School starts next week for our three girls. They will be in 3rd, 2nd, and 1st grades – this will be their first year in public school (they have been home schooled). My wife and I thought that this year would be a good time to start giving an allowance and start teaching some financial principles in a more direct manner (we are always teaching about money!).

So I went online and I bought each girl a new piggy bank – the money savvy pig. Each bank comes with four separate compartments: one for saving, one for spending, one for donating, one for investing.  The girls will earn their allowance daily – 25 cents. The first day they will put the quarter in to donate, the second day saving, the third day spending. The other two days we will split between spending and saving again. For now we will skip the investing part until they are old enough to understand stocks, bonds, etc.

We decided to give their allowance daily because if they do their chores correctly they will get their allowance, but if they don’t they will not receive their “pay”. This way if they do miss a day, they do not miss out on their allowance entirely, they can still collect for the other days. We want them to learn that they need to work to earn money, and if they goof off, well then their are financial consequences – just like in real life. Their chores are pretty simple for this year – make the bed, keep their room tidy, eat breakfast, be on time for the school bus. Obviously we will give them guidance and at first some “second” chances. The girls are pretty excited about their new banks – they have already talked about what charity they want to give to (makes a Dad’s heart proud!).

What tools are you using to help your children learn about finances? Share your thoughts and help all of us!

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We talk a lot about money at this site, and rightly so. We try to spend it wisely, saving any penny we can. We try to budget it, save it, invest it, and give it. We talk about building wealth and reducing debt. But one thing I haven’t talked about much is estate planning. Do we have a plan for our wealth for when we are gone? We know we can’t take it with us, but we also should know how we are going to give it away.

As I was meeting with a Financial Advisor for some church related financial planning, he gave me a booklet entitled “Family Love Letter”, Information in a Time of Confusion. It is a great booklet that helps you gather the information you need to pass on to your loved ones. You can purchase this booklet or read more about it at www.familyloveletter.com.  From the website:

The family love letter is is a gift – of time, love, and clarity – it is a Legacy for the Living. We will all leave a legacy. Will it be a legacy of confusion or information? Will we add to the trauma of  our death or incapacity by adding to its inherit confusion, or leave a road map for those to follow? Will we leave a Legacy for the Living – of the stories, hopes, and desires for our family?

It is a fairly comprehensive planning tool that will help you, and ultimately your loved ones. It has the following sections:

• Section 1: Advisers & Assets – a place to list things like stockbrokers, employers, lawyers, doctors, etc. This is the section where you will also list annuities, stocks and securities, mutual funds, cash funds, real estate, etc.
• Section 2: Financial Information – this financial information is specifically your liabilities. Mortgages, credit cards, leases, liens, etc.
• Section 3: Insurance and Benefits – this lists the types of insurance and coverage you have, employment benefits, etc.
• Section 4: Documents & Other Information – this lists all the documents you have executed and when they were signed and where they are located. Things like wills, trusts, power of attorney, etc.
• Section 5: Family History and Ethical Will. This section lists your history, who your parents were, grandparents, brothers and sisters, etc. it is like a miniature genealogy. It lists what groups you belong to (religious groups, fraternal groups, etc.), and other items that would be pertinent to a obituary. it also includes an ethical will–what is important to you, what have you learned in life, what do you value, what you want remembered.

Overall I think it can be a valuable tool to help you get started, or at least know some of the information you will need for a lawyer to do a will. I like it because it lists the names and places of where things can be found, and your estate will know what items to even look for. The one drawback to me is that it is a booklet and that it is not online. I could see this changing yearly and it being a pain to update by hand. I have the booklet, but I will probably not fill the booklet out – I will probably put it on the computer and then print out a copy for filing. With the info on the computer I can add, delete, update more easily.

Have you started your estate planning yet, at least having a will? It is never too early to start!

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I have often wondered what Financial Peace University (FPU) by Dave Ramsey was like. Well, beginning this September, I won’t have to wonder anymore. Our church has decided to host FPU, and I will be the facilitator. So for 13 weeks on a Tuesday night I will be leading / learning from Dave. I am excited about this for several reasons:

• I’ve always wanted to know what he teaches (because everyone asks me!)
• Because I am the facilitator I get to go for free (there is a reason this is called a penny saved)!
• It’s good to review financial things just to refresh and get recommitted
• I will be doing this with my wife – we’ve never really gone through a financial seminar together

So far about 5 couples have signed up. I expect we will get close to 20 couples. The price is a little steep – $100, but then again it is 13 weeks and you get a lot of information. It’s funny to me how we will spend $100 easily on something else, but when it comes to learning more about finances we balk!

Anyway, I am looking forward to it and will try to blog through the series each week.

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I  received my 2010 Consumer Action Handbook in the mail last week. Every few years I order a new copy for my files. I like this resource because (1) It is Free! (2) It has some good consumer tips (3) It has a good consumer assistance directory.

You can order this handbook  from the General Services Administration at www.consumeraction.gov. It has four parts to it:

1. Being a Savy Consumer. This section has 20 categories covering such items as banking, cars, credit, housing, insurance, privacy protection, wills and funerals, etc. The information is pretty basic, but it’s a good start.
2. Filing a Complaint. Gives you steps in how to resolve a complaint. Pretty good.
3. Key Information Resources. This gives information that would be helpful for teachers and military personnel.
4. Consumer Assistance Directory. This is the goldmine section. You get addresses, phone numbers, internet resources for all kinds of consumer needs. Listings for State Insurance Regulators, State, County, and City Consumer Protection Offices, Federal Agencies (that I didn’t even know existed!), Corporate Contacts, etc. It’s a handy reference guide.

When you order the Consumer Action Handbook you will also get a Consumer Information Catalog that lists other free and low-cost publications.

Overall, this is not a bad resource to have if you live in the U.S. It can come in handy from time to time.

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. 2010 Consumer Action Handbook is a post from: A Penny Saved, the best darn personal finance blog around.

Having trouble with your filing cabinet? Is everything filed under miscellaneous? After doing your taxes this year you promised yourself you would have a better filing system? Want a simple and relatively inexpensive solution?

A few years ago I set out to redo my files. I wanted some guidance for the categories I should set up. So I did what I normally do – I searched the web. I came across the site http://www.homefileorganizer.com/. For $25 you can have a complete filing system in place and ready to go! (FYI – I am not affiliated with this company, nor am I getting anything in return for recommending their product – I just happen to use it myself). It is a pretty good system – you get 2 index cards that have all the categories on them (so if you forget where you may have filed something you can look on the list to see where they recommend you file things). You also get 22 lamented file divider cards – this is what I really liked.  Sure, I could have hand written my own file folders – but if you have ever seen my handwriting you know why I didn’t!  Just drop each file divider card into its own manila folder and put them in your file drawer and you are ready to go!

In addition, you get a financial planning organization handbook that is helpful. It covers such things as safeguarding valuable records, the IRS and your files, how to use the quick-find index, and covers some basic organizational principles. It’s written by J. Michael Martin and Mary E. Martin, both of whom are Certified Financial Planners.

Sure, you could set up your own filing system (I have several times in the past), but this is so easy and useful that I didn’t mind spending the money. There are a few categories I wish they had added, so I did have to make a few extra categories to suit my needs: research (for information on things I might purchase in the future), computer (for all my computer stuff), utilities (some people throw away after paying – I need to keep for a year for tax purposes), etc. But overall I have enjoyed using it.

Do you use your own system, or maybe some other company’s system? Let us know and share your filing tips!

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When I did my taxes earlier this year I was not able to e-file through H&R Block’s software. The program kept telling me (I tried more than once!)that I could not e-file because I was claiming ministerial income and a housing allowance, and then it would reference Publication 517.

Publication 517 deals with Housing Allowance for Ministers and it does state that if a Pastor has unreimbursed ministerial expenses that they are claiming on their tax return then they must file a worksheet (because when claiming a housing allowance not all unreimbursed expenses can be claimed). But since I was not claiming unreimbursed ministerial expenses I should not have had to fill out a worksheet.

So, because of a bug in H&R Block’s software, I had to manually file – which cost me money (and of course H&R Block won’t refund any part of their package cost which includes e-file which I cannot do because of their mistake!).

Frustrating! When even the “tax pros” cannot get it right, then the tax code is too complicated.  Not only did it cost me a little more money, but it cost me more time having to print out copies to mail, getting it to the post office, etc.

Because of this I may switch tax software next year. I went with H&R Block because it was cheaper than TurboTax, but it will no longer be cheaper if I have to manually submit my tax return!

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Read an article by Beryl Jantzi who is a stewardship education director for Mennonite Mutual Aid – an agency that helps individuals with insurance and financial services. In the article he talks about the new normal for living well, which is living below your means.

According to Jantzi, living beyond our means (spending more than we earn) produces four negative results:

1. borrows from our future
2. it is unsustainable in the long-term
3. leads to significant finance charges
4. takes a toll on our emotional, spiritual, and financial resources

Living within our means, which is what a lot of us were taught growing up, is a little better, but has risks also:

1. no real immediate debt
2. is sustainable in the short-term
3. leads to no long-term financial goals
4. is a time-bomb waiting to go off (emergencies, etc.)

Living on the edge, living paycheck to paycheck, is just one paycheck away from disaster.

However, if we can live below our means, there are four benefits:

1. Eliminates unnecessary debt
2. builds up savings
3. allows for flexibility for the present and future
4. creates space for generosity to others

I like how he broke this down into three categories instead of the usual two (living above or below). I know for me, there was a period of time I thought I was doing well because I was living within my means, but that is not the best financial plan.

How are you living right now? Above, within, or below your means? What step can you begin to take today to  move from one category to the next best one?

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Do you live beyond, within, or below your means? is a post from: A Penny Saved, the best darn personal finance blog around.

Over the years, I’ve written quite a bit about the benefits of rewards credit cards.  When used wisely and carefully, rewards credit cards are a great way to get paid to buy things that you would buy anyway.  However, the trick is using them wisely, and not getting into the bad (and easy) habit of spending more than we would otherwise.  After all, what’s a few extra dollars if it’s on the credit card?  The bill isn’t due for another month, and besides, we get those rewards.

That’s dangerous thinking.

If you start thinking that way when shopping and using your credit cards, it’s time to consider other options.  The Envelope Method is one choice, where cash only is used.  But it’s quite inconvenient.  Plus, online shopping is out completely, and that’s where the best deals tend to be on a lot of things.  So, what’s a frugal person to do?

Consider a prepaid debit card.

With a prepaid debit card, you get (nearly) all the convenience of a credit card, with none of the pitfalls.  Think about this:

• Use it like you would a regular credit card – in stores or online
• Accepted anywhere Visa is accepted
• Safer than cash
• No overdraft fees (unlike a traditional debit card)
• Free Direct Deposit

There are a lot of reasons for a person to get a prepaid debit card – especially for those of us who tend to overspend on credit cards.  If you’re on the edge, and need just one more reason, take a look at this: the Pink Visa Prepaid Debit Card. It’s a traditional prepaid debit card, with the added bonus that ACE Cash Express will donate a portion of the proceeds of each transaction to the National Breast Cancer Foundation.

Control your spending and help fight breast cancer?  There are definitely some positives there.  So, is there a downside?

Well, of course there is.  There are positives to everything, and prepaid debit cards are no exceptions.  Namely, fees.  There are fees for purchases ($1 per purchase, unless you go with a monthly plan).  ATM withdrawals cost about $2.50 each as well, which isn’t great, but certainly not out of the ordinary.  There’s also a fee if you lose your card.

It’s up to you to weight the pros and cons.

Prepaid debit cards aren’t the best choice for everyone.  They make sense for some people, and don’t make much sense for other folks.  Sit down, look at your spending habits and patterns, and see if the pros outweigh the cons.

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The Power Saver 1200 – maybe you have heard about it or visited their website (www.power-save.com).  I know that I had been interested in it since I first heard about the product several months ago. It is a device that you hook up to your electric panel (by a trained electrician) that is supposed to save you up to 25% on your electric bills.

I had tried finding info and reviews on the web, but didn’t find many. Well now a local TV station, WGAL, has tested and reviewed it for me! They placed one in a local house, and they placed one in a controlled test environment at a local technology school.

At the house test, there were no apparent differences from before or after installing the product. In the controlled test, there was a 2.5% reduction in kilowatts used. So, could this save you money? Possibly. But with a $299.95 price tag (plus shipping and handling), and paying an electrician to install, the payback period will be a very long time. For me, it is not worth it.

So, with our electric bill about to increase by about 30% because of electricity deregulation in our state, I will have to find other ways to reduce my electric bill!

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Review of Power Saver 1200 is a post from: A Penny Saved, the best darn personal finance blog around.

For those of you just joining us, this post is part of a series   -  I have been reviewing a seminar I attended put on by Jerry Robinson entitled “Bankruptcy of our Nation”. You can find out more about his seminars and books by going to www.jrmi.org.

After all the bad news that Mr Robinson delivers about the economy and our national economic condition, he then gets to the practical part, his ten recommendations on what to do. You could sum up this section with the saying “Get your mind right, than do right!”. Today I will cover the first five recommendations:

1. Admit that man cannot rule man. Men are going to fail, which means governments, businesses, financial institutions, etc. are going to fail. So plan accordingly. Be prepared.
2. Commit to Financial Education. Research and learn – don’t just believe everything you hear. There are three teachers in economics that try to tell you what to do, be careful of them: corporations trying to sell you things; media that helps them sell things; and bank and financial institutions that provide the money or debt to buy those things. Avoid the “herd” mentality (following everyone else). Study to learn how investments operate and function. Do your homework.
3. Create a network of family and friends. People are the greatest asset. We all need family and friends to help us, and for us to help.
4. Give to Charity. This is the number one tool against materialism. This current generation is 480% richer than the generation that lived during the Great Depression, and yet we give less percentage wise than they did.
5. Save 15% of your income. There are five factors that erode our finances, so we need to plan and save for these factors:

(a)     Taxes

(b)     Inflation

(c)     Planned Obsolescence (things need replaced)

(d)     Deferred Expenditures (things we will need to save for to get)

(e)     Technological Advancements (computers, cell phones, etc.—upgrade)

If we are not saving 15%, then we will sooner or later get hit – and hit hard. We    need to plan for these expenditures that will happen.

Well, those are his first five steps. How are we doing? Although I don’t agree with everything he said (the gloom and doom especially), I think these first five steps are a good beginning for anyone to do. I liked the explanation for the 15% saving rate. It is the first time someone explained in some detail how much and why. Now, I am no where near that, but on the surface it makes sense – definitely something for me to consider.

Tomorrow I will go over his other five recommendations. Trust me, some you will know, some will have a twist!

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Bankruptcy of America – A Game Plan is a post from: A Penny Saved, the best darn personal finance blog around.