Jan 20 2014

5 Reasons Why You Should Never Use Your Debit Card

By |January 20th, 2014|General Personal Finance|Comments Off|

Debit cards have become increasingly popular. People now spend more on debit cards than they do on credit cards. When you compare debit cards to cash or checks, then the benefits are obvious. For those of us who remember writing checks at the grocery store, or searching for exact change, then we know why we love debit cards. Gone are the days of balancing checkbooks (did that check clear or not?). Gone are the days of going to the bank to get cash, and then going to the store. Debit cards made things instant and easy.

But, when you compare debit cards to credit cards, the case becomes far less convincing. Here are 5 reasons why you should reconsider your debit card habit:

  1. Temporary authorizations: an excuse for someone else to hold onto your cash. When you book a hotel, open a bar tab or go to the gas station – the merchant may put a temporary authorization on your account. They do that to protect themselves against the risk that you don’t have enough money to pay. For example, if you give your card to a bartender – they may put a $100 temporary authorization (block) on your card. At the end of the night, they will then charge you for your drinks, and release the temporary block. But, it can take a few days for that block to go away. That is your cash! You now won’t be able to access that cash for a few days. With hotels, the numbers are even larger.
  2. Debit cards don’t have a lot of the benefits that credit cards offer. For example, many credit cards offer car rental insurance. Good luck finding that with a debit card.
  3. You do have fraud protection – but it will be very painful. If someone steals your credit card and makes unauthorized charges, they are using your credit line. If they steal your debit card – they are using your cash! Sometimes the appeal process can work very well (the bank credits your account immediately, and you win). But, it can go wrong and take a lot of time. Do you want your cash being held by fraudsters? And fraudsters don’t tend to steal small amounts.
  4. You give up the opportunity to have free money for a month. When you use a credit card, you are given a month to pay, without any interest accruing. You are – in effect – being given an interest-free loan. When you use a debit card, the money is gone immediately.
  5. You give up the opportunity to earn rewards. Credit cards give you the opportunity to earn very rich rewards that could be worth thousands of dollars a year. From cashback to free flights, credit cards can really pay off.

So, why are debit card rewards and benefits so few and far between? There is actually an easy explanation: regulation. With recent regulation, merchants pay banks a lot less for debit card transactions than they do for credit card usage. As New York Times article reveals, merchants only pay approximately 20 cents per transaction. For credit cards, they pay approximately 2% of every transaction. So, on a $500 purchase at Target – the bank would get $0.20 for a debit card transaction, or $10 for a credit card transaction. The reason banks give away more benefits on credit cards is because they can afford to do it.

But how much could that mean for you? One of the most popular ways to use credit cards is to earn frequent flier miles. To understand just how much you could get every year, look at calculator for a United Credit Card. Input how much you spend every month, and you will see how much you get back. In most cases, it is over $1,000 per year.

With a credit card, you can:

  • Earn over $1,000 per year in rewards
  • Receive benefits like rental car insurance
  • Receive an interest-free 30 day loan on every purchase you make
  • Receive real fraud protection – that ensures banks don’t hold your cash while they investigate

So, why do people still use debit cards over credit cards? There are a few reasons:

  • They don’t understand how good the deal is with credit cards. Hopefully this article has helped.
  • They don’t trust themselves with credit cards (will just max out their card and go into debt). We can’t help you with self-discipline, but there are plenty of tools available to help you avoid a debt trap. From text and email alerts, to calling the credit card company and asking for a credit limit decrease – you can find ways to make sure you don’t spend more than you should.
  • They don’t trust the credit card companies. This lack of trust is well earned. But, with the Card Act, some of the worst practices (risk-based re-pricing, double-cycle billing and others) have been eliminated. For example, almost all issuers have completely removed the over-limit fee.

The credit card is still a great product, which offers incredible benefits when used properly. If you only spend what you can afford, and pay off the balance every month – you will be much better off with credit cards. Leave those debit cards at home!

Jan 13 2014

Protect Your Teeth to Protect Your Wallet

By |January 13th, 2014|Blog, Personal Finance Tips|9 Comments|

Who knew Ultimate Frisbee could be a dangerous sport?

I was playing Ultimate Frisbee about 10 days ago, which for those who haven’t heard of it is like a combination of soccer and football, only played with a Frisbee.

ultimate frisbee

photo credit: CasparGirl

I was out on the field having fun and playing defense, when a guy standing about 10 feet away from me threw the disc as hard as he possibly could. And instead of soaring 50 or 60 yards in the air to his teammate, after about 10 feet it ran into an obstacle: my mouth.

Yep, I took a Frisbee straight to the mouth. The good news is that I technically made a good defensive play and caused a turnover. The bad news is that I immediately could taste blood filling up my mouth.

At this point I was angry and in pain, but I also REALLY wanted to finish the point and score. I was spitting out mouthfuls of blood as I was running around out there, but after about 2 or 3 minutes we scored and I ran off the field.

I immediately grabbed some ice and put it to my mouth. I touched my teeth and my two front teeth were loose. Luckily they hadn’t fallen out completely, but I felt exactly like a 7 year old about to get a visit from the tooth fairy.

I went to the ER, and while I was in the waiting room I tried to push the teeth back in place. Fun stuff.

When the doctor saw me he prescribed some pain pills and told me to see my dentist on Monday (the accident happened Saturday afternoon). I called the dentist’s emergency line and set an appointment for Monday at 7am.

After a painful weekend, I saw the dentist and he told me that I might be just fine. The teeth would firm back up and as soon as the pain was gone I could be in the clear.

However, he told me to look out for either of the teeth turning gray. If that happens, I can’t just fix it with teeth whitening gel by smile brilliant; I would have to go get a root canal.

After a little over a week, it looks like I have a root canal in my future. One of my teeth has definitely started turning gray, and I can’t quite tell on the other one. Looks like I need to make another dentist appointment.

I Should Have Worn a Mouth Guard

All of this could have been easily prevented if I had worn a mouth guard. With protection for my teeth, I probably would have been dealing with a bloody lip at worst.

And even if I had tooth problems while wearing the mouth guard, I wouldn’t have been liable for the dentist bills. The mouth guard I bought from Shock Doctor comes with a $10,000 dental warranty, meaning they would pay the first $10,000 of dental bills if I got hurt while wearing their mouth guard.

Luckily I have health and dental insurance, as well as a Health Savings Account that has thousands of dollars in it, so it’s not going to hurt me much financially to pay for all the dental bills I have incurred and will incur with any more work that needs to be done.

From now on, I’ll be wearing a mouth guard any time I’m playing sports, even if it is one that seems as harmless as Ultimate Frisbee. I’d rather not deal with the pain of another root canal or a chipped tooth, and I don’t want to be financially responsible for any damage.

Readers: Do you use a mouth guard when you play sports?

Jan 7 2014

Should We Pay Teachers Like Babysitters?

By |January 7th, 2014|Blog, Economics / Politics|12 Comments|

At some point in your life you may have come across a little post about how if we would just pay teachers as if they were babysitters, they would be some of the highest earning professionals in the country.

schoolI’ve heard many teachers use this analysis as evidence that they aren’t paid well enough. For those who haven’t read it, here it is (author unknown):

Teachers’ hefty salaries are driving up taxes, and they only work 9 or 10 months a year. It’s time we put things in perspective and pay them for what they do – babysit.  We can get that for less than minimum wage.

That’s right. Let’s give them $3 an hour and only the hours they worked; not any of that silly planning time, or any time they spend before or after school. That would be $19.50 a day (7:45 to 3:00 PM with 45 min. off for lunch and plan– that equals 6 1/2 hours).

Each parent should pay $19.50 a day for these teachers to baby-sit their children. Now how many students do they teach in a day…maybe 30? So that’s $19.50 x 30 = $585.00 a day.

However, remember they only work 180 days a year. I am not going to pay them for any vacations.

LET’S SEE…That’s $585 X 180= $105,300 per year. (Hold on. My calculator needs new batteries.)

What about those special education teachers and the ones with master’s degrees? Well, we could pay them minimum wage ($7.75), and just to be fair, round it off to $8.00 an hour. That would be $8 X 6 1/2 hours X 30 children X 180 days = $280,800 per year.

Wait a minute — there’s something wrong here. There sure is.

The average teacher’s salary (nationwide) is $50,000. $50,000/180 days = $277.77/per day/30 students=$9.25/6.5 hours = $1.42 per hour per student– a very inexpensive baby-sitter and they even EDUCATE your kids!)

WHAT A DEAL!

Well now that I’ve lived in my house for a year and have paid my property taxes for the first time, it made me think about this little story.

This story makes me angry because it leaves out the fact that millions of people (like me) every year are paying hundreds or thousands of dollars in taxes for schools, and we don’t even have kids. If we are going to base teacher pay on how much it costs to babysit children like this author suggests, then I should be paying $0 since I am not asking the school district to babysit any kids.

And to clarify, I understand that there is benefit to living in a place where children are educated. I’m just addressing this unknown author who wants to talk about paying for babysitting.

Let’s Do The Math

According to this story, a parent should pay $19.50 per day directly to the teacher for each child they have in school. The story also says teachers work 180 days a year. That means the teacher should be paid $3,510 for each kid during a school year. At 30 kids per class, that comes to $105,300 per year.

Well I was looking at my property taxes for the year, and guess what? It turns out I paid $2,860 to my local public school district over the last 12 months. And my house is probably $75,000 or $100,000 below the median home value in my city. That means a lot of my neighbors are paying something as much or more than that $3,510 amount.

And guess what? I don’t have any kids.

I paid almost $3,000 to my local school district this year not for teaching my kids. Not even for babysitting my kids. I paid that money for other people’s children.

Let’s Look at the Real Numbers

I did some research. The school district where I live employs 675 teachers. The budget for this school district is $125,345,727.

If we were to split up that money evenly among the 675 teachers, each one would earn $185,697 per year. That’s way better than the $105,300 this little story asks for.

However, I realize teachers aren’t the only expense for a school district. Let’s say the district uses half that money (or $62.7 million) to pay for school buildings, utilities, supplies, administrators, etc. That still leaves each teacher making an average of $92,848.

Too bad that number is far from reality. I found one source that says teachers in my school district make an average of $47,888 a year.

I Pay Enough Taxes

This “Pay Teachers Like Babysitters” story makes me angry because it is directed towards the general public, as if people aren’t paying enough in taxes to give teachers good salaries.

I’ve been paying property taxes since I was 19 years old (I wasn’t paying them directly when I rented apartments, but the taxes were definitely built into my rent) and I’ve yet to even think about putting a kid in a public school. I bet I’ve paid anywhere between $15,000 and $30,000 over the last ten years directly to local public schools.

Then I’ll probably have a few kids in public schools for about 15-20 years, and then once my kids graduate and leave the school system, (when I’m around 50 years old) I’ll be paying thousands of dollars to the local school district for another 30 or 40 years without having any children in school.

Before I die I will have paid hundreds of thousands of dollars directly to public schools through taxes. I say that’s enough.

There are also people who never have kids, or those who pay for private schools. Those people will pay all this money without ever having a child spend a day in a public school.

In conclusion, if teachers in my local school district want to get paid more then I would encourage them to ask for a bigger piece of that $125 million pie instead of asking me and all my neighbors (many of whom don’t even have kids in public schools) to pay more taxes.

More Teacher Pay Posts

Here are a few more of my posts on teacher pay. This is an interesting topic for me since my mom, father-in-law, and sister-in-law are all teachers.

Readers: We haven’t touched this subject in a while. How do you feel about teacher pay?

Jan 3 2014

Managing Your Banking in the Mobile Banking Age

By |January 3rd, 2014|General Personal Finance|2 Comments|

A recently published article on BankTech.com asked, “Is 2014 the Year of Mobile Banking?” The article points out that over the course of 2012-2013 smartphone ownership jumped 25% and tablet ownership skyrocketed by 60%. When you pair those numbers with the “mobile remote dispute capture” feature that almost every banking institution (traditional and web based) has adopted, it’s no wonder more and more people are turning toward mobile banking in favor of even online banking.

We talked on this site recently about how my partner got tired of paying money every month to a traditional bank just to keep an account open. After doing some research, we found a web based bank that offered better rates and lower fees and switched to that and we haven’t been happier.

This makes me wonder: with so many strides being made in mobile banking, why aren’t more people adopting the technology? Why are there still so many traditional bank branches all over the place? In some cities you’ll see ATMs and branches of the same bank on every block!

Your Bank

For most people, mobile banking is seen merely as a way to check in on the banking that they do through traditional means. They use apps to check their balances while they are in line at a store or to make sure a check has cleared if they are away from their computers, but they still use traditional bank branches and ATMs for everything else.

This is largely because people are still using traditional banks over web based banks in spite of the better rates that are offered. People tend to pick a bank and stick with it, even if doing so is not in their best interest. If you take a few minutes to look around, like we did, you’ll find that there are all sorts of web based banking institutions (even credit cards like Discover Card have online banking options now) that offer you better rates and plans than your traditional bank.

The Bank’s App

This logic is reinforced by the mobile banking apps themselves. It has only been over the last year that traditional banks have started to adopt the mobile deposit capture for their apps. According to the article mentioned above, they’re still dragging their feet over even more advanced features like being able to pay a bill by taking a picture of it.

Web based mobile banking apps, like the Discover Bank mobile app, are better thought out and offer more functions than simply allowing the user to replace a quick automated phone call with a quick mobile login. The more you can do via the app, the less likely you are to want to stick with a website.

More importantly, experts predict that over the next couple of years, mobile banking apps are going to become advanced enough to allow you to do a whole bunch of things like opening new accounts and submitting applications for credit, loans and helping you set up investments.

The Security Factor

Regardless of whether you choose to stick with your traditional bank or switch over to a web based bank, one factor is universal in a person’s decision to make the leap over to mobile banking: security. If a bank can’t ensure that a user’s information will be protected and kept private why would someone take the risk of using it?

Dec 30 2013

Dog Bathing Made Easy With These Inexpensive Tools

By |December 30th, 2013|Blog, Personal Finance Tips|5 Comments|

If there is one thing my fiancee Tag won’t tolerate, it’s having our house smell like dogs. She hates when you walk into someone home and the first thing you notice is a dog smell. That’s why she does a great job of keeping our house AND our dogs clean.

Our Australian Shepherds

Kona is in the front and Sydney is in the back

Our two dogs, Sydney and Kona, love to play outside and wrestle. That means they are constantly getting dirty and smelly. We have had them groomed, but that cost $30 each dog (plus tip!), which makes grooming and unsustainable expense for our budget.

We have also tried bathing them ourselves in a bathtub using a plastic cup to pour water over them, but with Australian Shepherds and their double-coats it’s very hard to get them completely clean. Then even if we do get the shampoo into their second coat, it’s terribly difficult to rinse it. Finally, I can’t even talk about all the dog hair that found its way down the drain.

We needed a better solution to bathing our dogs, and this is what we found:

Rinse Ace Pet Shower – Tag and I took a chance on a $28 Rinse Ace Pet Shower Deluxe PLUS, and we were not disappointed. It’s similar to those shower heads that are detachable, except it is made specifically for pets and you can keep your regular shower head attached at the same time.

This is an upgraded model (the company sells a cheaper version) but we like it because it has 3 different settings, which is helpful for our two dogs. One of them is a little jittery, so we need to use the softer setting for him. The other doesn’t know the meaning of the word “nervous” so we can use the high pressure setting for her.

This was 1000 times better than the cup, as it easily penetrates into their second coat and gets them clean. It’s also convenient because you can turn the water on and off at the handle so you don’t have to mess turning it off at the wall.

This is the single most important thing that has allowed us to stop grooming the dogs and bathe them ourselves.

Hair Catcher – Tag and I also purchased a hair catcher because we wanted to make sure we don’t clog our drain with dog fur. We bought the Danco Microban Hair Catcher, and while it did catch a lot of hair, it also let a good amount into the drain underneath the edges. It needs a silicone rim or something to stop hair from getting under this catcher. I gave this product a 3 star rating (out of 5) on Amazon because it didn’t work as well as I had hoped. Luckily, it was only $5 and it seems to work well enough that we can continue using it for now.

If anyone knows of a better catcher that they have used, I will update the post and add it here.

Dog Shampoo – The final ingredient for bathing your dogs at home is the shampoo, and unfortunately I can’t give any recommendations here. We still haven’t finished the shampoo that came in our puppy kit, so we are gonna keep using that until it runs out.

There are quite a few highly rated products on Amazon, but I haven’t tried any. If anyone has suggestions in the comments, I’ll be happy to add them here.

Bonus Dog Item: Hammock Seat Cover – This has nothing to do with bathing dogs, but it is incredibly useful if you ever take your dogs in the car and put them in the back seat. It’s called the Solvit Waterproof Hammock Seat Cover, and it’s fantastic.

We used this when we drove from Dallas to St. Louis for Thanksgiving, and it was incredible. It gives the dogs so much more room and you don’t have to worry about them falling off the seat onto the floor, or climbing into the front seat.

Readers: How do you save money in bathing your dogs?

Dec 27 2013

The Best Tools to Manage Your Credit

By |December 27th, 2013|General Personal Finance|Comments Off|

Your credit is an important part of your life whether you like it or not. And your credit score is used to determine whether or not you will be able to buy a home, purchase a new car, or even receive favorable terms on your car insurance. So it’s important for you to properly manage your credit to maintain a high credit rating. When looking at your financial accounts, it isn’t enough to simply know the ballpark amounts; you need to make sure you have accurate figures.

Using Online Tools

The Internet isn’t only a tool in which to do your online shopping. It is also a powerful place to find the credit tools you need to manage your finances and keep your credit under control. If you’re looking for a way to keep track of your monthly spending, there are plenty of companies that offer online tools to not only keep track of your monthly spending, but monitor your debt, your income, and any investment accounts you may have. Many also offer the added option of managing your credit score through your mobile phone with upgraded services.

If you need help creating and keeping a budget, there are a number of sites that will allow you to do this for free. Creating a budget and sticking to it is one of the easiest credit tools you can use to manage your credit. By creating a budget, you know exactly how much money you have coming in every month, and you can set up manageable and realistic payment plans to make sure you are able to pay all of your bills on time, every month. These types of sites provide a real wake-up call in regard to your monthly spending.

In recent years, a new trend for online credit tools that has emerged is the ability to manage your debt through online sites. Many sites provide side-by-side comparisons for consumers that show them how they might benefit from refinancing, debt counseling, or taking on different payment strategies. This can be an extremely helpful tool for individuals and families that may be under added stress due to high amounts of debt. These types of services also show you how each solution can not only get you out of debt, but how they will affect your credit score. For instance, choosing to consolidate your debt will get rid of it sooner, but it will have a negative impact on your credit score.

The Bottom Line

When it comes to managing your credit, the best thing to do is to be persistent. You can’t simply ignore your credit and hope it fixes itself or stays in good standing. Like anything else, it takes work. Be vigilant when checking your credit report. By law, you are allowed to request your credit report once a year from the three major credit bureaus. If you notice a mistake, be sure to quickly reach out to the bureau to have it fixed. Take the necessary steps to establish a household budget so you know where your monthly income is in relation to your debt. Sign up for a service that will alert you to any changes that may happen to your credit report. This way you can fix errors immediately. Having a good credit score is an important part of everyone’s life. It is a huge determinant when it comes to being able to get a loan or a better rate on your insurance. Find the credit tools that will work best for you and take advantage of what they can get you.