With the news that Americans are saving more and changing their lifestyles (at least for the duration of the recession), I’ve been thinking about needs vs. wants , and how the current situation is bringing this into focus for many. And I started looking at my life, and wondering whether or not some of the things I see as “needs” are actually wants. Here are some things our culture has come to see as “needs” in the past two decades :

• Second car
• Television with cable or satellite service
• Computer with Internet access
• Lots of activities for our kids
• Cells phones
• Eating take out (or going to a restaurant)
• Video game systems

I’m sure you can think of several other things that seem necessary. All of these items cost money. The advent of easy credit in the mid-1980s, and its acceleration in the 1990s, has made buying these things convenient. Indeed, instead of saying “no”, we as a society become prone to giving into temptation and pulling out the plastic.

But now, we, as a society, are realizing that many of our “needs” are actually wants . Everyone in the family does not need a cell phone. Unless you work from home, Internet access is not required. And, of course, there is very little use in having cable or satellite TV service. While I love our second car for the convenience it offers, I know that we don’t need it, and that it is really a luxury.

There is nothing wrong with enjoying luxuries and indulging in some wants. However, splurging should be done in moderation . Additionally, it is important make sure that you can afford the luxuries that you purchase. Recongnize the difference between needs and want s, and remember that if you can’t afford the wants, you should probably learn to say no.

Image source: William Hook via Flickr

Today, the word is out that unemployment has reached 9.5% . As the unemployment rate inches toward 10%, many are wondering what to do, and how they will cope. For the unemployed in Michigan (which has the highest unemployment in the country), help may be coming a little sooner. K-Mart plans to offer discounts to those who are on the unemployment rolls .

For those who can show that they are registered with the government as unemployed, K-Mart will provide a “Smart Assist Savings” card. This card will be valid for six months, and will offer 20% savings on K-Mart brand products . While the offer won’t apply to everything in the K-Mart store, discounts on already discounted labels are likely to help — and may even lure customers back to the store. Douglas McIntrye offers this look at the strategy in 24/7 Wall Street :

The new savings package is not completely selfless. K-Mart caters to the lower end of the middle classes, a segment of the economy that has been especially hard hit as corporations cut costs. K-Mart has probably lost many of its customers completely and believes that the new incentives will bring these people back .

Even with the alterior motive, the savings program is a nice touch during these tough economic times. Michigan was probably chosen due to the fact that before K-Mart merged with Sears, Troy, Michigan was its headquarters. If things go well in Michigan, K-Mart could roll out the program to other markets .

Image source: Wikimedia Commons

Parents are starting to feel a greater pinch as more and more college graduates join the “boomerang” generation . The recession, along with the natural inflation that comes with tuition and rent, are squeezing college students and post-grads, sending them back home to mom and dad. An email I received from IBISWorld highlights this growing reality:

“We can expect to see a surge in the boomerang generation [ages 18-24] returning home and continuing financial dependency on parents due to a scarce and competitive job market,” said Toon van Beeck, senior analyst at IBISWorld. “This phenomenon has become more apparent in recent years, with higher costs in tuition and rent making transitioning into adulthood increasingly difficult. Thanks to the recession, many parents will get prolonged time with their kids until their debt is paid off or market conditions improve .”

For the most part, mom and dad pick up the bill. Additionally, it is worth noting that even married children are moving back in. The incident of foreclosures, job loss and other factors means that sometimes children, their spouses and their children are moving in further inflating costs.

Should you let your adult children have a free ride?

While it may seem cruel to charge rent and demand help around the house, the fact of the matter is that the costs of taking care of adult children (and sometimes their families) can become a burden on parents. The obvious solution is to ask for help with the cooking, cleaning and yardwork . Additionally, make it clear that you expect your adult children to look for jobs while they are staying with you. And, if they do have some sort of employment, you might ask them to chip in for utilities costs and groceries. After all, you are a victim of the recession as well.

Image source: Old Shoe Woman via Flickr

If you are looking for a way to condense a great deal of personal finance information into a plan of action for your money, The 1-2-3 Money Plan by Gregory Karp will probably be helpful for you. Karp himself admits in the introduction that there really isn’t anything earth-shattering or new in this book; rather, it is meant as a financial tool to aid your planning.

One of the interesting things about The 1-2-3 Money Plan is the way it is organized. As the title implies, Karp has set up the book so that it revolves around the “rule of 3″. He reduces most personal finance principles down into 3 three doable steps that can help you plan . (He does this over and over again throughout the book.) Some of the topics covered in the book include:

• Spending
• Estate planning
• Identity theft
• Banking
• Insurance
• Retirement
• Saving
• Credit cards
• Credit score/report
• Choosing a financial adviser

The subjects are important for those floundering and attempting to make a plan. One of the things that struck me is that Karp sets up the book into three sections, all devoted spending smart: Today, Yesterday and Tomorrow. All of the steps given in The 1-2-3 Money Plan revolve around making a plan for your money that involves preparation and considering what you are doing with your money. The goal, of course, is to learn what you need in order to ensure that you set yourself up for success with money . Tips, examples and reminders throughout the book offer easy to read insights.

For those who are unsure of where to begin, The 1-2-3 Money Plan can be extremely helpful in terms of providing direction and helping you develop a cogent plan for your money. It may not be as useful for those who already have a money plan and their finances under control. But it can serve as a good reminder.

Have you read The 1-2-3 Money Plan ? What did you think of it?

Today, as I watched Transformers: Revenge of the Fallen , I began thinking about what makes a good value. It is all about price? Or does your experience go into it?

The matinee price at the movie theater we went to is $5.50. Compared to the price we paid for a movie when we lived in New York, that’s a great value. But what if I didn’t like the movie? Maybe not such a good value after all. Incidentally, I thought Transformers was largely worth my $5.50. Plus concessions for my husband and myself: $9.25.  But there are other considerations for me when I see a movie:

1. I usually go with my husband , so we spend time together. And we have something to talk about afterward.
2. I like getting concessions . I know they’re a rip-off, but when I go to a movie I want to eat and enjoy the full experience. (Much like when I go to a baseball game. I have to have a hot dog. Or two. And nachos.)
3. It’s fun for me to see action movies on the big screen . The sound and the visual is great on the big screen.
4. I can lose myself for a couple of hours , and just be entertained.

So, seeing a movie is a good value for me. Unless I hate the movie. But we rarely choose to go to movies that we might hate.

At any rate, as I came out of Transformers and my husband pointed out that it didn’t deserve the horrible things lots of people said about it, I thought about how personal preference pays a big role in what we perceive to be a good value . Some of the people in the theater probably felt that they had been robbed by the amount of money they paid (especially if they got concessions). But when I go to a movie, I prepare for certain expenses, and I am willing to pay for the experience. To me, there are certain things about watching a move in the theater that make it a good value.

What do you think makes a good value?

Image source: Air Force via Wikimedia Commons

Earlier today, Deb Ng at The Freelance Writing Jobs Network wrote a post regarding job security in the freelance writing world. Actually, the post was more about the lack of job security for people who write online. As long as their contract to you is upheld, clients don’t owe it to you to continue giving you work month after month. Today’s $1000 job could be gone tomorrow.

And one day, it will be. Few websites have continuously hired freelance writers for years. The ones that have rework their payment schedule and amount often. This is a business, and as their freelance writer, you’re a “bottom rung” expense. In other words, when things get tough, websites fire contractors before they cut other expenses in many cases.

Even if you have money saved for “dry” months, it can trigger a panic attack if you suddenly lose a job. Granted, if you did good work for the client, they’ll likely be more than happy to recommend you for other jobs, but that’s not a lot of comfort when bills are looming. So how can you feel more secure?

1. Split up the eggs.

Image: sxc.hu

You’ve heard me (and others) say it a thousand times - don’t put all of your eggs into one basket. In other words, you should have multiple clients every month, so that if one suddenly pulls out, you have other money to cushion the fall. My personal plan is what I like to call “rule of three.” I try to keep three major clients (people who pay $500+ every month), three minor clients (people who pay less than $500 every month), and three intermittent clients (people who don’t order work every month). I keep a big enough bank of intermittent clients so that usually three or four of them order work every month.

2. Look for a permanent part-time job.

Having a job outside of writing can be a real weight off your shoulders. I recommend looking for around 15 hours a week at a place near your home. Of course, these jobs aren’t guaranteed either, especially in today’s economy, but if a place is hiring, they likely won’t be firing anytime soon. The added bonus here is that if you do lose a big client, you can ask for a few more hours at your part-time job or you can volunteer to cover for people on vacation.

3. Apply to at least one job every month - or at least, keep trolling every so often.

I know a lot of writers who fall into this state of security when their schedule is filled, never applying for other jobs. Do you know how to job hunt online anymore? Trolling for jobs is an art, and applying for them can be difficult. Once, I went on a three-month streak where I didn’t apply for any new jobs…and then when I started looking again, one of the websites where I commonly got work had closed down and another had significantly changed its format. Stay on top of these things! If you’re a bidding site member, it also looks better to be continuously active, rather than to have huge lulls where you’re not around.

4. Split your costs.

It can be nice to live alone, but as a freelancer, that’s also very dangerous. I highly recommend having a roommate if you’re not married. And, if you are married or have a roommate, it’s a good idea that you work different places. Best-case scenario? Your spouse/roommate has a secure, full-time job. If he or she is a freelancer too, though, avoid working at the same places as much as possible. That way if one of your websites closes, the person splitting costs with you isn’t in the same boat.

5. Stay in contact with clients.

I’ve mentioned how important it is to have a bank of clients, so to speak. You want a large number of people who order work occasionally so that you’re always busy with something. Don’t forget to stay in contact with clients who haven’t ordered work in a few months. Otherwise, they might never contact you and instead just put out a call for writers. I like to email people when I haven’t heard from them in 3 months. I just say something like “I’m creating my schedule for the summer and was wondering if you foresee any upcoming projects.” Many times, they order work after getting an email like that.

Freelance writing online is never going to be stress-free and easy. The rug can be pulled out from under you at any given moment, and even if you aren’t living paycheck by paycheck, you’re never truly secure. We do this because we love it, right? Just remember - that huge paycheck could be gone tomorrow. Protect yourself today.

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When most people think of certificates of deposit (CDs) , they think of the plain old kind. You put money in for a period of time between three months and five years, and you get a guaranteed interest rate. You use them for CD ladders and any number of other things. I had heard of Brokerage CDs and High Yield CDs , but I had no idea that there were even more options than that. Bargaineering offers an excellent list of lesser-known CDs :

• Bump-up CDs
• Liquid CDs
• Zero Coupon CDs
• Callable CDs

It is important, though, to be careful when you start getting fancy with any financial product. Brokerage CDs, for example, may not be FDIC insured . Interest rates vary, and terms and penalties vary as well. Some CDs offer higher interest rates (callable), while others allow you access to your money at any time, penalty-free (liquid). But for every advantage, there is a disadvantage to balance it. You should read the fine print before committing to one of these CDs .

In the end, as with all personal finance transactions, you need to study what would be in your best interest and choose the right product for you. There are some great ways to maximize your cash, and CDs are more versatile than you might realize . Be sure that you understand how they work so that you are able to make an informed decision. Before investing in anything , you should understand how it works.

Image source: Daylife

Regularly, my dad has to go through my grandpa’s mail and discard the many offers and “awards” that he receives. Additionally, scams (including one that is aimed at seniors receiving a bonus through Social Security ) are often aimed at our elders. It is vital that you pay attention to what is going on in your own family . The California Society of CPAs points this out about the desirability of seniors for scam artists :

Con artists can use hard-core social influence tactics to take them in, both on the phone and in person. The oldest generation in any family is vulnerable to scammers for a variety of reasons , none of which necessarily have to do with their mental competence. They’re typically home during the day - a prime time for con artists. Once they give up the financial security a paycheck provides, and begin living off the wealth they’ve accumulated for retirement, they are naturally mindful that the money has to last. This makes them more susceptible to investment schemes and the con artists who sell them on this fear. In addition, con artists target seniors because that’s where the cash is.

And, of course, one can’t forget scams and other schemes that come through the mail. One of the most blatant is one in which a check appears in the mail and is cashed. Unfortunately, cashing this check constitutes entering into an agreement that a certain amount of money will be removed from your account , either all at once, or in monthly installments. Investment schemes are also worrisome, since it preys on seniors’ concerns about how long the money will last.

Protecting your elders from these kinds of schemes can be difficult, especially since you do not want to seem patronizing or distrustful of your parents’ or granparents’ abilities with money at this point. Before you talk to your elders about money, consider these good points offered by Money Energy :

1. Understand that their decisions are their own . You can warn your elders about scams, and help them with their finances, but unless they are declared incompetent, you have to realize that it is still their money.
2. Make sure you understand the line between “helping” and “controlling” .
3. Respect others’ boundaries .
4. Examine your own position . Are you really in a place that qualifies you to be giving this sort of help?

Image source: U.S. government via Wikipedia.

I am not the world’s most traditionally frugal shopper. I don’t often clip coupons, and I don’t get bent out of shape if that can of soup costs 35 cents less somewhere else. I’d rather save the gas and stay where I’m at. However, I do employ some simple strategies for frugal shopping that do save me a reasonable amount of money and time. (Saving time can be just as important — in my book — as saving money.) Here are 4 strategies that can help you save money while you are shopping:

1. Make a list : We recently started doing this, and it has worked wonders. When we discover that we need something, we write it down on a list we keep in a convenient place. If it’s not on the list, we don’t buy it. That simple.
2. Organize your trip : Just before we leave (while we’re eating breakfast or some such), we look over the list and organize our shopping trip. We figure out what we will get at different stores, and decide on our route. If we do happen to have coupons, we match them with the items we are getting. This gives us a purposes and encourages to avoid making detours.
3. Look for savings on the big stuff : If we are going to do price comparisons, the item better cost more than $30. And, usually, my husband will go online to check out deals (because he actually enjoys that sort of thing). We compare prices on the Web sites, and my husband calls to make sure the item is in stock. If we can get it much cheaper online (don’t forget to include shipping as part of the cost!), we do that instead.
4. Wait : Often, we will decide what we are willing to pay for an item we think would be nice to have, but don’t necessarily need immediately. We wait until the item is on sale for a price we like. We did this recently with a griddle. We were tired of cooking pancakes in a pan on the stove; they came out uneven and we couldn’t do more than three at a time. But we didn’t want to spend more than $20 on a griddle. We looked around on occasion, and waited. Finally, we saw the griddle we wanted on sale for $19.99 at Kohl’s. All that was left was the display model, so we said we’d take it for an extra 15% off. This method of waiting works well with buying non-perishable food items and household cleaners in bulk . Just wait and buy when they are on sale.

Do you have any frugal shopping tips?

Image source: ladybugbkt via Flickr .

One of the most common things you probably hear when you shop at a department store is this “Would you like to save 10% today?” And, of course, if you sign up for a store credit card , you get that promised discount. When you are spending a great deal of money, it is understandable that saving 10% might be desirable. However, in many cases, getting a department store credit card is asking for trouble. Here are some of downsides to getting a department store credit card:

• High interest rate : You will probably have to pay a higher rate of interest on balances that you carry.
• Credit score : While having more available credit can be helpful, it is worth noting that a department store credit card is not weighted the same way as a card from one of the big banks.
• Lack of rewards programs : Beyond your initial discount, you are unlikely to receive any sort of rewards for using a department store credit card.

If you do feel that you are making a large enough purchase that the discount is desirable and worth the ding your credit score will take when you apply, make sure that you pay off the balance as soon as possible. Do not wait for it to start earning interest. Even if you are getting a discount, the basic rules of responsible credit card use apply. And rule #1 is: Don’t buy something with a credit card that you don’t already have the money for .

image source: Paul Vlaar via Wikimedia Commons