Category Archives: Money Matters

Teach Your Kids About Money

child

Many of you have specific goals you are meeting for 2009. Several of you have shared these with me. One reader is spending $60/week on groceries for her family of five. Another is saving for a down payment on a house. Another is working to make extra house payments this year. Many of you are working really hard to spend or save your money wisely. But are you passing that on to your kids?

A Lasting Lesson
My parents modeled good financial practices. One thing my father taught me is that you shouldn’t spend money you don’t have. As aggravating as it was as a teenager when I couldn’t have a fancy car or expensive jeans, I am grateful for the lesson now. I never put anything on my credit card that I couldn’t pay for right now and I am careful with my money.

abc_blocksThe ABCs of Money
Kids need to know how money works. You can start when they are young by helping them differentiate between needs and wants. They need new shoes. They want the ones with the transformer on them. You can also show them what money looks like and how to count it. I cheated my little brother out of lots of money because he counted everything, “One money, two money…” and I knew the difference between pennies and quarters! Don’t worry, my mom made me give it all back.

You can explain that money comes from working and that everybody has a job. Once they get a little older, you can assign them chores and give them an allowance if they complete all their chores for the week. Then they will learn that if they do their job, they make money. But if they don’t, their allowance will be docked and they won’t receive the full amount. Just like if one of us doesn’t show up for work. Budgeting is also a useful tool that you teach kids of any age.

shopaholicAnd when they are even older, you can talk with them about credit cards, checking accounts, bank interest and other things. This reminds me a little of the Shopaholic movie that comes out in a few weeks. She thought everyone had these magic cards that got them whatever they wanted. No one explained to her how they really worked until she was 20k in debt! You may think that is a fictional circumstance but there really are people out there with that kind of credit card debt. And part of the reason could be that their parents never explained the concept or the consequences to them.

Sharing With Others
You can also help your children develop a sense of social responsibility. One way is to model charity. Many families give money to their church or other religious organization. Some families give money to a community service organization or charity. You can let your children add a portion of their allowance to the family donation so they feel they have contributed too.

charityAnother valuable lesson is to teach your children that even in lean times, they can still share with others. They can donate their time instead of donating money. They can also donate their things. There are countless organizations that ask for gently used clothes and toys. You can further involve your children in the process by letting them pick the organization your family supports. You can narrow the list down to two or three and tell them about each one and let them pick. Then they feel involved.

Teaching your children from a young age about how to manage their money can help them grow up to be more responsible and knowledgeable. Plus, by teaching them to be savy spenders and savers, you might just get them off your payroll sooner!

Do you have any tips that have worked well in your family?

The Best Reward Credit Cards

credit-card

This week’s money matters post is all about credit cards! Stan and I love ours. We have been able to take some really nice trips because of the airline miles we’ve accumulated. However, I know many of you are trying to get out of debt or use the cash only system. You can just file this post away for a time if/when you decide credit cards are right for you.

 

Before I go over the best cards, first ask yourself, do you carry a balance month to month? If the answer is yes, if you’re the kind of credit card user who carries a balance, then reward cards are NOT for you. Any benefit you get from a rebate card is swamped by the added interest costs when you carry a balance. Instead, you should look for the lowest-rate card you can find so you can pay off your debt as quickly as possible. Don’t get sucked in by 0% offers on rebate cards. After they expire, you’ll typically pay a much higher interest rate than you could find if you looked for a low-rate, non-rebate card.

 

But for those of you who pay off in full every month and are looking for the best credit card for you. I have a pretty good rundown of them. There are several different categories of rewards. You’ll have to pick what you think will work best for your needs.

 

Stan and I have the Capital One No Hassle card and it lives up to its name. It is so easy to claim rewards. We put EVERYTHING on the card and pay it off in full every month. All our bills, groceries, doctor visits, everything. We always pay it off in full and never carry a balance. We’ve taken several nice vacations and used our miles to pay for hotels and airlines.

 

Enough intro, here’s the skinny on the cards:

 

Airlines

Capital One No Hassle Miles

·         Earn 1.25 miles for each dollar spent on purchases

·         No blackout dates or seat restrictions

·         No expiration date on miles and no limit on the miles you can earn

http://www.capitalone.com

 

Miles by Discover

·         1 mile for every dollar spent on all your other purchases

·         Unlimited miles that never expire

·         Redeem for travel credits to your account, gift cards from partners or cash starting at just 1,000 miles

·         No annual fee

http://www.discover.com

 

Chase TravelPlus Visa Card

·         Miles can be redeemed for airline tickets, hotel stays, cruises and car rentals

·         Travel domestically or internationally with no blackout dates

·         Earn two miles per dollar spent on travel purchases

·         Earn one mile per dollar spent on all other purchases

http://www.chasecreditcards.com

 

Platinum Delta Skymiles Credit Card

·         Earn 20,000 bonus miles after first purchase

·         Earn double miles on every eligible dollar spent at supermarkets, drugstores, gas stations, home improvement/hardware stores and the U.S. Postal Service

·         Earn one mile for every dollar spent on other eligible purchases

·         Miles never expire, and there is no cap on the miles you can earn

·         $135 annual fee

http://www.americanexpress.com/cards

 

Hotels

Hilton HHonors Platinum Credit Card

·         Get three bonus points for each eligible dollar spent everywhere else

·         No annual fee

·         No blackout dates

http://www.americanexpress.com/cards

 

Starwood Preferred Guest Credit Card (American Express)

·         Use Starpoints for free nights and upgrades at over 860 participating Starwood hotels and resorts in 95 countries

·         Transfer Starpoints to select frequent-flier programs

·         Earn one Starpoint for every dollar spent and double Starpoints at participating Starwood properties and retail partners

·         No annual fee for the first year and $45 thereafter

http://www.americanexpress.com/cards

 

Maximum Rewards Platinum Edition Visa Card (for travel) (from First National Bank of Omaha)

·         Earn three points for every dollar spent on air travel and hotels

·         Earn rewards with every purchase

·         Huge array of redemption rewards

·         No annual fee

http://www.firstnational.com

 

Restaurants

True Earnings Card from Costco and American Express

·         Earn cash back: 3% for gasoline, 3% for restaurants, 2% for travel, 1% everywhere else, including Costco

·         No annual fee with your paid Costco membership

http://www.americanexpress.com/cards

 

Chase Freedom (3% cash back could apply to restaurants if you eat out frequently)

·         Receive $50 after you make your first purchase

·         3% cash back in your top three everyday spending categories

·         1% cash back for every dollar spent on all other purchases

·         Receive an extra $50 each time you save and redeem $200 in rewards

http://www.chasecreditcards.com

 

Entertainment

American Express Rewards Rewards Gold Card

·         Earn 10,000 bonus points after your first purchase with the card

·         No preset spending limit

·         Earn one point for virtually every dollar spent

·         Redeem points for travel, shopping and entertainment rewards

·         Gold Card Events: exclusive access to tickets for select concerts, shows, major sporting events and more, in cities nationwide

·         No annual fee the first year; $125 thereafter

http://www.americanexpress.com/cards

 

Disney Rewards Visa Card from Chase

·         Earn 1% in Disney Dream Reward Dollars for every $1 you spend

·         0% introductory annual percentage rate for up to 12 months

·         0% vacation financing

·         No block-out dates

·         No annual fee

http://www.chasecreditcards.com

 

Gas

·         Capital One No Hassle Miles Rewards for Travel and Gas

·         Earn three miles per dollar spent on travel and gas purchases

·         Earn one mile per dollar for all other purchases

·         No blackout dates or seat restrictions

·         No expiration date on miles and no limit on the miles you can earn

http://www.capitalone.com

 

BP Visa Rewards Card

·         Double rebates for two months

·         5% rebates on all participating BP location purchases

·         2% rebates on all eligible travel and dining purchases

·         1% rebates on all other eligible purchases

·         No limit on rebates

·         No annual fee

http://www.chasecreditcards.com

 

The Chase PerfectCard

·         Earn rebates on all of your gas purchases

·         6% rebate on all gas purchases made at any gas station for the first 90 days

·         After that, you’ll earn a 3% rebate on all gas purchases

·         Earn a 1% rebate on all other purchases everywhere MasterCard or Visa is accepted

http://www.chasecreditcards.com

 

Cash Back

Chase Freedom Credit Card

·         Receive $50 after you make your first purchase

·         3% cash back in your top three everyday spending categories

·         1% cash back for every dollar spent on all other purchases

·         Receive an extra $50 each time you save and redeem $200 in rewards

http://www.chasecreditcards.com

 

Capital One No Hassle Cash Rewards Card

·         2% cash back on purchases at gas stations and major grocery and drug stores and 1% cash back on all other purchases

·         No limit on cash back, and rewards won’t expire for the life of your account

http://www.capitalone.com

 

Blue Cash from American Express

·         Up to 5% cash back with unlimited cash rewards

·         Earn unlimited cash back

·         No annual fee

http://www.americanexpress.com/cards

 

This list should not be your only source of information. Use it to narrow your choices and then do a little more research to make sure you are choosing the best card for your circumstances.

 

Good Luck!

 

Bank vs. Credit Union: What’s Right for You?

moneypile

 

This Thursday’s Money Matters post will address the differences between a bank and a credit union. With all the bank failings and mergers I thought it would be a great opportunity to review the benefits of a credit union.

 

What is a Credit Union?

A credit union is a nonprofit financial institution that is owned by the people who belong to them. Members usually share a common bond, such as belonging to the same school, employer, organization or community. These institutions’ purpose is to promote thrift, provide credit at reasonable rates and provide other financial services to its members.

 

Since credit unions primarily focus on their owners, they are more concerned with making you happy instead of making a profit. So credit unions offer educational services and other support features to help you make the best decision when considering various financial products. They recommend what is best for the customer whereas banks recommend products that often translate into higher profits.

 

Pros to a Credit Union?

Credit unions are exempt from paying most state and federal taxes and are therefore usually able to offer services that banks can’t compete with like:

Ø  High Interest on Savings Accounts

Ø  Lower Interest on Auto Loans, Mortgages and Credit Cards

Ø  Free services like online banking, online bill pay and no fee checking accounts

Ø  Lower Fees and Penalties

 

Is My Money Safe?

Yes! It’s just as safe as with a bank. Your deposits are insured up to $100,000 and regulated by an organization called the National Credit Union Association. The NCUA is similar to the FDIC and just as stable.

 

Cons to a Credit Union?

You may be ready to sign up for a credit union right now. But wait, there are some cons. The first is that they have membership requirements, you can’t just show up at one and start banking. You’ll need to find one where you meet the membership qualifications. However, the requirements aren’t stringent  and you should be able to find one fairly easily.

 

The other con is their convenience. They have fewer ATMs and branches. However, in some places the local credit unions form an alliance and allow members to use any ATM without penalties. If your city has an alliance like this, there could be more credit union ATMs than your local bank ATMs.

 

The final con is the lack of variety in investment products and services.  Since credit unions aren’t in the business of turning a profit they focus on specific products that meet the needs of a majority of their members. Banks have more resources available and since they charge fees for many of their services, they are able to provide you with more comprehensive products.

 

What Do You Do?

Stan and I use both a credit union and a bank. My car loan is through the credit union. They gave me a great rate. I set up a savings account through them and my car payment is automatically debited from that account each month. I don’t have to write a check or remember to pay it. I have a portion of my paycheck direct deposited into that savings account. Plus I earn interest on the balance while it sits there waiting to come out.

 

We also have a regular savings account through the credit unionbecause their rates are significantly higher than any of our local banks. We opted to have our personal checking through them as well for convenience.

 

Stan and I also have a checking account through a bank with a little money in it, but not much. We primarily use it for emergencies. We have been researching money market accounts to use for our emergency fund. Our credit union doesn’t offer this service so we’ve been looking into banks. Banks also have CDs which are very useful investment tools.

 

Wrap-up

Keep in mind that what we do may not work for you. My best advice is if you want better rates and more personalized service, go with the credit union. If you need convenience, stick with a bank. But don’t stick with the same thing forever. Every couple of years, reevaluate your situation. Make sure that what you have is still working for you. Even if you prefer banks, it may be a good idea to switch banks to get a broader range of services that fit your current needs.

 

If you would like to find a credit union and explore their products, find one HERE.