20saver

Since Jake and I are moving in a week, we’ve been going through all of our CDs, DVDs, and books to pick out the ones we no longer watch, listen to, or read. We’ve come up with a sizable pile so far and I’ve gone through and put the ones that are worth the most up for sale on Amazon. We’ve already sold two DVD sets. We’re planning on selling the rest to a local used music and movie store. This extra money will be a great addition to our savings account, but I can’t help but think how much money we’ve wasted on insignificant things. Hindsight is 20/20, isn’t it?

Back in December, I got caught speeding on my way up to visit my family in Pennsylvania for Christmas. That $140 ticket wasn’t an easy thing to pay and now that lead foot has come back to haunt me in the form of my car insurance rate. My monthly payment is now going to be $16 more a month. I’ve shopped around a bit for a better rate, but other car insurance companies are either way more or are only a few dollars less a month. I don’t know if it’s worth the hassle to switch companies just for a few dollars savings a month. Also, I’m hoping that my current company will offer some sort of rate reduction if I continue to stay with them without any more violations. Honestly, I’m probably just going to wind up staying with my current company because I just don’t feel like dealing with this right now. Frugality would be so much easier if it coincided with laziness.

Jake and I took a few minutes to review our health insurance plan tonight and realized that he’s been wasting money on an unnecessary upgraded health plan. Starting July 1, the new standard plan will save Jake $263 per month. Holy savings!

Vacation was great- I’ll be sure to really update on it tomorrow.

Thanks to the failing economy, as of July 1st, federal student loan interest rates will drop over three percentage points. This will be the biggest one year drop in the Stafford loan program’s history. For Stafford loans in the grace period, rates will be 3.61% and for Stafford loans in repayment, rates will be 4.21%. For those of us with multiple student loans, now would be a great time to consolidate.

I have my student loans through Sallie Mae, who, interestingly enough, has stopped their federal consolidation program. I guess they feel like they would lose too much money if they continued to offer the program through this economic rough patch. The government’s Federal Direct Consolidation Loan program, however, is still going strong.

Three of my loans are at 6.8% and the other two are at 4.875%, so reconsolidating them would save me a good chunk of change over the life of the loans. I need to look into the Federal Direct program a bit more closely to see how my monthly payment would change and if they offer payment options.

Are you planning to consolidate your student loans?

Jake and I got a statement in the mail from our real estate company- never a good thing. The last time we got one, it was because they charged us a fee for turning our rent in late (we didn’t realize it was late until we got the statement and then read over the lease to see what constituted late rent- whoops). I knew our rent wasn’t late this time and I had a receipt to prove it. Wedged in between all of our (on time) rent payments was a $40 fee for unclogging our kitchen sink.

Unclogging our kitchen sink? We’ve never had a clog in our kitchen sink. While the fee was dated April 25th, the note next to it said the work was done on March 4th. The pipes under our kitchen sink had been leaking a long time ago, but I knew we had requested them to fix it way before March.

I gave the real estate company a call and explained that we never had a clogged kitchen sink. She pulled our record and only found the request for the leaking pipes. I asked her the date on that request and she said January 7th. She said she had no authority to clear fees off of our statement and that I would have to send an email to the maintenance supervisor. As soon as I got off the phone with her, I drafted the email and sent it off.

I have yet to receive a reply. I really hope they clear this fee soon as nothing about it adds up. We requested work done in January which means it would have been on our statement in February, but the fee that they are charging us was done in March and showed up in April. Most importantly, the pipes were leaking and we asked them to fix that, not a clogged sink. We are more than capable of fixing a clog and there’s no reason why we would have asked them to do that.

Just another friendly reminder to double check all of your bills for accuracy.

I occasionally figure model for a local art museum that offers studio classes in order to pull in a bit of extra income. Back in February and March, I modeled three weeks in a row for a portrait class and then a few weeks later, I modeled for a painting class. The museum only sends out checks once a month, so I usually have to wait at least a few weeks to get my payment. In March, I received a check, but it was only for one of the classes so I assumed I would get paid for the other classes in April. April came and went and I only received payment for one more of the classes. Hmm… I guess I’ll get the rest of my money in May? May came and went and I didn’t receive any more checks.

I looked at the two checks more closely and realized that they had the class dates on them. The first check was for the first portrait class and the second check was for the painting class. So whatever happened to the two other portrait classes in the middle? I gave the museum a call about a dozen times and never got an answer, so I left messages. I never received a call back.

I finally called the portrait instructor to see if she had any idea what was going on. She was very apologetic and gave the museum a call the following day on my behalf (as well as offered me a few more modeling jobs this summer- yay!). It turns out the paperwork just never went through for the two portrait classes. The studio school resubmitted everything and I should be receiving my check by the end of next week.

If you do any kind of freelance work on the side, make sure to keep tabs on the number of times (and for how long) you worked so that you receive the right amount of payment. It can be very easy to lose track when you’ve got a lot going on, but it definitely pay$ to pay attention.

Written by Trent Anderson and Seppy Basili, two contributors for various Kaplan guides, Broke!: A College Student’s Guide to Getting By On Less dishes out some common sense approaches to managing your finances in college. The bulk of the book is advice real college students have on topics that affect just about every coed. Credit cards, budgeting, food, traveling, and entertainment are just a sampling of what is covered. I have mixed feelings about Broke!, but my overall impression is a positive one.

But first, let me tackle the negatives:

Because the majority of the text is quotes from college students, you get a mixed bag of advice, some of which contradicts itself. If I were a financially confused college student, this approach would cause me more confusion, not clear up my worries.

The book is quite short and only offers a few quick tips on each topic before moving on to the next. While some things can be summed up quickly, I feel that other points should have been fleshed out more in order to really seem plausible for a college student. For example, when discussing budgets, Anderson and Basili just scratch the surface and kind of throw up their hands when it comes to the details. What if a college student doesn’t have any money left over after he draws up a budget? How does he adjust his budget to make it work? “Well, kid, just figure it out,” seems to be their answer. If they’re taking such a flippant approach to explaining budgets, how do they expect their readers to take budgeting seriously?

And now the positives:

The quotes from college students keep the book light and readable. You get the sense that you’re not the only one going through a money crunch and that you can survive because others have survived before you. That in itself can alleviate some of your worries. Anderson and Basili have advice of their own mixed in, adding some authority to the book, as well as lists of helpful websites at the end of each chapter.

All the topics covered are relevant to college students and are presented in such a way that keeps your attention without taking up all of your time. College students are busy people and the last thing they want to do is spend a nice chunk of their time reading a personal finance book instead of doing their homework or partying. Even though the advice that is given isn’t life altering, it will do in a pinch and offers a helpful nudge in the right direction for students.

Broke! was a bit fluffy for me, but I can still see it’s merit for Anderson and Basili’s target audience. I would recommend this book to college students who don’t have much experience managing their money and haven’t read up on personal finance already. If you’ve previously read PF books and have a good handle on your money (not to mention if you’re post-college), I would choose a book that’s more detailed about specific areas of money management.

For the past month or so, I’ve been meaning to take a look at Jake’s and my car insurance policies to see how raising our deductibles would affect our premiums. Jake has been worried financially about the coming weeks because he’s expecting to receive a less than normal paycheck at the end of this week (he’s paid mostly on commission) and I figured this would be an ideal time to give our policies a once over.

My policy is pretty much bare bones right now and my comprehensive and collision deductibles were only $500. I raised those to $1,000 and my premium went down $10 a month for doing so. Total yearly savings: $120.

When I looked over Jake’s policy, I was surprised to see that he was paying for a few options he didn’t need. He had chosen to have rental car reimbursement, loss of income coverage, and additional medical coverage. His comprehensive and collision deductibles were $500. I put all of the extras to zero and raised his deductibles to $1,000. His premium went down $17 a month. Total yearly savings: $204.

Over the next couple of years, I’m going to keep a close eye on the value of my car. Once it drops down to less than $3,000, I’m going to pull my collision coverage completely to save a few hundred dollars a year on my insurance.

For only a few minutes of my time, I managed to save us $27 a month or $324 a year. Not too shabby!

Jake and I have decided to rent the house from the owner of my dad’s studio because it would be pretty stupid of us to pass up such a great offer.

In order to secure the place, we need to fill out the application and give her the $600 security deposit (she didn’t say by when, but we’re guessing within a week or two). Once that’s squared away, we need to turn the electric over to our names and pay $200 by May 1st and another $200 by June 1st for her to continue to hold it for us. We will then sign the lease and officially have the house July 1st.

For those of you who are counting, that’s a total of $1,000 we need to pay (not including the electric bills during those two months, but those should be very small) before we even sign our names on the dotted line. There’s no way we would be able to snag this house and pay these extra “bills” if it weren’t for our wonderful friend, the emergency fund.

As I type this, the $600 is about a day or two away from landing in my checking account. Not a drop of sweat has been wiped off my brow over the figure or where we were going to scrounge up the money. We’ve saved our dimes here and there in a high yield HSBC savings account so that when we need a nice chunk of change to pay for something significant, we’ve got it; no problem.

If we didn’t have this money saved up, we would have to wait until our current lease is up, have our current landlords inspect the apartment, and have them send our $590 security deposit back to us. By then, the house would probably be long gone. Now, we’re securing the house and whenever we get that deposit back, we can just put it straight into our savings account to raise our balance back to where it was before.

As far as the other $400 goes, Jake and I might be able to swing it without dipping into our savings since it will only be an extra $100 a month for each of us. Besides, if we can’t afford to pay that extra money, we might as well not get the house to begin with since that’s about how much more we’ll be paying a month to move into the bigger place. As a result, those two months will be a trail run of sorts.

If you haven’t started an emergency fund yet, what are you waiting for? Socking away just a small amount every week, two weeks, or month makes a big impact over the long term. I highly recommend HSBC Direct or ING Direct in order to get a great interest rate. If you are seriously considering opening an account with ING (they also offer a free checking account that has a competitive interest rate), please drop me a comment or email me directly at 20saver at gmail dot com so that you can get a $25 bonus by using my referral link.

Last night, I took Suze Orman’s advice and visited Experian and TransUnion’s websites to give my credit reports a once over. I didn’t request my Equifax report since I get two free reports and scores a year from Equifax through my credit card credit protection service. I’m going to send in my request for my second free Equifax report and credit score as soon as I buy some more stamps.

Experian was as expected. All of my accounts (mostly student loans) were included and accurate.

TransUnion gave me a little jolt though. They included a public records section and I saw documentation of an incident I had completely forgotten about.

To make a very long story shorter, for some reason, when I was a teenager, all of my health insurance claims were being sent to the wrong insurance company and, of course, were being denied. My mom and I had no idea that this was going on since we never received any letters about it. Until, that is, I had to get an MRI. Naturally, the MRI was denied and we finally did receive a notice about it months later, asking us to pay the MRI center over a thousand dollars. That’s when we discovered what was happening and had all of my past claims rerouted to the correct insurance company. While I was in college, I received a letter from the court back home regarding this $1k+ past due amount. The MRI company was suing me. I called my mom and she said that she did/would take care of it. There was no way I could appear in court since I was six hours away at college. As far as I know, everything was covered by the insurance company.

I never dreamed this whole thing would show up years later on my credit report. Now, I don’t know what to do about it. It’s only showing up on one of my credit reports, but it’s something very negative and could affect my credit score. I don’t even know if it should be on my report to begin with since it was the fault of the insurance companies and I was a minor at the time. Not to mention the fact that I don’t even think the court hearing ever actually occurred.

Looks like it’s time to call my mom and pick her brain on what happened and what I should do.

This is the tenth installment of my review of Suze Orman’s The Money Book for the Young, Fabulous & Broke. The previous installment, Big Ticket Purchase: Home, covered the basics of buying a home.

Lasting relationships require financial intimacy. The key to this intimacy is not only understanding that the two of you have different financial personalities, but also striving to work together to come up with a shared approach to spending, saving, and investing. This requires complete openness with one another in regards to how much money you make, how much money you have in your accounts, and how much debt you owe.

Orman recommends merging some, but not all of your finances. Your shared living expenses should be paid out of a joint checking account, but be sure to keep your separate checking accounts for your personal expenses. Always keep your own individual credit cards that are only in your name so that you will still have an individual credit history in case something happens and the two of you split up.

When paying your living expenses, the two of you should pay equal shares, not equal dollar amounts:
-Figure out your combined monthly living costs and add 10% (because everyone underestimates)
-Add up your combined monthly take home pay
-Divide your expenses by your combined take home pay to figure out the percentage of expenses you each have to pay 

(Example- $3000 expenses/$4000 combined income= 75%
75% of $1500 [your monthly income]= $1125
75% of $2500 [your partner's monthly income]= $1875)

Pay your bills together every month. Both of you need to be up to speed on your joint income and spending. Once you have paying bills together down, your next natural step is to start saving together. Use the same equal shares method that you use for expenses to create a plan for your savings contributions.

Orman makes the important point that while you do not take on any debt that your spouse amassed before you got married, all of the debt accrued during your marriage is a joint responsibility. It doesn’t matter if only one of your names is on the account, loan, or credit card- you are both responsible for it.

Once you have dependents, you need to get a life insurance policy. Never get a policy before you have dependents, as it will be a waste of money. Orman suggests only buying a term life insurance policy, not a whole life, universal, or variable/cash value policy. Term provides insurance for 5, 15, 20, or 30 years. You choose the term based on how long you expect your dependents will need to rely on you financially. You want a plan that has a guaranteed level premium where your annual cost will not change for the entire policy term. Your dependents will only get money if you die during the term, not after. Orman states that life insurance was never meant to be a permanent need; it’s only meant to be a temporary solution until you build up enough assets to take care of your dependents. A term policy gives you coverage for the amount of time needed and that’s it.

If your partner has no respect for money, they won’t have any respect for you either. Orman suggests talking to your significant other about financial issues, but be careful not to attack them. Figure out areas where change needs to occur and conduct ongoing conversations to encourage and support them while they take on new habits. If your partner truly loves you, it will not be hard for them to make financial changes.

Jake and I have had countless conversations regarding his spending and saving habits, as well as my own. It was been an uphill battle, but he has made significant changes over the years because he knows how important it is to our relationship to get our finances in order. We’re still not on the same page all of the time, but it feels like we’re at least in the same book now! Jake and I share an ING checking account for our utility bills and a HSBC savings account. I’m thinking about having us use the checking account to merge our grocery spending as well. I have to admit, we split our bills 50/50 instead of by a percentage, as Orman recommends. I think we may have to change this soon though as I make significantly less than Jake does and boy, do I feel it when it comes time to pay the bills.

The next and last installment of my Money Book for YF&B review will be a wrap up of all of my installments.