Tag Archives: savings

How to Choose Credit Cards With Rewards to Save Money – Part 2

This is the 2nd part of Mr Credit Card’s guest post. In the previous post, he focused primarily on how to choose a cash back card to save money. In this post, he is going to discuss more about reward cards that let you earn points. His site has lots of information and you can apply for a credit card there.

In this post, I am going to give a few tips on how to choose a credit card to earn reward points. The decision you have to make is what rewards you want to earn with your points. There are a few broad categories of rewards that are available with most credit cards.

Travel Rewards – These include airline tickets, hotel stays, car rentals, cruises etc.

Merchandise – Most credit card reward programs have partnered up with various retailers and brands to offer their products to their card holders who exchange them for reward points. For example, you may exchange a certain amount of points to get, say, a Nikon Digital Camera.

Gift Cards – You can also exchange points for gift cards. A typical example would be to exchange 10,000 points for a $100 Best Buy Gift Card.

Charity – Most reward programs also allow you to donate points (for cash) to charities (though I doubt that is the intention of most reward card holders).

Travel Rewards

Most people looking for a reward credit card want to redeem points for airline tickets. The decision they would have to make us whether to get an airline credit card or a credit card with reward programs.

This dilemma is probably the toughest to resolve in any credit card decision because it involves so many factors. You have to ask yourself the following :

1. How Often Do You Fly?

2. Do You Fly with Just One Airline or Many?

3. Do You Spend A Lot on Your Card?

If You Just Fly on One Airline

If you just fly on one airline, then it make sense just to get a frequent flyer credit card.

If You Have Fly on a Few Airlines

If you fly on a few airlines and are a member of a few frequent flier programs, there are a couple of alternatives. For example, the American Express Membership Rewards allows you to transfer points you earn on Amex charge cards to 17 frequent flier miles. This is very valuable and is the reason why Amex is so popular.

The starwood preferred guest program allows you to convert Starwood points to air miles on a one for one ratio for most frequent flyer programs and you even get a bonus 5,000 miles if you transfer 20,000 points. Many frequent travelers carry the Starwood credit card.

If You Are Not a Frequent Flier But Want to Use Points for Airline Tickets

For those do not travel but want to earn points for an airline ticket for a family vacation, most regular reward credit cards should work. These days, most programs allow you to book your own tickets and use points t0 cover for them. That is the advantage they have over frequent flier programs because there are fewer restrictions like blackout dates, etc. that come with regular frequent flyer programs.

Merchandise

Choosing a reward credit card for merchandise redemption is a little tough because it is very difficult to compare the breadth of products available in their catalogs as they are always changing. Furthermore, some programs require less points for certain items but more for others. But generally speaking, after much research, I’ve found the Membership Rewards from AMEX to have the best selection of merchandise in their catalog.

Gift Cards

For those who want to use points for gift cards, the best card to get is probably the Discover Card as it has over 100 partners. The Discover Cards allow you to earn cash rebates and if you redeem them for gift cards instead, you double the value of the gift cards you redeem for certain merchants.

Donating to Charity

If you are a charitable person and would like to donate to charities by your credit, most reward programs allow you to do that. Some have many partners while others have just a few. The better ones like American Express allow you to set up your card such that you automatically donate to charities every month.

Shopping With Your Credit Card

Most credit cards today have their own shopping site and partnerships with online retailers so that you can actually earn more points or get discounts when you use your card.

For example, Discover has this feature called shopdiscover.com. The way it works is that you can shop at say bestbuy.com (but going through the discover website) and you can earn 5% rebates when you use your Discover card to shop at their site. American Express has a shopping comparison site called shopamex.com, which lets you compare many items with different retailers. You can then shop at the cheapest online store and even use your reward points to shop.

Most card holders do not use this feature. But you should, since you can save quite a bit by doing so.

Other Considerations

When you are researching credit cards, other things to consider are:

1. Do reward points expire

2. Is there a cap to how many points you can earn?

3. How many points you do earn for every dollar that you spend on the card? For most, it will be one point, but many cards lets you earn more points for certain category in spending.

Final Note – While savvy frequent travelers have always used reward cards to their advantage, most credit card holders don’t. To fully take advantage of credit cards (rather than let them take advantage of you), make sure you pay in full, get a card with rewards (whether it be cash back or reward points). You will enjoy savings and perks in many interesting ways.

How to Choose Credit Cards With Rewards to Save Money – Part 1

This is a guest post by Mr Credit Card from www.askmrcreditcard.com. Mr Credit Card reviews credit cards on his site. He also has a blog and you can subscribe to his blog here. Mr Credit Card will post a 2 part series on how to choose a credit card with rewards to save money on your spending.

Hi everyone! Firstly, I would like to thank Adam for the opportunity to guest post on his blog. Friends of mine inevitably ask me what credit card they should get when they find out that I actually run a credit card review site. This is a tough question to answer without first finding out about someone’s spending patterns. But the thing that always makes me shake my head is that fact that folks who pay in full every month carry a “vanilla” Visa or MasterCard. Worse of all, some even pay an annual fee to do so. If you pay your balance in full (or carry only a small balance occasionally), then you should be making money from credit cards by a getting a reward card, instead of letting credit card companies make money from you. It should be a two way street.

But how does one go about doing it? First, you have to be aware that there are two types of rewards. There are cash back credit cards that will pay you a certain percentage of cash rebates for every dollar that you spend on the card. Then there are rewards credit cards. These cards allow you to earn points or miles for every dollar that you spend on the card. You can then redeem your points for things like airline tickets, merchandise, gift cards etc.

Cash Back or Rewards?

The first decision you have to make is whether to choose a cash back card or a reward card. For this, the decision really comes down to preference. What sort of rewards do you prefer? Many travelers who fly frequently prefer to get an airline credit card with their favorite airline. Many folks who do not travel and do not want the hassle of redeeming points prefer to earn cash rebates instead.

How Do You Choose a Cash Back Credit Card?

For the rest of this post, I’m going to focus on explaining how I think one should go about choosing a credit card that pays you cash rebates. In part 2 of this post, I’ll focus on how to choose a reward card instead.

The first thing one has to understand is that different credit cards have different cash rebate formulas. And for someone who is researching it for the first time, it could be rather confusing. But here are the few features you have to be aware of:

Vanilla standard 1% formula – The vast majority of rebate cards fall into this category. They will pay you 1% rebate for every dollar that you spend on the card. While this looks like a decent deal and much better than a standard vanilla card, you can get better deals out there.

More than 1% on certain categories – These are the type of cards you should be looking at although there is less of them these days as credit card issuers cut back on the rewards they give. There are cards out there that pay more than 1% on certain categories that you spend. For example, a card like the American Express Costco Card pays 3% on gas, 2% on travel and restaurant spending and 1% on other regular stuff.

Rebates for online shopping – Some cards like Discover Card allows their card holders to earn between 5% to 20% if they use their card to shop at over 100 online retailers through their site.

Tiered Formula – Some cards also have a tiered formula. That means that you need to spend above a certain amount to earn more rebates. As an example, the Amex Blue Cash lets you earn 1% on gas, supermarket and drugstore spending for the first $6,500 of annual spending. Once you pass that threshold, you earn 5%. Having a tiered formula is not necessarily bad. It just means you have to use your card above a certain amount to fully make use of it.

How to Choose the Right Card For You

1. Figure out how much you spend on your credit card – Yes, go through your credit card bills and figure out how much you actually spend on your credit card.

2. Break down your expenses into different categories – The next step is to breakdown your spending into different categories. You should use the following breakdown as a guide:

Gas
Supermarket
Drugstore
Travel
Restaurant and Dining
Movies
Home Improvement
Others

3. Calculate rebates you can earn on different cards – Now comes the tough part. You have to do some research on the different cards available and use a calculator and figure out how much you will save from using each card. Then, once you are done with this exercise, you will know which is the right card for you. To make your life easier, I have actually created a cash back credit card calculator to save you time. All you have to do is to simply key in your monthly expenses in various categories and the calculator will show you the top 3 cards that will earn you the most rebates.

OK – that’s it for this post. In part 2, I will write about the different types of rewards that are available in reward credit cards, whether you should choose a frequent flier card or a regular reward card and other things to look out for. Remember, you should extract as much benefit as you can from credit cards and not the other way round.

Carnival of Twenty Something Finances – DC Edition

Welcome to this weeks edition of the Carnival of Twenty Something Finances! Last weekend, the future Mrs and I headed down to Washington, DC to check out the famous cherry blossoms. Although it was VERY crowded, I must admit that it was an amazing time to see them. DC is a great place to see on the cheap. Most museums in the city are free and they have a great transit system. Personally, we parked outside of the city at one of the free metro stations and rode the train all day. It cost us about $5 per person and we did not have to deal with the horrendous traffic and confusing streets.

Sprinkled throughout the carnival this week are some common places to see while visiting DC. Like I mentioned before, most of these sites are free to the public. You can get away with spending very, very little compared to other cities. I advise packing a lunch for you and your family as food can be rather pricey if you purchase it from vendors. Anyway, off to the carnival!

This is a picture that we took in the midst of the trees. The cherry blossoms were at their peak this year from around March 28th through April 12th.

Editor Picks

Debt Kid shows you that getting a mortgage after foreclosure is not so simple.

Debt Ninja at Punch Debt in the Face wants to know what’s your favorite dumb but fun expense? I would have to say that mine was my iPhone. I love it with a passion but I really do not need all of the features and the added expense.

Jerry at Deal Supermarket talks about getting unplugged with frugality. This was a very creative post!

DR at The Dough Roller gives you 10 tips to declutter your finances.

The Washington Monument is the most prominent structure in DC. It was built in 1884 in honor of George Washington. It’s free to get in but make sure you get their early!

The Rest of the Field

KC Lau shows you 5 ways to take charge of your finances.

Fabulously Broke in the City shows you why a small space does not mean you put your life on hold and whine.

Bank Savings Review let’s you know about four banks that gave their TARP funds bank.

Kathryn at Out of Debt Christian has the top ways to waste money on your home.

Shaun from Learn Financial Planning shows you why being frugal is just the first step.

SVB at The Digerati Life helps you choose the best online stock brokers for cheap stock trades.

Personal Finance Analyst wants to know if saving money damages your quality of life.

Patrick at Cash Money Life tells you when you should tell your boss that you are pregnant.

The Smithsonian Institution has a ton of great free museums to see in DC. You can go to the Air and Space Museum, Museum of Natural History, Freer Gallery of Art, etc.

Mr CC at Ask Mr Credit Card let’s you know how American Express submits your credit information to the credit bureaus.

Matt at Fine-Tuned Finances compares new credit card programs for saving for college.

Ginger at Ginger Won’t Snap has some credit card fraud problems.

Peak Personal Finance has 3 smart personal finance tasks that you are probably putting off.

Diego at Bankling shares with us his top 50 economics blogs.

Big Cajun Man at Canadian Personal Finance Blog has some advice for new grads.

Patrick at Money Saving Deals gives us the lowdown on how to get up to $150 from TradeKing.

RJ at Our Financial Planner shows you the miracle of compound interest.

The Lincoln Memorial is another great (free) site to see in the city.

MoneyNing shares with your his review of Everbank.

Jeff Rose at Good Financial Cents let’s you know what to do if there is a layoff pending.

Destroy Debt shows you how to get the last drop out of many popular products.

Pinyo at Moolanomy shows you how to transfer credit card balances.

Raj at DebtGoal is cutting the bill on digital services.

Wren at True Adventures in Money Hacking shows you how to get a free car. Really!

Dan at Everyday Finance gives you the best CD yields in April.

Jim at Bargaineering shows you how to pick the best credit card.

J Money at Budgets are Sexy gives some advice on Roth IRAs vs 401ks.

Visit Arlington National Cemetery and pay your respects to the thousands of fallen soldiers. You can also view the resting place of JFK and see the Eternal Flame.

Patrick at Military Finance Network shows how the stimulus plan assists military members affrected by the mortgage meltdown.

Credit Card Assist wants to know if you have ever looked at your credit card closely.

Apply 4 Credit wants to know if credit card protection plans are really worth the added cost.

Christian Personal Finance is giving away a free subscription of Kiplinger’s personal finance.

Investing School compares Etrade, TradeKing, and Zecco.

Mike at Money TLD lets you know that some expired foods can still be edible.

Eric at Twenties Money has five pieces of advice for twenty somethings.

BillEater shows you how to avoid debt reduction scams.

Kyle at Suburban Dollar gives you his review of CashCrate.

Saturday Sneak-Peak: PimpYourFinances.com

Welcome to this weeks edition of Saturday Sneak-Peak! Every week I explore a personal finance blog and give a brief review of the site. My major intent of the adventure is to expose everyone to new and/or obscure blogs. Up this week is PimpYourFinances.com. David has commented on the site a few times and I greatly appreciate his input. This blog would be nothing without you readers!

David is a twenty-something college grad who is just trying to get his financial house in order. He is tired of his debt and wants to rapidly decrease it while increasing his savings. David has a very unique writing style and I think that is what has given him a lot of success over the past few months (he has only been blogging since October of 2008). Here are a few of my favorite posts:

Are Savers Dooming the Economy? NO!!

What Would Bilbo Do? 14 Money Lessons from “The Hobbit” (Featured on MSN SmartMoney)

12 Easy Ways to Sabotage Your Financial Life In College

The Escalator Not Taken

I also asked David a few questions to help you get to know him. Here they are:

YMR: What inspired you to start a PF blog?

David: When I started making money at a real job, I had no idea what to do with it. So I started look around PF sites, and was disappointed that there wasn’t more stuff aimed at young people.

I started thinking that if I was desperate for information, there were probably a lot of people in a similar position.

YMR: You have had some pretty rapid success getting your name out there over the past few months. How do you explain that?

David: Thanks! It’s very flattering to think that my name is getting out and others consider me a success!

I think there are a few reasons.

First, I just try to be myself. I don’t try to write that same articles that other people are writing. I write articles that I’d want to read, especially if no one else is writing about them. That also means that I try to keep a very strong sense of humor and sarcasm.

It also means that I’m brutally honest about myself. I’ll admit the mistakes I’m making. I’ll tell people exactly how much debt I have, and the things I know I should be doing, but I’m not. I think people can relate with that, and hopefully use it to avoid similar mistakes. I’ll never pretend that I’m doing everything right.

Another big reason for what I’ve accomplished is that I teamed up with someone else when I started the site. I handle all the writing, and he does all the technical stuff. It’s allowed me to focus on writing and content – things I enjoy (and that take up most of my free time). It’s allowed him to focus on coding, layout, presentation, etc… stuff he enjoys, and is very good at.

By focusing on our strengths, we’ve done a lot more than we could have done by ourselves.

I’ve also tried to build strong relationships with other bloggers. I link heavily to the sites I like to read, especially ones that are similarly sized to mine. I need to be better about commenting on other sites though.

And one thing I definitely can’t leave out is Tip’d. It’s a social media site for personal finance. They’ve embraced bloggers, so it’s given me a way to publicize my site that didn’t exist a few months ago.

YMR: Which article has been your favorite so far?

David: The most fun I’ve had is with a post on What Would Bilbo Do? 14 Money Lessons from “The Hobbit”.

The reason I enjoyed it so much is that it came naturally. I love J.R.R. Tolkien, and have read the Hobbit / Lord of the Rings trilogy constantly.  At least 10-15 times each by now.

One day, I saw some financial undertones, and started taking notes. It came together by itself. I even ended up with 14 lessons – the same number that Gandalf intended – without trying. So it was fun and easy to put together. Plus I got to embrace my inner nerd.

And more than anything I’ve written, it struck a chord with the masses.  Get Rich Slowly linked to it.  Then MSN money did, and so did Mental Floss Magazine.  It was huge!

It was never a marketing ploy. I just wrote about something I was passionate about, and others picked up on it. It was a very cool feeling.

YMR: Do you think we will ever have too many PF Blogs?

David: Never! I think we all compliment each other. It’s great to having multiple opinions, and multiple points of view.

Even if we run out of unique ideas, you can always learn from the experiences of others.

Also, no one knows The right answers. We can all share our thoughts, but no one has it exactly right. By reading a variety of opinions, hopefully we’re all getting closer to the Truth.

It’s like good music or food. You can never have too many options. Each has their own audience, and even if they’re not normally your thing, there are some times when it hits the spot perfectly.

That’s it! I wanted to thank David again for taking time out of his busy schedule to do this interview. Head over to his site today and poke around! You will find many great things there, trust me.

Have a great weekend!

12 Questions With Deena Katz – Top Financial Planner

While attending Graduate school at Texas Tech, I had to opportunity to learn from one of the top financial planners in the country, Deena Katz. Deena has been in the business for many years and is recognized as one of the best CERTIFIED FINANCIAL PLANNERâ„¢ Professionals. She was recently named one of Financial Planning Magazine’s “5 Most Influential People in the Planning Business”. She is also the author or co-author of nine books on financial planning.

I appreciate the time that Deena took out of her extremely busy schedule to answer our questions. Here is the list of questions that I asked her. These questions include some of my own as well as some from readers. Deena has some great insight in her answers and I hope you appreciate her input!


YMR: What drew you to financial planning and how does it enhance your life?

Deena: My mother was a minister and a social worker, but when my father died at 39, it became clear that she was unprepared for the financial burden.  She taught me early on to be able to take care of myself, because there is a high likelihood that I would be taking care of myself at some point in my life.  That led me to the planning profession.  My first company was working with women in transition.  It is extremely fulfilling to see people learning to take financial responsibility and accomplishing their goals.  I’m passionate about it.

YMR: Why do you think many individuals are scared about the thought of using a financial planner? What can the industry do to fix this problem?

Deena: There have been some very bad incidents in past years (Madoff and Standford most recently) which have shaken the trust and confidence that people had in advisors.   This is a two-sided problem.  Many people do not have the education to recognize if something is not right, some are looking for investment opportunities that are just too good to be true.  A little greed and a little vice make a big mess.  I always tell people “Never let anyone care more about your money than you do.”  On the other side of that, I believe people should work with CFPs, who are bound to standards of ethics that are quite rigorous.  I also believe that advisors should act as fiduciaries (in the best interest of the client.)  When looking for a planner, ask how they work, how they are paid and if they are a fiduciary.   Then you can begin to develop trust.

YMR: How have you been calming down your clients over the past year? Did you have them well prepared for an event like this?

Deena: No one is really prepared for an event like this.  It’s a 6th standard deviation event.  But, if we are able to manage client expectations from the first minute they work with us, we have a better chance to keep them from jumping ship when things are rocky.  As advisors, we can never promise market returns, we should be exploring the downside of investments with them.  We should be able to “stress test” their plan, to demonstrate how bad things really have to get, before their plan is unworkable.  We need to keep them informed of what is happening in the markets, in congress, and in the economy so we can give them “our take” on it and how it affects them personally.

YMR: Do you think this economic climate will finally get people to realize that debt is bad and retirement saving should be a priority?

Deena: No.  I don’t think many folks really understand.  I am hoping that congress will start to help us focus on financial literacy so that young children get this education to prepare them for life, rather than stumbling through it, making grave mistakes, then trying to “right” everything before they retire. I think people are paying more attention, but I am not sure they have been taught successfully yet.

YMR Reader: Do you think budgets are a sexy thing right now?

Deena: I have always felt that budgets are a four-letter word…but “sexy” is not the word I think of.  The nature of many human beings is not to feel the constraints of budget, because you fight against them, the same way you fight against your parents when you are 15.  I believe in  “trade-off” spending.   The first thing you need to know is how much does it cost you to live-basics, like rent, utilities, etc.  Then you look at the variables-eating out vs. eating in, for example.   Then you can say, “I’d like to buy a new car, so if I eat in and shave off some other expenses, I can us that money to buy the car.”   With budgets you are managing money, but with trade off spending you are managing goals.

YMR Reader: The buy and hold strategy has been around for decades. Do you feel that same strategy applies to the Gen X and Y generation?

Deena: I do not believe that modern portfolio theory is dead.  I further believe that you can’t  make market returns unless you are in the market.  Look what has happened in the last two weeks— If you missed one day, you missed a 6 ½ % run up.  Right now, I have no reason to change my investment philosophy.

YMR: Speaking of generations, do you think the baby boomer generation is prepared for retirement? Why or why not?

Deena: Baby Boomers are not prepared, but they don’t really want to retire either. Further, if all of us did retire, we would not have a big enough work force to carry on.  Boomers may not stay with their current jobs, but may work at something they love, for less money.  They will postpone retirement because they have to, even though they will not admit that’s the reason.

YMR Reader: Asset allocation has been preached extensively after the dot.com bubble, yet even diversified balanced portfolios took a significant hit with the recent economic meltdown. How do you address that to those concerned?

Deena: See #6 above.

YMR Reader: Speaking of asset allocation, what do you recommend people do with their retirement accounts? I would like an answer for new hires, mid-range employees and close to retirement employees.

Deena: First, the younger you are, the more time you have to let your portfolio grow.  I suggest a low-cost S&P 500 index.  Leave it alone.  As you continue to add money, eventually you should buy small cap and international-all index.  Mid range employees, you may want to add some fixed income, probably around 20% max.  As you get closer to retirement, you may have 60% equities, depending upon when you will need to start withdrawing from them. You want low-cost selections, because the fund expenses come right off the return.

YMR Reader: The economy has my wife feeling a bit insecure even though we’ve got a sizable emergency fund built up, and we have no debt. The question is, once we’ve completed our emergency fund, what path should we take? Should we start investing in the stock market like it’s on clearance, save in a high yield savings account, or should we be paying extra on our mortgage? Or a combination of those things?

Deena: Some leverage is good, so I would not start paying down the mortgage unless your interest rate is so high that you cannot beat it by investing your money elsewhere.  If your mortgage interest is low, invest in the market, because it is on sale.  I would suggest that you in invest index mutual funds because they are cheaper (less expenses).  Try Vanguard’s S&P Index fund for starters.

YMR Reader: My wife and I are in the market to buy a new home. We’ve saved up a sizable amount and we are selling our current co-op to use mostly as a down payment on a new place. Our credit is also impeccable. Still…how can we tell if we can truly afford it? Is there a metric/guide we can go by?

Deena: Bankrate.com has a calculator that can help you get your arms around that.  I don’t like “rules of thumb” because they are made for average situations and I believe you deserve solutions that are unique to you.

YMR: Now a fun question! How are you liking semi-retirement in Texas?

I am not semi-retired!  I am working 24/7, but loving it.  I love Lubbock, it’s just the right size community for me.  I love the school, my fellow faculty and most of the students.  I can’t imagine doing anything else. In fact, we’ve opened up a branch office of Evensky & Katz here in Lubbock and we are in for the long haul.

Many thanks to Deena for allowing me to interview her!

If You Work In Retirement, Are You Still Considered Retired?

Retirement is something that we all strive to achieve. It symbolizes the end of a long career and is the point where you can relax and reap the rewards of life. However, many individuals these days are not prepared financially for retirement. Either they did not save enough or they had unusual circumstances that required them to retire prematurely. This typically means that they need to become extremely frugal (living solely on Social Security) or continuing to work. I’ve always wondered about the later. If you work in retirement, are you still considered retired?

What is Retirement to You?

What does retirement mean to you? Merriam-Webster defines retirement as:

withdrawal from one’s position or occupation or from active working life

With that definition, you can say that after you stop working your primary occupation, you are officially retired. What happens if you decide to go back to work after a few months of retirement? Does that mean that you are no longer retired?

Taking Any Work Possible In Retirement

I feel that if you go back to work in retirement because you need money, you are no longer retired. The ideal retirement for me does not have me greeting customers coming in the front door of a department store. When I retire I want to do the things that I always wanted to do but did not have the time to do it. I want to travel the world but because of work, I cannot do that right now. However, in retirement, I will have the time and resources to complete this dream.

Doing a Job That You Always Dreamed of In Retirement

What if you are set financially but choose to work? Many people choose to work in retirement because there has always been something that they longed to do. Have you always wanted to start a charitable foundation or non-profit company? I feel that if you are working in retirement doing something you are passionate about, you are still considered retired. Isn’t that what retirement is supposed to be all about, doing stuff you love?

In conclusion, I think that retirement is what you make of it. However, if you cannot fully retire for financial reasons, I don’t think you are officially retired. However, if you have a job just to stimulate your brain or get to know members of your community, I think that is an ideal retirement because you are doing what you are passionate about or what keeps you ticking. I just do not think you can officially be retired if you dread going to work at the local grocery store at the age of 75 just so you can eat.

What is your definition of retirement? Do you agree with my reasonings or am I way off base?