Do We Earn Things Anymore?

After stealing, errr.. borrowing, my husband's Men's Health, I came across this very interesting article about the fiscally fit man. The author had 5 areas for "debt weakness", but the one that struck me the most was perverting the American Dream.

Decades ago, the American Dream was pretty simple. If you could afford to buy expensive things, like a car or a house with a white picket fence, you were doing pretty well. Most of the time, you had to buy with cash or a large downpayment. People saved for years and years to buy big ticket items. They tightened their belts and budgeted down to every last penny. With the explosion of buying things on credit and having long-term loans, it seems most people have lost the concept of earning nice things. People max out their credit cards or take out multiple loans in order to get something they feel they deserve. Do you know the average American household has nearly $11,000 in credit card debt? I understand that times are still tough for a lot of folks, and credit cards are a necessity just to get by when you're in between jobs. But I would make a guess that not all people who carry a large balance on their cards are people who are out of work and trying to support a family.

I will acknowledge I'm part of this perversion. While my husband and I saved for 2 years for a house downpayment, it wasn't a traditional 20%. True, to save 20% to buy a house in the Seattle metro area likely means you would be saving for at least 10 years, and I know that's the case in many other parts of the country. And while we have paired down to be a one car family, we still have a loan for our car. We put down a chunk of money and got the shortest loan term we could, but we don't own either of our big ticket purchases free and clear.

On the bright side, we have ZERO credit card debt and have had it that way for nearly 3 years. And now we save for mostly everything else. Taking a vacation? We have a vacation fund...if we can't afford it, we wait until we can. How about a shiny, new appliance, like an energy efficient washing machine that I've been lusting after? We're saving up to hopefully buy one in the fall. We have a 6-9 month emergency fund that we spent a year to build in case something drastic happens. We don't have the desire (or ability, after becoming a one income family) to go out and spend a ton of money on non-essential items.

I understood the concept of earning better when I was 12 than I do now. If there wasn't enough money in my wallet, I couldn't get it. I could do more household chores or babysit more neighbors, but I didn't have the option of buying it now and paying for it later like so many of us do today.

The question still nags me - do we earn things anymore? Often, people feel they deserve luxury or expensive things because they work hard, or they're a good person, or insert other reasons here. And while I'm all for celebrating success and rewarding ourselves, does it come at too high a price? Keeping up with the Joneses is costing us big time.

What do you think? Do we earn things anymore? What was the last big ticket item you purchased? Did you charge it and pay it off little by little, or did you save for awhile and pay for it all up front? How did it feel?

Gettin' My Shop On (Holiday Edition)

Okay, no, wasteful spending is not something we promote here at LWG. Shopping when you need things is different, obviously. But let's be clear - holiday shopping is never about need. I always need food, and no one gets me groceries for Christmas. It's about random crap you get people to show them you were thinking about them around the last part of December.


I know it's September, but I am already thinking about the holidays. With me being nearly 7 months preggers around Christmas/New Year's, one of the last things I will want to be doing is walking around a mall with thousands of other people, trying to get gifts for my loved ones. So I'm planning to get my holiday shopping done by Thanksgiving with the help of...my credit card rewards.


For every $1 I spend, I get points. With these points, I can buy all sorts of stuff - a coffee maker, workout DVDs, and thousands of other choices. You can also redeem your points for cash back or gift cards at many stores and restaurants. While I could take the cash back option and add to my savings or retirement, I'm going to redeem my reward points for gift cards for stores that I'll shop at for holiday gifts. Here's how I look at it - it's money I was planning on spending anyway, and it's not coming out of my pocket! Plus, it will automatically set up a budget for me based on the value of the gift card.




What do you think? Good idea or bad idea? Anyone else planning to get creative with holiday shopping?

Discussion - How Do You Manage Your Finances?

I loved this post by J. Money at Budgets are Sexy so much that I decided I wanted to hear from you guys about how you make your finances work. Here are 6 questions and I'd really love to hear from you!



1) How do you spend: cash, debit, or credit?


I am all about using credit cards RESPONSIBLY. This means paying off in full every month, and deciding what credit card suits your needs and lifestyle. I think credit cards are convenient, they help me track my finances better AND you get cash back or other rewards. Nice!



2) Do you bank online? Do you use a financial aggregator (Mint, Wesabe, etc)?


I am completely paperless when it comes to banking. I pay bills online with Chase, although I'm thinking about moving my money. I also have accounts set up with USAA (love them!). And you've definitely heard me rave about how much I heart Mint. It's so easy to track your spending and also figure out if there are better options for your banking needs.



3) What recurring bills do you set on autopay?


I only have my car payment, cell phone bill, and cable bill on autopay. Everything else fluctuates a little too much for me to have it on autopay and I think it keeps me more on top of my budget when I look at my bills every month. (Another plug for Mint - it reminds you of due dates!)



4) How are your finances automated?

The only automated part of my finances is funding my 403b. Other than that, I move money from one account to another as it's needed. I'm trying to keep just what we need with a tiny cushion in checking while putting the rest (and promising not to touch it) in savings.



5) Do you use checks? If so, how often?

Our joint checkbook is so old, it has our previous address on it...and we moved almost 4 years ago! My personal checkbook has my COLLEGE address on it. Wow. Needless to say, I'm not a big check person. Just rent. And scratch paper.



6) Where do you keep your short-term savings?

I keep short-term savings in a savings account; however, I am thinking about switching to a no-penalty CD, which have higher interest rates than most savings accounts.

There! As I mentioned, I would love to hear how you all keep it together - respond in the comments with your 6 answers!

Trouble in Credit Card Paradise

I am one of those people who is in favor of using credit cards over debit cards (IF YOU PAY OFF YOUR BALANCE EVERY MONTH). By paying in full by the due date, you improve your credit score by showing you're a responsible consumer, and with many cards, you gain rewards like points, miles or cash back that you usually don't receive with your debit cards. As long as you can keep spending in check, credit cards (to me) are a pretty great way to get the things you need and get something back as well.

Stop the presses - because the good customers out there are being responsible, credit card companies are not making enough money on us. Usually when interest rates go up, it doesn't affect those of us who pay in full every month. But now, they're getting sneaky. Some lenders are imposing a new users fee, anywhere from $25-$75 a year and some are reducing rewards programs. But even more ridiculous, some banks will be issuing fines for customers who pay their bills on time. Yep. Other sad changes - you could be charged for not putting a certain amount on your credit card every year or you could be charged for having an inactive card. It's almost like they want people to stay in debt...

What to do about this? Well, before you think about cutting up your cards, do a little bit of research.

*Check with your bank and see if there are any changes that would affect you. Your bank may not be imposing anything on good customers.

*If they are, maybe do some shopping around. If you have a good credit score, you'd probably be able to get a good credit card with low or no annual fee. Typically, I've found that credit unions offer good cards with low fees and APRs.

*Check if your rewards are worth any annual fee you might incur. Maybe you have a card that gives you miles but you don't really fly. Look into switching to a cash back or points card that would be worth the fee.

*Consider closing newer cards. The older the card is, the more credit history it has and the more it will impact your credit score if you close it. However, it may be worth closing a new card that you don't use if you're going to be charged to put nothing on it.

Has anyone already noticed changes to their credit card fees? What did you do about it?

Store Credit Cards: Good or Bad Idea?

I have now seen multiple commercials touting their holiday sales - no, they don't mean Halloween. They're talking about those holidays - Christmas, Hannukah, and all the other gift giving occasions that occur during the last two months of the year. I can't believe they're here already! And while I will not really pay attention to Christmas until the day after Thanksgiving like I do every year (it's only fair to Thanksgiving), I'm already thinking about how I'm going to save money on holiday shopping.

Enter the store credit card. You've seen them. Heck, maybe you have one or more. When I was younger, I never thought they were a bad idea - I thought it made your finances easier. You could track your spending easier...or something. Riiiiight. I had four store credit cards by the time I was 20. Now, I never really took on a bunch of debt, but I could never resist when a sales associate asked if I would like to save 20% by opening up an account. Who doesn't want to save 20%?! So each time I went into a store and spent more than $5, it only made sense to open up a card. When I actually started paying attention to my credit report and my FICO score, I realized the more credit cards I had open, I was more of a credit risk. So I quickly closed all my accounts and have never looked back.

Until the holiday season....not only do you get money off when you make a purchase, but there could be extra perks! Free shipping, maybe a preview sale, free gift with purchase...UGH. I'm still sticking with what the pros say and my gut instinct and not opening a store account just to save a little bit of money in the short run, but it is awfully hard to do when you could be saving a serious chunk of change.

What do you think? I'm curious if any of you out there have a store credit card and think it's a good idea. What are your strategies for saving money during the holidays?

Improving Your Credit Score

Hey all! I came across this wonderful article, courtesy of Real Simple, and I definitely wanted to pass it along to you. I can't seem to find the web article, but pick up the September issue for the complete list of 8 ways to save your credit score. Among what I thought was most interesting:

1. Use your credit cards - within the past year, inactive credit cards have had limits lowered or even canceled because they don't make a profit for the credit card companies. Using your card responsibly and then paying it off every month is a good way to improve your score. Obviously, spend reasonably and within your means. There's been a lot of debate whether or not to use credit cards, but here's something else to consider when you're deciding how to pay for things.

2. Don't close cards when they've been paid off - according to the article, 15% of your credit score is determined by the length of time you have been using credit. Canceling a card you have a long history with will shorten your credit history and thus, negatively impacting your score.

3. Pay off the lowest balance card first - this seemed counterintuitive to me, as paying off a card with a higher balance (therefore higher fees) will save you more money. Since a lower balance will be easier to pay off, focus your attention there instead of dividing out your monthly payments equally among all of your credit cards. Continue to pay the minimum payments on all of your cards, but pay more on your lowest balance card. When that card is paid off, move to the next lowest balance card and use the money you were applying to the recently paid off card to your new balance.

If I find the article, I'll be sure to link to it so you can see the full list, but for other great articles on money, go to realsimple.com/moneyandmain

Credit Cards - Friend or Foe?

Quick thank you to The Newlywed Nextdoor for helping out us here at Lean with Green - we loved your post! If you have some great tips and you're interested in a guest post, contact us at leanwithgreen@gmail.com. Back to the original subject...

As soon as we began our sharp economic downfall last year (well, probably before that, but anyway), people were definitely looking for something or someone to blame. The real estate bust, sub-prime home loans, greedy people on Wall Street, power-hungry CEOs...you get the idea. There was a lot of blame to go around, and for sure, these things listed and other things not mentioned all came together at the same time to put us into a financial tailspin.

One scapegoat also happened to be the credit card companies. I kept hearing over and over from friends, family, coworkers, even from my 6th grade students, "Credit cards are evil!" and "I'll never get a credit card!". True, credit cards have the potential to RUIN you. There's a lot of fine print, and you have to understand the terms clearly. Do you have a different rate the first year you have the card? What are your late fees and other penalties and when are you charged? Do you have a grace period that's different if you pay the minimum balance or if you pay in full? Does it matter what time of day you pay your bill? If you pay late, that's at least a $30 fee, not to mention if you have a balance, and you're charged interest. The credit card companies are businesses, and they make a lot of money by NOT clearly stating terms. Sure, they send you that little packet when you first get your card - does anyone read it? It's like they purposely designed the system to trick you...

But credit cards are a great tool to build financial security. They can positively impact your credit score if you pay on time and don't carry large balances. Your credit score is vital to getting better rates on loans of any kind, which can save you a ton of money over the years. Not having a credit card can negatively impact your credit score much like having too much debt - why? Because lenders won't have much to go on to tell if you're a responsible borrower. Plus, many credit cards offer rewards like cash back, points, airline miles, and free nights in hotels. Whatever your interest, there's probably a credit card out there that could save you money on the things you buy most.

My husband and I have a strategy with credit cards to make the most of the rewards. First, we put all of our monthly expenses on them - grocery stores, bills, etc. Then, we immediately pay it off. If we are planning on making a large purchase, we save up the cash in our savings account first, purchase with the credit card, and then pay it off. The bottom line - if you can't afford it then, you probably shouldn't buy it. It's not rocket science, but there's a lot of people that don't think about using their credit card and then get into trouble with it later.

It's not the credit card companies who put us in debt - WE put ourselves there. I am glad to see changes coming to credit cards with the new legislation passed in May, because this is definitely an area that needs more transparency and fairness. But let's start taking some personal responsibility. Stop buying things you don't need. Don't get the biggest TV or the most expensive car. Don't give the credit card companies any of your hard-earned money - give it to your bank instead!

To find out more about the Credit Cardholders' Bill of Rights, go here.

What are your feelings about credit cards?

Guest Post: Money Tips from The Newlywed Next Door

Hi Everyone! I was so excited when Frugal Femme and Budget Babe asked me to do a guest post for them on Lean with Green! I'm The Newlywed Next Door, a Newlywed from California who blogs regularly at http://www.newlywedsnextdoor.com/ about all things Newlywed.

I'm sure you've heard that money is one of the main things that married couples fight about and Newlyweds are no exception. So I wanted to give you a couple of my Newlywed money management tips.


Tip #1: Savings Account Management

I'm sure you've read a lot of great "saving" tips on Lean with Green, so first I wanted to share our best "saving" tip with you.

Divide your savings account into multiple sub-accounts.

That's right, break that one big savings account into several smaller sub-accounts for the key things you save money for. For example your sub-accounts could be: Emergency Fund, Home Repair/Furnishing Account, Travel Account, and General Savings Account.

This can be done really easily through Bank of American or ING. Here is what our ING Savings Accounts look like:


What this is great is that is makes you realize how little money you actually have in savings once you divy it up into those piles and can see it split that way.

For example, say you have $10,000 in general savings. Thats seems like a huge chunk of change. But once you break it into $5000 for emergency fund, $2000 for house fund, $2000 for Travel Fund, then you only have like $1000 of misc savings you realize that you should be saving more.

Now that we've divied up the accounts, we've set goals for each one to $x in Emergency, $x in Travel, etc.

Creating sub-accounts helps us realize our financial goals faster and it even makes saving a little more fun!


Tip #2: Credit Card Management

Credit cards can provide a lot of benefits if you use them properly. We get hotel points, cash back, airline miles, and much much more as result of our credit cards. But they can come with hefty fees if you don't pay them on time. When we got married we suddenly had five credit cards and we were always getting confused as to which ones we had/had not paid. We had to argue with Chase and Amex a couple of times when we accidently paid late.

So to avoid this I went online and figured out the date that all of our credit cards closed each month and the date they were due each month and put it an excel table in date order like this:


I then printed this out as well as emailed it to both of us to save in our email folders for easy reference. It has really helped us to see which cards were due when and we have not had a late fee since.

As a bonus, this helped us to go paperless and save trees, since we can manage all of these cards online and do electronic bill pay from our checking account.


Are there any other Newlyweds out there that have tips from merging finances, creating a budget together, or just dealing with dollars in general? I'd love to hear your comments!