, mutual funds, stocks and bonds.
• Deposits held at different FDIC-insured banks are subject to separate FDIC insurance coverage plans.

If you have questions regarding your bank or are curious about particulars, the FDIC has a website with many links and tons of information on this topic. If you wish to confirm that a bank is insured, you can use the FDIC’s Bank Find service or you can call the FDIC toll-free.

Are You FDIC Insured? Make Sure Your Money Is Safe!

There, are you feeling better about the security of your deposits? Good. Now, there are a few things you want to double check. Firstly and most importantly, is your bank or financial institution FDIC-insured? Secondly, understand that traditional accounts are going to be insured: these include your basic deposit accounts, checking, savings, certificates of deposit, IRAs and other retirement accounts.

Financial institutions now offer a multitude of other investment products that are not insured. Life insurance policies, municipal securities, annuities, mutual funds, stocks and bonds are not insured by the FDIC. Prior to purchasing a new investment product, you should make a habit of asking if it is FDIC-insured or not, especially if it is outside the norm of traditional products. Here are steps to protect your money:

• Never purchase a product that you don’t understand.
• Have all the information you need prior to investing. Ask questions until you are satisfied.
• Understand the financial risks that you may be taking.
• Know who is investing your money.
• Select a salesperson who knows your financial goals and who will make recommendations based on your personal financial situation, goals and risk tolerance.

Visiting The FDIC Website

A quick visit to the FDIC website will reveal the many services that the FDIC offers. Not only does this agency protect your money, but they also have an Office of the Ombudsman (OO). This service is available to act as a bridge between the financial institutions, the public and the FDIC powers-that-be.

The Office of the Ombudsman’s purpose is to:

• Act as a resource and liaison for the general public and the financial industry.
• Resolve problems and hear complaints in a fair and impartial way.
• Provide timely and helpful feedback to the FDIC.

The FDIC also provides consumer protection information and industry analysis. The FDIC website contains tons of information, including some things to watch out for (and to be highly wary of):

• High CD rates – be cautious, as many of these suppliers are not FDIC insured.
• Credit card interest rate reduction phone scams.
• Emails that claim to have originated from the FDIC: The FDIC does not send out unsolicited messages to the public. It follows that nobody should attempt to click on links found in suspicious email messages of this sort.
• Federal lending laws.
• Blank checks you receive from your credit card company (they come with a price and carry risks).
• Programs to help you through the current financial crisis.
• Various scams that have come about due to the economic downturn.

In closing, only you can answer the question: is your money safe? Are your deposit accounts held at FDIC-insured institutions, and if not, are you comfortable with that?

Are You FDIC Insured? Make Sure Your Money Is Safe is a post from: Banker, Saver

What it’s like living in a new market environment where the stock market is down and interest rates are low.

I am the cheese, and he is definitely the ham, in more ways than one: I’m talking about myself and my husband. I guess that is why they call us the sandwich generation. We have aging, financially needy parents, two sets of kids, two of which are in university (help!) and two in middle school. And us, we’re just a couple of pigeons stuck in the middle of it all. When I think about our investments and our family situation — well, I wonder if there’s really anything left for us to invest!

Living With Poor Investment Performance

My husband called the other night wondering if there was any new mail. “Yep, your pension statement came,” was my response. “Oh great, how bad is it now?” was Rick’s obvious next question. Happily I can report that his pension is back to where it was a year ago. Celebrations all around! Never mind that most of the money we’re seeing here have been contributions we’ve made over the last 12 months. Frustrating, yes. But, keeping our financial situation in mind, we won’t be touching that nest egg for a long time. This is one of those times when Rick’s attitude of “throw it in some risky, some middle of the road stuff” has been tested the most. I’m always the one pushing for guaranteed stuff.

I am proud of us: so far we haven’t bailed out of anything, tempting though it has been. Maybe that means we have a decently rounded mix of CD’s, stocks and other high risk investments along with a ton of balanced funds. Still though, it has been quite the roller coaster ride. Either that or we were just scared into procrastination.

I remember the “old” days of anxiously waiting for fund and bank statements to arrive. While the markets could have been all over the board, you really didn’t watch your money fluctuating daily. Now with online bank accounts, online brokers and mutual fund sites at our disposal, watching stock prices on websites has got my poor blood pressure going up and down six times a day! (Get a life, I know, I know).

Just when we think things are starting to look up, another few days or weeks come along with the markets deciding to shift direction to the downside. It makes me wonder just how long things can carry on this way. The last few years have been so good, we should have been semi-prepared for a slump/recession, no? I always tell ourselves that, but we always seem to get hit out of the blue and it seems like we’re never prepared enough.

I do feel for some friends who planned to retire in the next couple of years, but with the losses they have sustained this year, they’re thinking of hanging on to their jobs for a while. How heart-wrenching to have saved and planned for years to watch it dwindle and have no control. Having to stay at a job you are really ready to leave can be hard on anyone, including your own employer!

I guess I worry less about the loss/gains in our investment portfolio and more about the work prospects. With our lives revolving around the oil patch, it’s been a pretty scary year. I would be happy if we don’t have to touch our savings to buy the groceries this year.

Living With Low Interest Rates

One good financial thing did happen this year. The mortgage on the condo that my in-laws have been living in came up for renewal. Yippee! Bring it on. Our bank dragged their heels and quoted us a ridiculously high rate, so a’shopping we went. Not surprisingly, the bank across the street was quite happy to vie for our mortgage business. So, with a great low interest rate locked in for 7 more years, we can afford to keep my husband’s parents living in the lap of luxury. OK, it is just a two bedroom condo, but the underground parking is sweet in the winter.

Did the low interest rates encourage us to buy anything this year? Other than celebrating the good mortgage rate, not really. Should we buy a second vehicle? Not yet. Let’s see how that employment thing works out first! 2009 — a little good; a little bad; and hopefully no ugly!

Living With Low Interest Rates and Poor Investment Performance is a post from: Banker, Saver

Your 401K fund is an instrument that was developed for regular working people — employees like you and me — who’ve been harboring the impression (or the expectation) that the stock market would keep returning superior gains over time relative to ordinary safe haven savings vehicles. Sure, times have been rough for our 401Ks in recent times, but they’re still a great place to keep our long term funds for reasons we’ll discuss here.

How Safe Is Your Retirement Fund?

As an employee, you determine how to distribute your money. Your retirement accounts are there to cover you in retirement and are likely to serve you well over time because stock markets eventually do recover. The people who may have some concerns at this time are those who are thinking of retiring anytime soon. In this case, if you’re unlucky enough to be in this boat, then you may have to think of Plan B to address the gaps you may be seeing in your investment portfolio (care of recent stock market setbacks). But if you have a long term investment horizon ahead of you, by all means, do not fiddle with your 401Ks as you are bound to get whipsawed by the markets if you decide to sell now.

As it is, millions of Americans are going to be relying on their 401K accounts to support them well into their old age once they decide to retire. We never know how Social Security will be evolving over time. But let me repeat for good measure: our 401Ks and retirement plans will remain safe even if the company behind them gets into trouble. Why? Because the money you have in your retirement accounts are never mixed with your company’s assets — they are in fact, held separately. According to financial experts, not even bankruptcy courts can touch your money.

The questions remain though, about how safe 401Ks are, especially when we rely upon our own judgment to invest the funds we have in here in any way we so choose. Conventional wisdom has taught us to invest our retirement money in equities that are inherently riskier than our standard stable savings accounts, but as we have seen in recent months (or since our current economic recession started), this hasn’t turned out to be the best approach to take, especially for older savers and investors.

The key here is to be prudent with how to administer to our own 401Ks. We know that there is no issue about the safety of our funds even when employers or underlying companies go bankrupt. But we need to ensure that our 401Ks are safe from our own faulty decision-making. We should be careful to distinguish our truly long-term funds from those that are more appropriately considered as short term funds. We need to keep a balanced and well diversified portfolio so that we are not caught unprepared by difficult economic situations like the one we are experiencing today.

I’d make sure that I have enough of a cushion made up of short term, safe, secure funds ensconced in a stable bank or financial company that can last me a comfortable while (the older you are the bigger this cushion should be). The rest of my long term funds will be in my retirement funds, waiting for the day they can start growing again. But yes, the key is always balance and moderation, especially when it comes to the risk we take as investors.

How Safe Is Your Retirement Fund? is a post from: Banker, Saver