Credit Cave

This article is the next part in the series on Controlling Cash Flows: Maximizing your Savings when Shopping. In the last article we discussed the overall situation of using advanced lists to compete with major retailers. We now start to get down to business and detail how to achieve this goal.

In our last article we described how simple lists can form a strategy to help you obtain your objective of minimizing your spending while shopping.

Last time we mentioned that modern day stores are setup to optimize their cross promotional opportunities against you the shopper. If they set up a camping aisle, they will include flashlights and a mini battery section. If they sell turkeys, they will sell turkey bags.

Their goal is to provide the things you are looking for and put a host of related items near those things so that you will stop and consider, I needed nails, do I need a new hammer too? How about a plastic Nail Holder Gizmo so that I don’t smash my thumb, now that sounds like a good idea! (While you are there in the store, but when you get home and hit that plastic Nail Holder Gizmo once with the hammer and it smashes to pieces, you are now out $5 and the store has taken money out of your pocket that you never intended to spend!

Retailers have very advanced systems and many very intelligent people working to sell you when you walk into the store, lengthen the amount of time you spend in the store, and get you to keep filling up your basket, and switch to a cart and get a second cart if possible. You can go into the wilderness unprepared or you can make a plan (simple list) and even get some survival gear to prepare yourself (advance list and advanced list tools).
In our next article we will cover the details of preparing an advanced list and soon after that how to use it!

This article continues the series on Controlling Cash Flows and sets up the simple theory and practices you can utilize to compete head to head with entire corporate sales teams run by retailers like Wal-mart to entice you to spend more than you intend, want or can afford. This second segment in this series can help you to level the playing field with corporate retail marketers.

There is a key to shopping that can make a major difference in the results you achieve. The key is extremely simple to understand, implement and benefit from for just about anyone. It does not require technology, but technology can help make it work more efficiently. Its a simple tool that delivers reliable results.
Its a Simple Shopping List.

It may sound almost too simple to be true, but when applied correctly it can make a huge difference in maximizing your savings when shopping especially from a cash outflow perspective. A shopping list is not just a memory jogger to help you not to forget the eggs or milk.

A shopping list is an action plan, a strategy that includes a list of objectives to obtain. Your strategy should include an objective to minimize cash expenditures. As an example,

• Eggs
• Milk
• Butter
• Save Money
• Don’t spend more than necessary
• Don’t buy anything not on the list

Shopping Lists can do even more for you than remind you to buy the right things, it can help remind you not to buy all those useless, frivolous extras that you never intended to buy when you left the house for the store.

In our next article we will take this simple concept one slight step further and apply the use of lists to managing our purchases at multiple stores for a wide variety of needs. Stores are setup to cross sell you many products that you may not normally associate with that specific store. This is a great bonus for the store. They increase their revenues and that means you have increased your spending so we will look at ways to make sure that this works in your favor next!

Controlling Cash Outflows Series

Today we pick up where we left off yesterday running down ways that you can avoid maxing out your credit card. To revisit the First part of this series see How to Avoid Maxing Your Credit Line Part 1.

Controlling Cash Outflows Series

Yesterday, we discussed our intent to help people learn how to control their Cash Outflows. There is no genie in the bottle of the Credit Cave that will fix all of your problems however we will now start to empower you to tackle or prevent credit issues.

As a credit card holder or borrower you never ever want to Max out your credit, your credit lines and not even a single credit card. Having the ability to access a line of credit is extremely valuable and can definitely help you when you need it, however this resource can also be squandered and too often get very good people into a lot of trouble. When you max out your line, your credit rating will go down, your interest rates will go up, you will be more likely to default on payments and get into serious financial trouble and more.

Here are some tips to help you avoid this situation:

• Do not go shopping with your credit card
• Take Cash, Take your check book, take a debit card for your bank account, you can even take your PayPal Card - DO NOT TAKE YOUR CREDIT CARD!
• If you absolutely must take your credit card, do not use it, use something from point 2 above.
• Leave all of your other cards at home, preferably locked up safe in a safe or vault or secure location. If you are not carrying the cards, you will not be able to succumb to temptation.

. . . To be Continued tomorrow!

There are many components to your personal finances that are important areas to monitor and manage. Typically, it is best if you can treat your finances like a business and focus on your Cash Inflow and your Cash Outflow.

Many of us have fixed incomes whether it is in the form of a salary or even if it is an hourly rate, there are only so many hours you can work and multiply it by that rate. We typically have a limited capability to increase our cash inflows unless your boss is a push over and will give you a bonus on demand!

Our Cash Outflows are usually much more flexible. In the age of credit cards, it can be extremely flexible. An average consumer can spend everything they have in the bank and everything they will earn in disposable income over the next couple of years if they max out a couple credit cards in one shopping venture. Fortunately, not too many people fall victim to this kind of spending.

That doesn’t mean the rest of us might not fall victim to Binge Shopping habits. Often if we go shopping for items, we will buy a product at the spur of the moment (usually enticed by something the savvy retailer has done to sell us on it.) We may not max our credit cards out in one shopping spree, but it is all too common for people to max their cards out over a couple year period and much of this comes from buying more than they set out to buy and more than they need.

This week I will cover a series of articles on Controlling Cash Outflows to help you control your cash outflows and find ways to:

1. Avoid maxing out your credit cards
2. Maximize your savings when shopping
3. Learn how to recognize a truly good spontaneous deal
4. Recycle your extra stuff not only for the good of the environment but for the good of your pocket book!

We may not be able to directly and rapidly impact our Personal Earnings, however we often have a great deal more control over our Cash Outflows. By the end of the week, we will work to empower you to maximize your ability to control your Outflows and maybe just in time to make for a more enjoyable holiday!

Sounds a little convoluted but that’s exactly what banks are helping their customers do. Spending done via credit and debit cards are linked to a savings component. For example, American Express offers a credit card where one percent of the amount spent goes into a high-return savings account.

A similar program by Bank of America for its debit cards works something like this. Every time you make a purchase, the amount gets rounded off to the nearest dollar and the extra money gets transferred to your savings.

However, all said and done this does appear to be a case of penny wise and pound foolish, it is illogical to expects any real savings this way. In fact, consumer activists warn that there is a real chance of us overspending for that feel-good saving. We need to factor in the fee that the credit card transactions attract and the interest on any card payments that you may default in your eager haste to save.

I have a secret. Well actually if you have read the title of this article, I had a secret.

I am making and saving a lot of money with my PayPal MasterCard, and you can do the same thing.

Who is PayPal?

PayPal is a company originally setup in 1998 to make online transactions easier. PayPal is owned these days by EBay after an acquisition in 2002.

What does PayPal do for me?

It’s really pretty simple. PayPal is like an online savings account for me.

Direct Benefits

• They currently pay me 5.15% interest on all funds in my account.
• I get 1% cash back savings on all purchase I make with my PayPal MasterCard
• I can transfer money from my primary bank account to or from my PayPal savings account with a direct deposit (ACH)transfer.

Indirect Benefits

• My PayPal MasterCard is not a credit card. It is debit card that is accepted anywhere MasterCard is accepted. This enables me to make purchase with the convenience of a mastercard without having to run the risk of making a credit card charge.
• Paying for small items with a credit card is convenient, but if you do not pay your bill in full you end up paying 5% to 10% to 20% to 25% interest on those small purchases and that interest can add up quickly.
• When I make small purchase with my PayPal card I never run the risk of getting a credit charge. The funds come straight out of my PayPal account, where they were previously earning 5.15% interest.
• I immediately get 1% cash back on the charge instantly!
• As I am charging through MasterCard and not debiting, the vendor selling the goods must pay the fee to MasterCard. This is good for me as I am not paying a debit fee myself.
• In addition to all of those great things, I use my PayPal card as a buffer against my normal bank account. I only keep enough money in my PayPal account for my monthly charges or internet purchases. So if I were to ever lose my PayPal card or become the victim of identity theft if someone hijacked my number, then only the small amount of funds in my PayPal account would be at risk.
• Plus I would get the full protection offered by MasterCard covering that small amount of risk. My primary bank account and other credit cards remain safe!

To sum it up, I get 5.15% interest, I get 1% cash back instantly, I do not pay any interest fees on purchases, I have the convenience of a MasterCard without the expense, and I have protected my identity with an added layer of protection!

Christmas season is increasingly being looked upon as an excuse to shop and its spirit as a festival is perhaps on the wane. These are the views of F&C Asset Management.

72 Point Limited undertook research for F&C Asset Management and found that 17% of parents and grandparents felt that they would have to bear the brunt of crazy Christmas shopping and it will take them more than a month to repay their credit card borrowings. The survey was conducted across 2,194 respondents and it found that a staggering 45% of the parents felt that they could not afford to save for their children’s future and yet 40% of the respondents will be shelling out £100 per child on Christmas gifts and 70% will be spending in excess of £50 per child.

Be forewarned, merriness of the spirit in this season will leave you feeling all warm for quite some time, spending merrily, that too on credit, will only leave you feeling cold as the season peters out.

I first picked this up over at My Money Blog.  Basically winter is an expensive time to run any household, especially if you live in a country / area where winter means cold temperatures and high oil prices.  While there are plenty of ways to save money from simply by opening your curtains during the day to let the sun heat up a room and closing them at night to keep heat in to  keeping windows and doors closed, these will not keep you toasty for the entire winter.  No, the only way that’s going to happen is by heating the house with oil fired central heating, gas or a stove.

If you are serious about saving money on your utility bills may I suggest the Home Energy Saver tool.  You enter in your ZIP code and enter in some more details about where you live, then the tool returns various way you can save money and what it will save you.  Entering in more information about your home will allow the tool to provide a more accurate estimate of potential savings.

Some of the cost-cutting measures will require you to upgrade your home with more insulation, new triple glazed windows and such.  Obviously this is going to cost a fair whack of money up front, but the tool covers this by giving you an estimated payback period.

It costs nothing to have a go and some of the ideas may well be feasible for you.  I highly advise trying it out.

The Bank of America are running an innovative promotion that should catch the attention of personal finance bloggers and savers alike.  It’s called Keep The Change, and I have to say that it looks really good.

So how does it work?  Well, say you were out buying some groceries and a coffee.  The groceries came to $34.50 and the coffee was $3.20, Bank of America will round your purchases up to the nearest dollar.  The difference is then deposited into your savings account.

It sounds so simple, it’s basically a digital cash jar.  Well worth looking into in my opinion.