A One-Salary Household

Hemorrhaging debt isn’t typically how a family moves to a one-salary household.

The corporate goodbye plan was hatched poolside during the summer of 2007, and began with my wife and I deciding to give our house a not-quite-extreme-but-still-impressive makeover, taking on massive debt in the process.  We knew that the move to one reliable salary would mean hitting the pause button on any major home projects, so we prioritized the most needed upgrades, those deserving immediate attention and anything else that could become a problem in the near future, and came up with the following big three:

• Convert the sunroom & one car garage into livable space for our expanding family.
• Replace the vinyl siding.
• Replace the 20+ year-old old roof.

Important Reasons

The decision for me to stay home was based on the nagging reality that our two children were spending too much time in daycare, and way too little with the people who brought them into this world. We looked at our daily schedule – drop off at 7am, pick up at 5pm, home at 5:30, preparing family dinner, eat and clean-up until 7pm, bath & nighttime routine (brush teeth, read books, etc.), then put them to bed by 8pm.

At the end of those nights, my wife and I would look at each other in amazement that we’d spent only about 2 ½ hours with our kids.

That’s a whopping 12 ½ hours in the presence of my offspring during the week!  There are deadbeat dads more engaged with their kids than that.  It got to the point where it simply wasn’t acceptable to have our children raised by, essentially, strangers for 50 hrs a week, just so we could take an extra vacation and buy more crap we didn’t need.

Additionally, I was only one year away from having my oldest daughter, then 4 ½, become a full day kindergartener.  It’d be 13 years (at least) before the school system would spit her back out to me, so we decided that I’d trade in my 40+ hours a week at work for those many hours with her, before kindergarten steals her away.

It may seem crazy to prepare for the dropping of an income by spending thousands of dollars.  It could be said that we took the contrarian’s approach to this move, spending money as wisely as we could, to ensure our total comfort in our modest home  – the place where I’d be spending most of my time going forward.

Transitioning to Financial Changes

With all of the contractor’s invoices paid by the end of 2007, we entered the New Year with a clear picture of our debt situation.   Our budget for 2008 was configured accordingly, with the intention of paying off everything, including one lingering car loan.  We sacrificed a lot that year, doing without much of what makes us happy, including vacations, concert tickets, CDs, and theater subscriptions.  It wasn’t until we were no longer saddled with revolving credit card bills, a line of credit balance or car payments and had a house we were finally completely happy with — that I was able to bid farewell to the cozy confines of my cubicle and the relative safe steady paycheck that came with it.  This was August 22^nd, 2008.

To be a middle class family in America generally means a pair of working parents.  It’s been this way for the better part of three decades and it’s this way for a reason, well several actually.  One of which is that we want far more stuff than at any point since maybe the Romans craved new lands.  Breaking free of this uniquely modern American mindset hasn’t been a walk in the park.

My wife and I arrived upon the doorstep of the at-home dad world with careful consideration of our financial situation, both present and future. We knew that to make this happen we were going to have to permanently do without certain luxuries two healthy paychecks afforded us.  Additionally, our financial future would be severely altered, since no job = no 401(k) contributions or employer match.  Now, I’ve never been much of a planner, but even I hunkered down to crunch numbers and make certain that we wouldn’t have to dip into my retirement savings 6-months into this experiment. In this way, becoming an at-home dad challenged my own make-up.  If we were going to be successful in living within our means and making sound financial choices on one steady income, I would have to think ahead, plan and give up some of the spontaneity I enjoyed when my direct deposits were filling up the bank account.

I recognize that many families make tough choices everyday, many of them a lot harder than those my wife and I made.  I also witness many American families extending themselves to the brink of financial disaster in an effort NOT to make choices.  Giving up a vacation, eating out less, and buying less stuff in 2008 wasn’t easy, and there are still times we’re flat miserable with what we cannot do. However, making sacrifices teaches our children that you simply cannot have everything you desire in life, at least not all at once, and prevents us from being flat broke.

photo credits: stmoritz1960, Holtsman, and Leonid Mamchenkov

This post "Bye-Bye Cubicle, Hello Children: Why I Quit Corporate America to Be a Stay-At-Home Dad" is from StopBuyingCrap.com.

• Applies only to homes used as your principal residence.
• Reduces your tax bill or increases your refund, dollar for dollar.
• Is a fully refundable tax credit, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

Checkout this one minute and 29 seconds video by Hector from the IRS explaining the first-time home buyer tax credit.  If you don’t want to watch the video, a summary of the highlights can be found below the video.

Qualifying and Claiming the $8000 Home Tax Credit

• You may qualify for the home tax credit if you bought a home in 2009 or you’re considering buying one this year.
• You qualify as a first-time home buyer if either you or your spouse haven’t own a home in 3 years.
• If you’re buying a home this year (2010), you must sign a binding contract by April 30th, 2010, and close no later than June 30th, 2010.
• Also, if you’re a long-time home owner, and you’re purchasing a replacement home for your principal residence, you may qualify for a credit up to $6,500.
• If you bought the home in 2010, you have the option to claiming the home tax credit either on your 2009 or 2010 tax return.
• To get the credit this year.  File your tax return, attach form 5405 and supplement documents (such as copy of settlement statement).
• Important: To claim the tax credit this year, you must file the tax return on paper. You won’t be able to claim the credit on e-file as the current e-file system isn’t able to handle the supporting documents that must be submitted along with the home tax credit.

Tax Forms You Will Need

• Good old Form 1040 (report it on line 67 for the 2009 return)
• Form 5405 (attach with return)

Additional Resources:

• Questions and Answers on home tax credit from IRS
• Additional Questions and Answers (qualifying, due dates, etc.)
• Filing requirements on the home tax credit

This post "$8,000 Home Tax Credit" is from StopBuyingCrap.com.

Before you start setting up various financial New Year resolution goals, one quick exercise you should probably do is to focus on prioritizing  your financial weakness that cost you the most money.  Whether it’s lack of will power in spending, inability to comparison shop properly, impulsive financial decisions, risky stock purchases — we all probably have made a number of blunders that has cost us more money than we’d care to admit.

The reason why I believe it’s important to focus on the weakness or mistakes that cost you the most money, is simply because the return on time investment will have a more meaningful financial impact.  Unfortunately, whether or not it’ll be easy for you to fix or improve that particular financial weakness will be another story.

But take heart, although baby steps are a perfectly legitimate way in bettering yourself, there really isn’t anything wrong with trying to tackle a big problem and failing — after all, none of us are perfect.  Maybe you tried to cut your monthly lavish spa treatment but was only able to stick to the gun for 2 months.  So what?  That two month’s worth of savings is decisively better than never taking the initiative to save.

Discover by Getting the Hard Numbers

The best way to discover your financial weakness (e.g., actions and behavior that cost you money), is to take an analytical approach and track your spending.

Yes.  This is bitch work.  It’s not fun, it’s not sexy, but seeing concrete numbers telling you where your cash is going will always trump guess work and decisions based upon feelings.  Remember, the goal is to find your financial weakness and put a stop to it.

There are numerous ways you can track your cash flow and overall financial health. Free online-based software such as Mint.com, Wesabe, MoneyStrand, and Green Sherpa (90 day trial period) will work well.  Not comfortable with having your information online? Intuit’s Quicken will definitely do the trick too.

Set up your accounts, if you don’t already have them and start checking the expense tab to see where unexpected expenses are accumulating.  All of the software and applications listed above will have capabilities for you to sort by types of transaction, their frequency, and the total dollar amount.  The periodic late fee you get from your credit cards that you didn’t think was a big deal?  Suddenly it’s $120 over the span of 3 months. Ouch.

I recommend tracking things for at least 2 to 6 weeks, depending your actual expense ranges. Safer bets are actually a time-line of 2 to 3 months, but that’s not always possible depending on your time constraint.

Understanding the Real Problem

If you were able to identify financial weakness that cost you money, it’s time to take another step to really dive into the reasoning behind those financial transactions.

FACT: Money is NOT sentient. It does not magically wake up one morning and decides to fly out of your wallet or bank account and convert itself into a designer jean or a 55″ HDTV.

The financial waste that you may have discovered doesn’t have to be actual wasteful purchases (after all, whether or not its wasteful can be highly subjective). They can also can be unnecessary and avoidable fees, poorly made investment choices, or unintentional daily habits — the list goes on.  In fact, my own recent financial weakness are miscellaneous, convenience fess that have racked up from the airport and liquor stores.

The fact of the matter is, most of the time, something you did cause the money to be spent.  I racked up $80 in parking fees at San Francisco International Airport because I woke up too late to catch the rail to the airport.  I bought over priced goods at the liquor store because I slept too late the night prior.  Though each of those unnecessary expenses are from different sources, the underlying pattern that cause these financial mishaps are simply because I stay up too late sometimes.

This entire scenario sounds a bit stupid and minuscule, but in actuality, I’ve paid well over $200 in avoidable “convenience” fee simply because I have a bad sleep schedule.  Pretty stupid when you think about it, right?

Many times, we are creature of habits.  Back when I was living in Southern California, I tend to regularly stay up late and sleep at odd hours too.  The only reason why it didn’t cost me money?  If I wanted a lift to the airport, I can easily call up a friend.  If I wanted some random odd trinket at 4 in the morning?  There’s a 24/7 supermarket and Walmart five minutes down the street.  If I was running late and needed to find parking fast?  Well, it’s Southern California, parking is generally not an issue (nor are cursed parking tickets).

In another scenario, a friend of mine consistently pays her bill lately once every few months across various different bills, racking up late fees and penalty fees simply because she can be a bit disorganized.  While it will be years until she sort out the organizational issues (I can easily relate as I have piles of envelopes on my desk dated from 5 years ago), she was able to put a stop to the madness by setting up automatic monthly online bill pay.  If you ever have similar issues with forgetting bills, set up automatic online payments now — you don’t even have to set it to pay the full statement balance, just set it to pay minimum, at the very least you can avoid paying late fees.

As you examine your expenses and track your spending, if you were able to find a pattern of financial waste or mistakes, chances are, it’s due to some personal habits that you’ve accumulated through the years.

Habits are not easy to fix, but understanding your habits — especially habits that have financial impacts, will give you some form of armament toward the fight of curbing your financial waste. As with all things in life, knowing the real underlying issue will be the important first step you can take toward solving the actual problem.

Need help on setting and achieving financial New Years resolution? Check out some of the other related post below.

photo credit: Joe Athialy

This post "Before Setting Financial New Years Resolution: Discover and Understand Your Financial Weakness" is from StopBuyingCrap.com.

(source)

The Federal Reserve Bank of New York begins purchasing fixed-rate mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae under a program first announced on November 25, 2008.

January 12, 2009 – Allocating TARP Funding

At the request of President-Elect Obama, President Bush submits a request to Congress for the remaining $350 billion in TARP funding for use by the incoming administration.

January 16, 2009 – TARP in Action

(source)

The U.S. Treasury Department purchases a total of $1.4 billion in preferred stock from 39 U.S. banks under the Capital Purchase Program.  In the same day, The U.S. Treasury Department, Federal Reserve and FDIC finalize terms of their guarantee agreement with Citigroup.

February 26, 2009 – Fannie Mae Reports Massive Loss

(source)

Fannie Mae reports a loss of $25.2 billion in the fourth quarter of 2008, and a full year 2008 loss of $58.7 billion. Fannie Mae also reports that on February 25, 2009, the Federal Housing Finance Agency submitted a request for $15.2 billion from the U.S. Treasury Department under the terms of the Senior Preferred Stock Purchase Agreement in order to eliminate Fannie Mae’s net worth deficit as of December 31, 2008.

March 2, 2009 – Additional Bailout for AIG

(source)

The U.S. Treasury Department and Federal Reserve Board announce a restructuring of the government’s assistance to American International Group (AIG). Under the restructuring, AIG will receive as much as $30 billion of additional capital from the Troubled Asset Relief Program (TARP). In addition, the U.S. Treasury Department will exchange its existing $40 billion cumulative preferred shares in AIG for new preferred shares with revised terms that more closely resemble common equity. Finally, AIG’s revolving credit facility with the Federal Reserve Bank of New York will be reduced from $60 billion to no less than $25 billion and the terms will be modified. In exchange, the Federal Reserve will receive preferred interests in two special purpose vehicles created to hold the outstanding common stock of two subsidiaries of AIG: American Life Insurance Company and American International Assurance Company Ltd. Separately, AIG reports a fourth quarter 2008 loss of $61.7 billion, and a loss of $99.3 billion for all of 2008.

March 19, 2009 – IndyMac to OneWest Bank

(source)

The FDIC completes the sale of IndyMac Federal Bank to OneWest Bank. OneWest will assume all deposits of IndyMac, and the 33 branches of IndyMac will reopen as branches of OneWest on March 20. As of January 31, 2009, IndyMac had total assests of $23.5 billion and total deposits of $6.4 billion. IndyMac reported fourth quarter 2008 losses of $2.6 billion, and the total estimated loss to the Deposit Insurance Fund of the FDIC is $10.7 billion. The FDIC had been named conservator of IndyMac FSB on July 11, 2008.

April 6, 2009 – Liquidity Crisis

(source)

The Federal Reserve announces new reciprocal currency agreements (swap lines) with the Bank of England, the European Central Bank, the Bank of Japan and the Swiss National Bank that would enable the provision of foreign currency liquidity by the Federal Reserve to U.S. financial institutions.

May 20, 2009 – Helping Families Save Their Home Act

President Obama signs the Helping Families Save Their Homes Act of 2009, which temporarily raises FDIC deposit insurance coverage from $100,000 per depositor to $250,000 per depositor.  The new coverage at FDIC-insured institutions will expire on January 1, 2014, when the amount will return to its standard level of $100,000 per depositor for all account categories except IRAs and other certain retirement accounts.  This action supersedes the October 3, 2008 changes.

June 1, 2009 – General Motors Files for Chapter 11 Bankruptcy

As part of a new restructuring agreement with the U.S. Treasury and the governments of Canada and Ontario, General Motors Corporation and three domestic subsidiaries announce that they have filed for relief under Chapter 11 of the U.S. Bankruptcy Code.

July 23, 2009 – Truth in Lending in Crossfire

(source)

The Federal Reserve Board proposes significant changes to Regulation Z (Truth in Lending) intended to improve the disclosures consumers receive in connection with closed-end mortgages and home-equity lines of credit. Among other changes, the Board’s proposal would improve the disclosure of the annual percentage rate on closed-end mortgages and require lenders to show consumers how much their monthly payments might increase for adjustable-rate mortgages. The proposal would also prohibit payments to a mortgage broker or loan officer that are based on a loan’s interest rate or other terms, and prohibit lenders from steering consumers to transactions that are not in their interest in order to increase the lender’s compensation.

August 25, 2009 – Ben Bernanke Renominated

President Obama nominates Ben S. Bernanke for a second term as Chairman of the Board of Governors of the Federal Reserve System.

September 18, 2009 – From the Dust of Lehman Brothers

(source)

The U.S. Department of the Treasury announces the expiration of the Guarantee Program for Money Market Funds, which was implemented in the wake of the failure of Lehman Brothers in September 2008. The Program was initially established for a three-month period that could be extended up through September 18, 2009. Since its inception, the Treasury had no losses under the Program and earned approximately $1.2 billion in participation fees.

October 14, 2009 – Dow Jones Above 10,000

(source)

The Dow Jones Industrial Average closes above 10,000 for the first time since October 3, 2008.

November 1, 2009 – CIT Files for Chapter 11 Bankruptcy

(source)

CIT Group, Inc., files for bankruptcy protection under Chapter 11 of the bankruptcy code. The U.S. Government purchased $2.3 billion of CIT preferred stock in December 2008 under the Troubled Asset Relief Program (TARP). The firm’s prepackaged bankruptcy is expected to wipe out the equity stakes of CIT’s current shareholders, including the U.S. Government.

December 2, 2009 – Bank of America Repays TARP

(source)

Bank of America announces that it will repurchase the entire $45 billion of cumulative preferred stock issued to the U.S. Treasury under the Troubled Asset Relief Program (TARP) after the completion of a securities offering.

December 9, 2009 – Exit Strategy for TARP

U.S. Treasury Secretary Timothy Geithner sends a letter to Congressional leaders outlining the Administration’s exit strategy for the Troubled Asset Relief Program (TARP). Secretary Geithner announces that the program will be extended to October 3, 2010, and focus on three areas: 1) foreclosure mitigation; 2) providing capital to small and community banks; and 3) possible increases in the Treasury Department’s commitment to the Term Asset-Backed Securities Loan Facility (TALF).

This post "The 2009 Financial Crisis Timeline in Photos" is from StopBuyingCrap.com.

A few years ago, I was reading a blog post by Trent at The Simple Dollar regarding living on half of your income, and at the time I thought to myself:  “Well that’s nice. So instead of thirty Cup Noodles per month, I get to eat only fifteen? That’s totally doable.*”

(*Cool kids often use the word doable back in the days).

But time has changed. I’m now a hard-working member of society (sort of) and I’m no longer a dreadful leech on my parents (again, sort of).

Huh. I Could Have Sworn I Made More Than This…

In the past couple of months, I’ve again uprooted myself from Southern California and moved up to the San Francisco Bay Area to work on various projects, spending some good part of my time at the very cool BillShrink.com.

Being the ever disorganized person that I am, for the past few months I was being a little late on the invoicing for my contracting jobs — and by a little late, I meant a couple of months late.  And when I said disorganized, what I really meant was that I was busy working hard, of course.

So in effect a good portion of my income was not flowing into my checking account.  These are by no means small amounts too as they were more than enough to pay for a couple months worth of rent. Things got a bit silly when I was finally asked by the consulting clients: “When will you invoice us so we can pay you?”

Ohhh right. Money. Yeah, I need those things don’t I?

The interesting thing I noticed though was that my living standard didn’t change too much during these past couple of months — even though the cash wasn’t flowing in.  You can surmise a few things from this:

1. Maybe my living standard just sucks to begin with.
2. Maybe I make soooo much money that half of it is still a crap load.

And the truth usually lies somewhere within the middle of those two extremes.  I realized now that I do indeed have quite a no-frills life style: my expenses consist mainly of food, lodging, and transportation cost. Entertainment?  Who needs to pay for entertainment when your excitement consist of weekly Settlers of Catan sessions with a fellow personal finance blogger?

Still, literally living on half of your monthly income because you forgot to ask for your paid is STUPID.  When you’re not receiving your cut from the man, you’re doing yourself a major disservice:  you can diminish your cash-on-hand to invest and any potential realized savings toward your retirement.  Sure, timing the market is generally stupid, but missing out on tax advantages because you don’t have cash available (when you should) is even more stupid.

Having said that, being able to live on half of your income (or much less) can be great way for you to achieve your saving goals — and it is much easier thing to accomplish for recent college graduates, many of whom may go from making $0 per year to tens of thousands of dollars per year.

How to Live on Half of Your Monthly Income

1. You should have a clear idea of the type of living standard you would want to enjoy.  This is key, as a mortgage payment or a car loan won’t fit into the scenario unless your salary is  gangbuster-high.
2. You need to understand the actual expenses involved for the living standard you’ve decided to live by.
3. You need to be willing to trim or cut down on certain expenses.
4. You need to acutely keep a budget — unless you’re one of those type that can maintain their expenses by willpower.
5. You need to understand that not everyone can live on half of their monthly income. This is especially true if you have dependents or other financial obligations. Just because some frugality tip tells you to rock a “50% savings plan” doesn’t mean that you can apply the same tactic to your life situation.

For more tips, check out this AOL coaches article: Live Your Life For Half the Price.

Regardless if you can or can’t live on half of your income, thinking about the situation can be a good mental exercise in the type of expenses you’re currently incurring.  Personally, I think if you have frugal lifestyle and mentality, living on half the monthly salary will probably be a cake walk. However, if you were having issues balancing your checkbook a month or two ago, and then you suddenly decided to switch to a savings style of “living on half your income” — you probably won’t get very far.

Not a Fan of “Living on Half  of Your Income”

Before you think otherwise, you should know that I am NOT a proponent of a “50% savings plan” or some “living on half your monthly income” savings tactic.

Money, at the core of it, is meant to be spent.   Money affords us options and choices in life.  Although I’m a pretty frugal guy, my basic financial outlook is this: If you can afford it, spend it. Just don’t be a moron and cry about it later.

I’m not a real believer in hardcore saving tactics unless its for a very specific and concrete goal (e.g. you want a house within so-and-so years).  If you’re ever considering living on half of your income so you can do a 50% savings plan, you should think carefully about the trade-offs from the savings.

Sure, a vacation after a first few years of work straight out of college may be a bit lavish, but there are only certain things you can do while you’re young and have  flexibility in life.  Yes, maybe remodeling your entire backyard can’t be classified as a frugal move, but if you can enjoy more family time together with the new grill, patio, or jacuzzi — why not?

For some people, living on half their income is as easy as a stroll through the neighborhood (Compton, CA excluded). Their life style isn’t impacted and they’re making great headway toward their saving goals.  For others, forcefully living on half their income can often be stressful and difficult.  If you’re in a situation where you’re considering living on half of your salary, you need to carefully weigh the pros and cons.  At the end of it, it’s all about balances and your own preferences.

What do you think about people that choose to live on half of their income?  Or maybe you’re already doing it and you love it? Feel free to share your view and tips in the comments below!

This post "Accidental Frugality – Can You Live on Half of Your Income?" is from StopBuyingCrap.com.

Here’s the breakdown on the changes when the law comes into effect February 22, 2010.

Consumer Protection

• Retroactive interest rate increase are banned except when a cardholder is more than 60 days late paying a credit card bill.
• Credit card issuer must review the cardholder’s account six months after increasing the interest rate, and return the APR to the previous lower level if the cardholder has been on-time with payment.
• Interest rate cannot be increased within the first 12 months, and promotional rates must have a minimum of 6 months in duration.
• Advance notice of 45 days prior to significant changes in credit card terms: this includes the benefits and reward structure of a credit card.
• The practice of universal default and double-cycle billing are no longer allowed.
• Over credit limit fees are now prohibited unless consumers specifically agree to allow transaction to go through instead of being denied.
• Bills must be sent out no later than 21 days before the due date.
• Payments cardholder makes must be credited as on-time if the payment is received by 5 P.M. on the due date.

Enhanced Consumer Disclosures

• Clear disclosure on how long it would take to pay off a credit card balance if cardholder makes only the minimum payment each month.
• Clear disclosure on the total cost in interest and principal payments if a cardholder makes only the minimum payment each month.
• Late payment deadline and postmark date are required to be clearly shown and disclosed to cardholders.

Protection of Young Consumers

• Credit cards cannot be issued to people under the age of 21 unless they have an adult co-signer or show proof that they have the means to repay the debt (proof of reasonable income).
• College students will be required to receive permission from parents or guardians in order to increase credit limit on joint accounts they hold with those adults.
• People under the age of 21 will now be protected from pre-screened credit card offers unless they specifically opt-in for offers.

Gift Cards

• Gift cards are now required to remain active for at least five years from the day of their activation.
• Dormancy or inactivity fees on gift cards can no longer be imposed unless there have been no activity in a 12-month period.
• Dormancy or inactivity fees must be clearly disclosed to gift card buyers.
• If the gift card expires after 5 years, the terms of expiration needs to be clearly disclosed to gift card buyers.

Effective Date

• The majority of the new rules will be taken into effect 9 months after the signing of the bill, which puts the effective date on Feburary 22, 2010.
• The rule on 45 days advance notice of major changes in account terms will take effect 90 days after the bill’s enactment, beginning September 2009.

This post "Breakdown: The Credit CARD Act of 2009" is from StopBuyingCrap.com.

Spying a cute girl of similar age across the room, I proceeded to try and “look smart” by picking up the local newspaper so I can pretend to read it — but of course my real intention at the time was to have an easier means to take the occasional peek at the cute girl.

Ah. The shaping of a future creepy stalker. I’m not sure why I added this story to the post, but, there it is.

What really caught my eyes that day though was a story in the local newspaper about “killer” medical bills – medical billing errors that were so drastic that it affected the entire financial well-being of a family.  Apparently, a fat-finger mishap occurred where the hospital billing department mistakenly typed in the wrong billing code for the procedure done in the hospital, and the minor clerical error resulted in a fatigue-inducing, long drawn-out battle with the hospital over the medical bill.

According to a Medical Billing Advocates of America, 80% of the medical bills contain errors in them. Occasionally the problem get more confounded by confusing Explanation of Benefits from insurer and hospital summary bill that’s lacking in details.  Coupled with these and many other factors, it’s little wonder there’s an entire industry out there dedicated to helping consumers deal with medical billing errors, overcharges, and underpayment by insurance companies.

Because of the high percentage in probability of errors, you should always request an itemized bill from the hospital and compare it closely with your EOB from the insurance company before you pay your bill.  If you spot anything that you have questions about, take the time and contact your insurance company or the hospital/physician’s billing office.

Common medical bill errors as listed by Consumer Reports:

• Duplicate fees for tests and procedures.
• Incorrect date of service – nothing beats being charged for a room on the day you weren’t even there.
• Inflated room charges for incidental items such as sheets and towels (these should already be included in the room charge).
• Human errors – as mentioned above, a mistaken keystroke could result in the wrong billing code.

If you’re in a situation where you can’t seem to resolve a medical billing dispute with your insurer or hospital, you might want to consider outside help from a billing advocate, though you should be aware that billing advocates usually charge an hourly fee plus a percentage of any savings.

With the potential of errors that can cost thousands of dollars, scrutinizing your bill should always be a requirement.  When I told my family about the story I read in the paper, we went through our medical bill carefully when it arrived and thankfully it was without errors.  My family, of course, promptly asked me what business I had reading the paper, to which I responded defensively with a long exposition on how I love to read and seek knowledge.  I’m not sure why they didn’t believe me.

photo credit: Alice Chaos

This post "Avoid Costly Medical Bill Errors & Mistakes" is from StopBuyingCrap.com.

For example, here’s the top rated FML (f– my life):

Today, I received my passport in the mail. They got my birth date wrong. Then I picked up my birth certificate that I had sent in with the application. Turns out my parents have been celebrating my birthday on the wrong day for 16 years. FML

As with many websites geared towards sinking time,  fmylife.com can often be a funny yet sad read.  The reason why I pointed out this website was not to spread further misery, but to acknowledge the fact that, sometimes, life can throw a sucker punch in your face, and there’s not much you can do about it.

Occasionally you may have events in life that may be overwhelming you.  Add those life situations to the mounting debt, to the struggling cash flow, to the seemingly unmanageable financial accounts and you’ll have a good reason to turn a blind eye to financial meltdowns that may be occurring around you.

Although at times you may not be able to do much about certain happenings in your life, your personal finance doesn’t have to be the same way.   Many times, your personal finance is something you can affect and manage.

So what steps should you take to gain command over your personal finance?  What can you do to make sure your finance isn’t contributing to the suckage?

The answer, unfortunately, varies depending on your life situation.  Yes, it would have been sweet to be able to find a one-size-fit-all financial solution at the end of this post, but if you couldn’t tell from the horrendous writing, you’re reading a C-list personal finance blog.

Instead of mouthing off financial advice that may not pertain to your situation and face possible litigation on making your life worse, here are some decent personal finance books that I recommend, depending on your life situation:

• If you’re young, clueless about financial basics and still thinks a T-shirt in exchange for a credit card is a swell deal, consider I Will Teach You To Be Rich by Ramit Sethi.
• If you feel that you’re too busy to deal with all the financial jargon but still want to build a solid foundation for your financial life, check out Smart and Simple Financial Strategies for Busy People by Jane Bryant Quinn.
• If you’re looking for simplicity in your life and feel that you need to find a sensible balance to your finances, try Your Money or Your Life by Vicki Robin.
• If you’re knee deep in debt, don’t see an end in sight and feel that some drastic financial changes may be in order, look into The Total Money Makeover by Dave Ramsey.

This post "So Your Life Sucks, But Your Finance Doesn’t Have To" is from StopBuyingCrap.com.

Since they’ve been throwing around a bunch of different numbers and qualification scenarios, here’s the fairly-certain low down on the new home buyer tax credit.

To Qualify for the $8,000 “First-Time” Homebuyer Tax Credit:

• Home purchase must be made between January 1, 2009 and November 30, 2009.
• Must be a “first time buyer.” In order to qualify for this status, you must not have owned a home for the past three years.
• You must also live in the purchased house for at least three years, or you’ll be obligated to pay back the tax credit.
• Homebuyers must make less than $75,000 for single tax filers, or $150,000 for couples.
• Higher-income buyers will receive a partial tax credit, but details have not yet been fully released.
• Single family residence purchases (condominiums, townhouses, co-ops) that will be used as a principal residence will qualify.

How to Claim the Homebuyer Tax Credit:

• Simply claim it on your tax return.  You will not have to filed any other forms or papers.  If you’re not a procrastinator like me and you’ve already filed your taxes, you can simply file an amended return for 2008 to claim the credit.
• What type of tax credit is it? It’s one of the better type: a refundable one.  This means that if you don’t owe any taxes, you will get any excess credit in the form of a fat refund check.  Example: If you owe $1,000 in taxes, you’ll get a $7,000 refund check.  If you’ve overpaid $1,000 in taxes, then you’ll get a $9,000 check. You can read more about refundable tax credit in the resource link below.
• If you’ve already claimed last year’s $7,500 tax credit, then you won’t be able to claim the $8,000 credit on next year’s return. It’s one credit or the other, buddy.
• Unlike the previous $7,500 tax credit, there’s no repayment required for this $8,000 tax credit!  (Unless of course you sold your house within three years, as stated earlier).

Other Miscellaneous Notes:

• If you’re buying into a retirement community, unfortunately, the purchase won’t qualify for the $8,000 first-time homebuyer tax credit.

This post will be updated as the IRS release further details upon their interpretation of the just-passed American Recovery and Reinvestment Act.

Regardless if you think the first-time homebuyer tax credit in the stimulus bill is a smart move or that it’s entirely bullsh*t  — the tax credit will certainly be a nice bonus for those that are looking to purchase a home in 2009.

This post "Breakdown: The $8,000 First-Time Homebuyer Tax Credit" is from StopBuyingCrap.com.

Calling it “lazy budgeting” is sort of misleading, as I don’t really budget — the entire act is more of a reminder for myself.  For example, for the month of November (or whenever), if I’ll be spending an extra X amount on so and so… I make a mental note or jot the dollar amount and the planned purchase date on a sticky note, notepad, or a text document on my desktop.

Holiday gift for the family?  Mental note.  Jewelry for the mistress?  Sticky note.  Monthly payment to the loan shark?  Sharpie-written note on forearm.

What are some of the benefits of making a note on these purchases?

• No surprises when the bill comes the following months.
• Know exactly how much I need to transfer to checking to cover expenses.
• No freak-outs when credit card company calls to verify large purchases.
• Accountability: can’t pretend I didn’t spent the money.

If you’re lazy and you don’t budget like me, you should at the very least consider making a mental or visual note whenever you have a large upcoming expense.  A visual cue to the actual spending can actually be pretty powerful, as I’ve found myself at times changing my mind on a large purchase simply because I got sick of staring at the sticky note on top of the monitor.

“Birthday present for sister? Pff. Forget it.”  *tears off sticky note*

Teehee.

This post "Lazy Budgeting: Planning $500+ Purchases Ahead of Time" is from StopBuyingCrap.com.

Without going into too much details, lets just say yours truly made a series of serious mistakes in 2008, almost on the same level of my previous stupidity of amassing around $10,000 in credit card debt back in 2002.

Yeah, parts of ‘08 was that crappy. Even though they were not exactly financial mistakes, they were costly mistakes.

Having said that, this brings me to the point of this post: dealing with the debt you’ve created from poor spending decisions.

As a very much imperfect person (my parents will attest to this) that’s slowly realizing he’s the harbinger of mistakes, I’ve learned a few things about dealing with poor choices in life.

Whether they are financial mistakes or something else, there are about two choices you have when you’ve made a mistake: 1) Suck it up, learn from your mistake.  2) Continue the fun fest of being stupid.

The Excuses We Make

Geez. Cap is being so negative. He must have gotten rejected by the local bowling team again.

Be that as it may, the truth of the matter is that we will often try to habitually justify our own ill-conceived actions through excuses and poor reasoning.  If you’ve ever made a stupid mistake that you’ve regretted before, you’ll probably know what I’m talking about.

“Its not my fault I spent so much. Work is stressful and I need some occasional relief.”

“Its not my fault I didn’t pass that test.  Chelsy was in a bad situation and she needed me to be there for her.”

“Its not my fault my body weight went uncontrolled.  I’m too busy with work/school/etc. to get a proper meal.”

If any of these sounds familiar — worry not, you’re not the only one that has thought of them.

Understanding the Mistake

When I woke up that one faithful morning six years ago and realized the asshat decisions I’ve made to get myself in the position of owing so much money — all the excuses I’ve been giving to myself suddenly disappeared.  For months, the excuses kept the realization at bay, but at that one brief moment, I had a moment of true clarity and realized that I didn’t want to continue to live a debt-ridden life.

What I’ve just described may sound a bit dramatic, but that morning was a definite eye-opener for me (being scared sh*tless by debt helped too, of course).  And from that eye-opener, I made the frequently mentioned mental attitude change. I decided to spend less than I earn, save money, budget, yada yada — you’ve most likely read it all before (if not on this blog, then on another).

Fixing the Mistake

If you have amassed debt from excessive consumerism (or some equally stupid reason), you should know that combating that particular debt doesn’t require some magic formula or a requirement of being a super genius.  You’ve probably noticed this already, but I’m not exactly a rocket scientist (again, my parents can also attest to this) — if I could paid off debt with an attitude adjustment, you can too.

Thus, suck it up. Realize that you’ve made a mistake and make a plan on how you can fix it.  There are hundreds, if not thousands of articles online with methods and steps you can take to pay off your debt.

Here’s a simple guideline:

1. Earn more money or spend less money.
2. Use excess from earnings/savings to pay off debt.
3. Done.

It’s a New Year. Make it a better one!

This post "Got Debt from Stupid Spending? Suck It Up and Fix It" is from StopBuyingCrap.com.

Damn.

Besides the added waistline, the unflattering effects of gravity, there are a few (financial) advantages as you get older:

1. Car rental will no longer be a rip off after the magical age of 25
2. Car insurance premium will slowly become cheaper
3. Your credit history should be steadily improving as financial accounts adds age
4. As you reach a certain age, you’ll get to join AARP (et al) and get senior discounts

Yeah, I know it’s a pretty weak sauce list but that’s about the only four things I can come up with.  There are a few other financial situations that should improve as you get older, such as your savings, your retirement accounts, etc. — but they’re not really a direct benefit that you get as you become older.

If you know some financial advantages to getting old, throw me some bones because there’s got to be something to look forward to — this quarter-life crisis is driving me nuts!

Haha. I kid, I kid.

This post "Four Financial Advantages as You Get Older" is from StopBuyingCrap.com.

Yeah well, I guess they were onto something.  Here’s a snapshot from the current stock holdings in my TradeKing account:

Hey sweet. The holdings are only down 69.29%.  I believe a month ago it was down 78%, in which case the title for this post would have been “19,711 Reasons Not to Buy Individual Stocks.”

These are of course unrealized losses.  I don’t expect to sell any of these three holdings anytime soon, nor do I expect them to recover within any short time frame.

I’m fairly confident about two of the company above.  One’s a telecommunication company paying out a steady dividend (knock on wood)… and the other is in the semiconductor industry and has enough cash to weather the storm (hell, with current prices, it has 41% of its market capitalization in cash).

There’s only one holding that I’m iffy about and that company is in the buildings material industry.  That description alone should be self explanatory. Heh.  The company did however receive additional funding from one of its major institutional investor, but whether or not those fundings can get the company through hard times is another story.

Despite the fact that I’m still fairly young and will most likely be able to ride all of this out, there were a few moments a month ago when I realized I was reaching my risk tolerance levels. Let me tell you something, that was a very fun experience (if you consider feeling scared and anxious fun, then yeah it was super fun).

So yeah. Don’t buy individual stocks unless you can do the proper homework and tolerate the risk involved.  I would plainly suggest against investing in individual stocks on the whole, but you know… hard to give that suggestion when I don’t follow it myself.  Hah!

P.S. These individual stock holdings are of course not the majority of my investment, or else I’ll be freaking out and crying (a lot more anyway).  Most of my other long term investments are in my retirement accounts, and they’re happily down only about 30-40%. Haha. Good times.

This post "17,511 Reasons Not to Buy Individual Stocks" is from StopBuyingCrap.com.

You might be wondering why your pal Cap is so corny these days.  Truth be told, as I get older, it becomes harder to be a wise-cracking, sarcastic moron poking fun at all things in life (although being an ass means I’ll keep trying). One thing is for sure, my goal in reaching financial independence is the same now as it was years ago, and will remain the same years later:  to provide for my family and loved ones.

You’ve read hundreds, if not thousands, of financial tips from personal finance blogs.  Don’t just read them, take some action. If most of us average-Joe personal finance bloggers can pay off our debt, fund our retirements, and reach our financial goals or dreams — you can too. Print out these reminders or write your own today.

Have a reminder to share? Please leave a comment.

This post "Five Quick Reminders for the Holidays: Post-it Notes Style" is from StopBuyingCrap.com.

From [Money & Shopping Blog] and [Adrants].

This post "There’s No Bailout Clause in Your Credit Card Contract" is from StopBuyingCrap.com.

If you’re getting tired of reading financial ramblings from Joe-Just-Like-You, how about some literary genius from the experts, the real journalists, the pro-bloggers, the big kahuna…

What? I’m artificially inflating your expectations so you can be sorely disappointed and resort back to mediocre awesome blogs such as mine?

I have no idea what you’re talking about.

Self-talks aside, each of the blogs below are worthy of a place in your feed readers. As with what you do with your children, you may pick and choose a favorite at your discretion:

1.  The Wallet from The Wall Street Journal by Mary Pilon

Launched just a few months ago in September, The Wallet has already amassed more post counts than Stop Buying Crap (then again, which blog on the web hasn’t).  Updated by Mary Pilon, The Wallet covers investing, retirement, credit cards, mortgages — anything that impacts your wallet.  Check out their video series In Your Wallet, which provides more financial voyeurism goodness by highlighting wallets from some famous and not-so-famous people.

2.  Tightwad Tod from Consumer Reports

Even more of a newborn than The Wallet would be Tightwad Tod from Consumer Reports.  Launched last month, Tightwad Tod is far from a newbie in the world of consumer finance, having been covering all aspect of a consumer life at Consumer Reports for nearly 20 years.  You’ll find daily news and tips on ever aspect that’ll affect your pocketbooks at Tightwad Tod.

3.  Alpha Consumer from US News by Kimberly Palmer

Unlike the other two new comers above, The Alpha Consumer has been around for little over a year now.  Written by Kimberly Palmer, a senior editor at U.S. News & World Report, The Alpha Consumer dishes out tips on saving money, avoiding scams, managing debt, and overall being a savvy shopper.

4.  Smart Spending Blog from MSN by Karen Datko & Donna Freedman

Whether you’re a PC or a Mac (urgh), you’re sure to like MSN Money’s Smart Spending blog.  Co-hosted by Karen Datko and Donna Feredman, the Smart Spending blog will find you the best money saving tips from around the web while frequently highlighting post from the personal finance blogging community.  If you’re visiting the blog, don’t forget to check out the Smart Spending message board!

5.  Money and Shopping Blog from Consumer Reports

Topping off this round-up is another blog from the good folks at Consumer Reports.  Slight bias for the independent, non-profit organization?  Hey why not?  Getting its contribution from the money reporters, editors, and testers at Consumer Reports, the Consumer Reports Money and Shopping Blog hammers out frequent quick doses of financial tips.

Got other blogs on your readers that I may have missed mentioning?

Sorry, they weren’t awesome enough.

Alright just kidding.  Chime in and I’ll add them to the list.

This post "Five Kick-Ass Personal Finance Blogs from “Traditional” Media" is from StopBuyingCrap.com.

You know, if you read financial blogs and related websites, you’ll occasionally see those stories about how a family or an individual dig themselves out of massive debt after years of hard work and due diligence.

They’re usually good stuff.  Sometimes they can be dramatic: after losing a loved one, John Doe fought the insurance company, restored his family name and wiped the family debt; sometimes they can be inspirational: after losing her job at the local company, debt started piling up for single mom Jane Doe, but she continued to work hard and eventually found financial independence.

The truth is, debt reduction and elimination doesn’t have to be a news story, blog entry, or topic of the week.  If you’re anything like me, you simply realized your debt got a little bit out of hand, readjusted your lifestyle and worked towards getting rid of those nasty bills.

That’s mainly the reason why I haven’t written about my debt all too much on this blog — it was caused by stupid reasons, and it came as easily as it went.

I don’t mention this now as to brag about how awesome I am in getting rid of $10,000 of credit card debt.  Far from it.  I mention this because if your life situation is anything like mine, you can most likely get rid of whatever debt you have within a reasonable amount of time too.

Here’s the story: I was about 19 year-old.  I had an online business selling car parts and I worked part-time at Bank of America after school hours.  Despite an income of about $30,000 per year (after tax), I quickly racked up a credit debt of about $10,000 when I was 20 year-old.  I wish I can blame it all on tuition but I had Cal Grants covering my state university cost and portion of my rent.  Heck, I even shared the apartment with two other high school buddies.

So what happened?

I simply lived beyond my means. I frequently ate out, went on trips, and lived the lifestyle of a bratty college kid.  It was all fun and chill until I woke up one day, looked into my checking account of about $24.85, saw the credit card balance over $10,000 and realized I have a slight problem on my hand.

Months later, Cal Grant cuts back dramatically on the amount I was awarded with as the tax filing came rolling in, and Bank of America closes the department I worked at and laid everyone off.  With less income to combat the sudden rise in financial responsibility, it was a classic case of getting screwed by your own stupid decisions.

So what did I do?

I moved back home and opted for the hour and half commute.  Rent was the same, but you’d be surprise how much you can save if you stop living the “lavish” college lifestyle. As I glance around my room, I saw the massive amount of crap I had amassed (especially obvious after a move) and literally stopped buying crap — hence the stupid blog name.

Gone are the days of eating out each night, and taking trips I couldn’t afford. I made a simple budget, figured out my credit standing, transferred my balances to lower promotional rate offers, ditched the poor credit card usage habit, started piling money into the highest interest debt — and within a year I was credit card debt free (still had the car loan but that went its way a few years later).

My situation is of course easier than many others that may be in debt.  Although I lost about a third of my income from the Bank of America job, I still had a pretty decent income for a 20 year-old.  Beyond rent, school tuition, car payment, and car insurance, I didn’t have other financial obligations.  And so as mentioned earlier, I made a conscious decision to live within my means and soon the debt went away.

Looking back, the real difference and turning point was my attitude with regards to money.  I had this silly notion that I can always make more money “later” and it’ll all be peachy.  But when things started getting tough, it quickly became apparent that I’ll never get ahead if I continued being financially irresponsible.

If your situation is anything at all close to mine, if you’re a college student seeing an increase in your credit card balance and a lower amount in your savings account, it may be time to look at your financial standing to see if something is amiss.

Don’t worry, I won’t get too preachy about how you should change your financial lifestyle — after all, it’s really up to you to make a conscious decision to bring about change.  If you’re already on your way to getting rid of your mundane debt, more power to you.  If you don’t think you have a financial problem (even though you might), eh, maybe you’ll realize it years later. Maybe not.  Its your life and you know it best.  As with many other things in life, we learn best from our own personal experience.

For those of you with the simple consumer debt, know that it can go away as easily as it came.  Take heart in that these aren’t debts accumulated due to life changing situations such as medical emergency, serious job loss, or the loss of a family member.  Know that you don’t have to make a dramatic shift in your lifestyle to get rid of the debt.  If you make a conscious decision to combat the debt, the debt reduction will happen — and before you know it, you’ll be picking up healthier financial habits along the way.

photo credit: mjpeacecorps

This post "Knocking Down Debt Doesn’t Have to Be Dramatic or Inspirational" is from StopBuyingCrap.com.

Don’t get me wrong, I’m staying up to teach this 12-year-old kid in Australia who’s the real king in Call of Duty 4 — how dare he knifes me while I’m refilling my bowl of Cap’n Crunch!?

Here’s the survey break down:

• 30% worry about cost of living
• 29% worry about credit card debt
• 14% worry about mortgage payment
• 13% worry about retirement savings
• 3% worry about childrens’ tuition
• 3% worry about health care costs
• and 8% aren’t losing any sleep

And here’s the amazing interactive poll:

[poll=5]

This post "Are You Losing Sleep Over Money?" is from StopBuyingCrap.com.

Frequently getting overage charges from your cell phone plan? Billshrink.com may be able to help you sort through hundreds of different cell phone plan and help you find the best plan to save you money.

Billshrink is pretty easy and straightforward to use. Choose the service that you want to compare (wireless or credit cards), input your calling or spending pattern and Billshrink will spit out a list of possible alternatives.

You can also get a bit of phone usage analysis and better accuracy on cell plan comparison when you upload your phone bill to Billshrink. The site didn’t work too well for me as I already have a low price, discounted T-Mobile plan through Freelancer Union. The monthly bill of $36.85 is also a bit off since my plan was recently pro rated. If you have a regular consumer cell phone plan, you should definitely see better saving results.

As you can tell, I don’t use too many minutes or text messages. Lack of friends and all.

Heck, most of the calls is from the probational officer. Damn you James, I’m staying away from trouble, stop forcing me to call you already…

Features of Note:

• Get quick cell phone usage analysis by importing your bill. See who you call the most and which calls are costing you money.
• Sort through different plans from across different networks and choose the best rate.
• Estimate additional cost for extra features on cell phone plans.
• Compare and contrast best credit card for your spending pattern.
• Let Billshrink “watch your back” and get notification when better rates and service are available (plans and credit card terms changes all the time).
• Choose the type of phone you want to use and get even more specific comparison for plans that support the phone.

Billshrink can work fairly well if you’re not satisfied with your cell phone plan or not earning the proper rewards from your credit card spending. If you’ve already went through the process of doing heavy research to get the best cell plan or credit card — then Billshrink wont really help you save additional money (most likely the case if you’re reading a personal finance blog).

The credit cards comparison section is very detailed in terms of how they calculate the rewards; whether its point or miles, Billshrink converts them all into dollars so you can better compare the offerings.  Problem is, how the calculations are presented can be a bit confusing. If I had to re-read some details a few times just to understand how the calcuation works, then others that are less financially geeky may not be willing to take the time to understand the differences.

Despite that minor drawback (and I’m sure they’ll tune the site as time pass), BillShrink can be particularly helpful for the less research inclined. If BillShrink can continue to provide fast, easy, and objective recommendations, then it has the potential to establish itself as the place to go for service recommendations.

Pros:

• Best for people looking for quick ways to identify best service for them.
• Easy to use, especially if you import your cell phone bill.
• Notification service lets you know if there’s better offerings out there.

Cons:

• Credit card comparison calculations are a bit confusing.

This post "BillShrink.com – Find Better Cell Phone Plans and Credit Cards" is from StopBuyingCrap.com.

It’s a week or so old, but sound financial advices are timeless (woo super cliché).

From [Vanguard views on recent market events]

This post "Vanguard CEO On Recent Market Events (Video)" is from StopBuyingCrap.com.