The Finance Castle

For the United States, the 800 lb. gorilla in the room has been hanging out for quite some time. For decades now, the country has continued to spend more than it earns, like a consumer maxxing out their credit cards year after year for the sole reason that creditors are willing to stomach your appetite for debt. Yet it seems even the richest country in the world can hit a credit limit, and with the country rapidly approaching that point, something had to be done. So, when a 12-member, bipartisan “super committee” was put together to come up with a workable solution once and for all, I admit I was hopeful.

After all, I reasoned, failure wasn’t really an option here, was it? The nation’s credit rating had already taken a hit, falling below the coveted AAA rating thanks to S&P. Trillions of dollars are at stake, and if they can’t come to an agreement now…then when will they? Ultimately, through all of this pomp and circumstance, the committee came to one conclusion.

Do nothing.

Failure to make the cuts everyone knows must be done led to dangerous inaction, and we see a reflection of that in our own lives. Spending is easy, it permeates through every part of our lives. When we’re food shopping, Christmas shopping, window shopping, watching TV, using the computer. Everywhere we look we are bombarded with “BUY ME,” and our fingers are always one click or swipe away from the trigger. Conversely, saving is hard. The peace of mind from saving on your cable bill and putting a little extra away each month seems like chump change by comparison to your expenses. So you say to yourself, why not just forget about it. Keep on keeping on…right up until we’re drowning in debt and there’s no way out. The “Super” committee is making this exact same mistake. It is probably a good idea to learn from them.

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I have always been a big fan of rewards programs. It almost feels like you’re getting something for nothing, despite the fact that you clearly have to buy something or provide some sort of information in exchange for your reward. While point programs can be a recipe for excess spending,  it is important to get even more mileage from purchases you were going to make anyway. I have one credit card, for example, which is used for a variety of monthly expenses. I pay the balance off every month, don’t get charged interest, and earn a modest number of points along the way. After a year of such purchases, my wife and I can now go on a free mini-vacation to someplace nice, though the locale hasn’t been determined yet.

Another such program is Bing rewards, a point system launched for Microsoft’s popular (though not nearly as popular as Google) search engine. You can earn points in a number of ways without spending money, such as making searches each month, checking out offers, etc. It is important to note that you won’t be racking up points very fast, but every little bit helps, and if you’re searching for things anyway, why not get a little extra on the side?

If you want to sign up for Bing rewards, check it out here. As a matter of disclosure, yes, I get some extra points for referring you!

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If the economic turmoil of recent years is any indication, one thing that certainly seems to ring true is that the old model of banking just isn’t working as well as it used to. Banks across the world have faced huge losses after a number of investments that turned sour, and since that occurrence they have been scrambling for ways to make up that lost revenue. As you might expect, this hasn’t come in the form of pay cuts to the CEOs, but rather they are finding ways to slyly charge consumers for whatever services they can come up with. As such, you’ll need to be watching your bank account more closely than ever.

If At First You Don’t Succeed…

Facing a huge backlash from their consumer base, many large banks like Bank of America have backed away from charging consumers for the use of their debit cards. That hasn’t stopped them from placing new fees elsewhere, though. A lost debit card, for example, will now cost you $5 to $20 depending on how quickly you need it at Bank of America. A U.S. Bancorp has begun charging 50 cents per check for those consumers who deposit via mobile phone. TD Bank will be charging $15 for cash wired into consumer accounts.

Why is it Allowed?

Banks are using these fees because they are not covered by regulators and tend to fly under the radar of most consumers. After all, when was the last time you got up in arms about a 50 cent charge to any of your accounts? The amount seems almost completely insignificant, but it quickly ramps up when you spread it across millions of accounts that utilize the service everyday.

What to Do

Always check with your bank for a full review of the fees that could ever be charged to your account for whatever services you may need. If you find your bank charging much more than it used to, consider switching over to an electronic bank like ING direct or to a credit union, where fees tend to be much more manageable. The world of finance is becoming a more dangerous place for everyone, so it’s best to be prepared.

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If there is one trap that seems oh-so-easy to fall into financially, it is the monthly subscription service. Such services like cable, phone, internet, etc. all automatically deduct from your account each month, poking invisible holes in your monthly income and causing leaks that go unnoticed. I recently did a review of services I shell out each month for, and came up with some alternative solutions.

Cable

While I don’t have the most tricked-out DVR plan available, I do have one premium channel and HD service. Combined with internet service, this clocks in at around $100 per month. Ouch. I’d like to have that $1,200 a year back, but unfortunately I still need Internet service. I wouldn’t call myself an avid TV user, but there are shows out there I watch on a regular basis (Looking at you, NCIS). As an alternative, I may cut down my cable service to the absolute minimum, saving me around $50.00 a month. To replace it, I may pick up Hulu Plus, which offers TV shows streamed from their site for around $8.00 per month.

Savings: $42ish/month

Gaming

When I subscribed to Gamefly a few months ago, I was convinced that it would be a better alternative to buying the actual game. This is due to the fact that for most single player games, I play through the story and then throw the game away, never to be seen again (except in my attic). Unfortunately, I’m easily addicted to multiplayer games. This is especially true for free to play competitive games like League of Legends and Battlefield Heroes. I wasn’t getting my money’s worth, so it had to go.

Savings: $15.99/month

Phone

Still struggling with this one. I often tether my smart phone on trips to do work on my laptop. Unfortunately, this means I need a smartphone with that capability, which costs $30.00 per month for the privelege. I’m going to call up Verizon and see what I can negotiate.

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What about you, readers? If you’re going to trim the monthly cost fat, where do you tend to start? Have any of you tried Hulu Plus?

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For as much as I like to pride myself on being an optimist, I also tend to be a bit of a worrier. While I fully understand that there’s now ay to accurately predict what life is going to throw your way, I still try to anticipate the next obstacle that’s going to show up around the corner. My recent purchase of my first house was a testament to that, as I spent entirely too much time worrying about all of the potential items that could break, and break catastrophically. Take your pick from the usual suspects: Roof, foundation, electrical system, and so on. I worried about it.

But that’s no way to go through life, son.

Eventually after a few weeks I realized that I could simply not go on like I was. All the worrying in the world would not stop the roof from leaking or the foundation from crumbling. I came to the conclusion that the best solution was to focus on one thing a time, prepare for the worst as much as I could while expecting the best. So far, this seems to have worked, although I still occasionally suffer bouts of concern.

So, if you find yourself worrying about your finances, STOP worrying. Take action, however small, to work to alleviate the source of your stress. Here’s a favorite quote of mine on the issue:

Worry never robs tomorrow of its sorrow, it only saps today of its joy.  ~Leo Buscaglia

Get out there and get back to enjoying your life!

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