Frugal Fridays: 12 Tips to Improve Your Financial Health

Welcome to Frugal Fridays where we share money saving tips, discuss living frugally and generally talk about personal finance issues.  

Thanks again to plf515 for guest hosting last week and thanks in advance to AnnieJo and blue jersey mom for taking on next week and the week after.  I'm still looking for other guest hosts for the future.  If you are interested, email me: frugalfridays (at) gmail.com.

I keep coming across articles on 10 tips for this or 5 tips for that.  I am jealous of all the good ideas that these authors come up with, but rather than put the effort into researching and writing my own list of helpful hints, I thought it would be just as helpful (and a lot easier on me) to link to some of the ones I've found most interesting.  So, without further ado, I present the ultimate list of financial tips: my List of Lists.

1.  The suggestions in  Do as these 10 rules say and you'll be fine define a very good overall approach to help you achieve financial happiness.  These are mostly "big picture" suggestions (i.e., save more, spend less) but he has some very good concrete advice on how to frame your goals and then structure a plan to achieve them.

2.  If you are drowning in credit card debt, there is some good advice in Ten Tips to Getting Out of Debt.  The one piece of advice that I think is really smart, but I always forget to suggest myself is #8. Contact your creditors and try to work out repayment plans.  Creditors can be very willing to work out an alternate payment plan, reduce or eliminate fees or reduce your interest rate, but you need to ask.

3.  With housing market in such a slump, if you are a renter with a good credit rating, now might be a good time to think about buying a house.  If you have never owned a home before, be sure to check out the tips in Buying your first house.  I hesitated a bit to include this in my list.  While most of the advice in this article is good, there is one bit I really objected to.  They advise you to check your credit score before you start shopping for a loan (a really good piece of advice I heartily endorse) but then they link to a site that tries to sign you up for a service you could end up paying for.  Instead, you should get your free credit report from the site that is federally mandated to deliver you a truly free report once per year from each of the three credit reporting agencies: www.annualcreditreport.com

4.  If you already own your home and you want to accelerate the payoff of your home mortgage, check out Five Ways to Pay Off Your Mortgage Loan Faster.  One thing I really like about this article is that it covers up front the reasons why early payment of your mortgage may not be the wisest course for everyone, but if you decide it is right for you, these suggestions can help you accomplish it.

5.  If you are self-employed, definitely look at this list of 13 things on What every freelancer should know.  My favorite financial tip on this list: #2 Set up a different bank account for your business earnings.  It's a very simple thing to do that will make your life so much easier come tax time.   Tip #8. Take a shower. At least every other day. is also priceless advice for all of us.

6.  Before you merge your finances with a partner, whether through marriage or some other method, check out these 10 tips on Marrying your financial future.  There's lots of good advice here, but my favorite tip would be #6. Get used to tackling goals together.  The only times I've seen financial affairs tear apart a relationship is when fundamentally the pair never really considered themselves a team, but rather individuals yoked together unwillingly.

7.  This entry is actually a list of lists itself.  To be honest, I haven't read every single one of these 66 Ways to Save Money Every Day because I don't really have any interest in updating my bathroom for less than $50, but if I did, I would check here first.  There are so many shopping and decorating tips here, you should find something new and helpful.

8.  This is sort of an anti-money saving tip, but hear me out.  Raising kids is expensive and it is tempting to save money whenever you can, but before you buy used baby toys and furniture, check out this list from Consumer Reports: Don't buy these 5 baby products used.  The best advice from this article: there are so many products that are still in use that have been recalled for serious safety defects, that you should always check out the government web site www.recalls.gov before you buy used.  Your kid's life is not something you want to risk to save a few bucks.

9.  There are some people out there who are amazing and hunting down the best bargains available.  I think I'm pretty good at it, but I am a rank amateur compared to some of these people.  Check out this list where Extreme Savers Share Their Secrets in seven categories.  There are many ideas in here I hadn't thought of.  I got at least one idea from this list that I'll try to put in practice in the future.

10.  If you are interested in taking a foreign vacation, but are appalled at the thought of most foreign currency exchange rates, don't despair.  Here is a list of 7 places you can Vacation where the dollar is still strong.  They all look exotic and attractive to me, but Panama is particularly appealing.  The engineer in me is amazed at the construction of the canal and I'd love to see it in real life.  I'm ready to start packing my bags.

11.  Before you book your vacation, make sure you understand what fees you would incur for cancellation.  Here are  10 tips to clip travel cancellation fees.  Most of these require you to do your homework before you book.

12.  Last, but by no means least, Mother's Day is on the horizon but you don't need to spend a ton of money to show Mom you care.  You need to give her something from the heart, and often that doesn't cost you much at all.  Here's a list of the Top 6 Super Cheap Mother's Day Gift Ideas.  My favorite is a framed picture of you or your family.  It's something she will treasure every time she sees it.  If you want to give her something that doesn't cost anything but effort, you can always take Garrison Keillor's advice and write her a sonnet.  Trust me, she'll be blown away.

Frugal Tip of the Week: This is the season when college aid packages are sent out.  If you are trying to compare packages from different schools, here is a handy calculator to help you summarize for contrast and comparison your different offers.  

•  Tips for the tipster?

  I'll be in and out today, but please feel free to add your own tips or links to articles you like in the comments.

  by sarahnity on Fri Apr 18, 2008 at 12:01:16 PM PDT

  •  Thanks Sarah, I saved to my hotlist to enjoy....

    after work.

    by jdmorg on Fri Apr 18, 2008 at 12:08:56 PM PDT

    •  Me too! Thanks, Sarah. n/t

      by Joy Busey on Fri Apr 18, 2008 at 12:50:10 PM PDT

•  If you do buy a house

  ask to see all the documents in advance of closing, and read them. All of them. Don't sign anything you haven't read and/or don't understand.

  Get a copy of FHA mortgage documents to compare with the ones drawn up by your lender. You'll be able to spot quickly if your mortgage differs from a "plain vanilla" one.

  A few years ago, we looked into getting a home improvement loan to put in a swimming pool. The lender tried to switch us into one of those "cash out" home mortgages with terrible and risky terms. Fortunately, I read the documents before closing so we dumped that lender.

  by elmo on Fri Apr 18, 2008 at 12:06:33 PM PDT

  •  Hire a real estate lawyer

    it may be the best $500 you'll ever spend. Realtors do not represent the buyer's interest.

    by lgcap on Fri Apr 18, 2008 at 12:11:36 PM PDT

    •  Indeed

      You're spending tens or hundreds of thousands for a house.  Get a lawyer.

      by plf515 on Fri Apr 18, 2008 at 12:15:17 PM PDT

      •  That's actually state dependent

        In New York, I think it's almost unheard of to buy a house without a lawyer.  In California, it's almost unheard of to use one.  If you don't get a lawyer, get a buyer's broker.  You want someone who is solely responsible to you.  Don't use a dual agent or, god forbid, a realtor who is representing both sides.  Get someone on your side who knows the business.  That doesn't have to be a lawyer though.

        by sarahnity on Fri Apr 18, 2008 at 12:21:00 PM PDT

        •  um, no on the broker thing

          The last thing you want to do is trust the advice of someone who doesn't get paid unless the deal goes through.

          by elmo on Fri Apr 18, 2008 at 01:28:38 PM PDT

          •  Not sure what you mean

            Some buyers brokers work for an hourly rate, if that really concerns you.  The fact is that everyone you hire has an incentive to cheat you.  You can't avoid that by hiring a broker rather than a lawyer.  If you pay them by the hour, they have an incentive to run up the billable hours.  If you pay them a percentage of the deal, they have an incentive to make you pay as much as possible.  If you are dealing with unscrupulous people, a lawyer versus a broker is indistinguishable.

            The thing is you want to make sure that whoever you hire has a fiduciary responsibility to protect your interests and you want to get recommendations from previous clients of theirs before you hire them.  If they follow the law, then your interests are going to be their main concern.  If they are willing to break the law, then nothing can protect you in advance.

            by sarahnity on Fri Apr 18, 2008 at 02:38:53 PM PDT

            •  if you're paying someone by the hour

              yes, they can run up the bill, but they have no incentive to omit telling you things that might make you decide not to buy the house.

              However, if the fee is contingent on the deal closing, if the professional only gets paid if the deal goes through, that's a conflict of interest. Their interest in getting paid could influence the advice they give you, because sometimes not closing on a particular house is not in your best interest.

              And you are also right about the broker's incentive to inflate the price of the house, because that inflates their own commission. Both buyers' brokers (on commission), and sellers' brokers are really working for the seller because it is in their interest that the sale go through for the highest possible price.

              by elmo on Sat Apr 19, 2008 at 07:09:58 AM PDT

              •  What you are saying is true

                for standard brokers.  For buyer's brokers, not all of what you say is true.  Sometimes they work on commission.  Sometimes they work on flat fee.  Sometimes they work on an hourly rate.  Always, they have a legal responsibility to work for your best interests, not the seller's.

                by sarahnity on Sat Apr 19, 2008 at 12:50:36 PM PDT

                •  sure

                  noncommissioned brokers haven't got the same incentive that a commissioned broker has. Just don't expect any real expect broker to be able to give you legal advice.

                  by elmo on Sat Apr 19, 2008 at 02:06:37 PM PDT

                  •  Like I said above

                    The use of lawyers in real estate transactions is very state dependent.  In some states (like CA) they are very rare.  If you were to go looking for a lawyer who specialized only in real estate, you'd be hard pressed to find one.  Out here, the vast majority of real estate transactions take place without lawyers on either side.  I don't think it's wise to scare people into thinking they must hire a lawyer in all cases.   It's not necessary in all states.  Real estate law varies widely from state to state and you can't extrapolate from one to another.

                    by sarahnity on Sat Apr 19, 2008 at 04:13:12 PM PDT

                    •  hmm

                      are you a buyer's broker or something? I don't mean to accuse all buyer's brokers of being unethical or anything, just trying to explain the conflict of interest situation with those working on commission.

                      I started out this thread not suggesting the need for a lawyer, just suggesting people read documents before signing. A lot of headaches could be avoided just by this simple step.

                      by elmo on Sat Apr 19, 2008 at 05:18:06 PM PDT

                      •  No. I'm not.

                        I'm not any kind of financial professional.  Are you?

                        by sarahnity on Sat Apr 19, 2008 at 05:55:06 PM PDT

                        •  nope

                          by elmo on Sun Apr 20, 2008 at 08:05:33 AM PDT

    •  don't let that be a substitute

      for reading the documents yourself, though. A lawyer can help you understand what the terms mean.

      by elmo on Fri Apr 18, 2008 at 01:27:33 PM PDT

      •  Very definitely

        Take the time to understand everything you read before you sign.  Whether you are buying a house, a car, renting an apartment or signing a disclaimer in a bike rental shop.  Read the documents in entirety before you sign.  

        I was taught to "read with a ruler".  Slide a ruler down the page as you read.  Don't move to the following line till you understand the one you just read.  Good advice when you are just getting started in the world.    And never ever sign a document that says one thing that all the parties agree orally to ignore.  Trust me, you will be held to that provision no matter what they said at the time of signing.

        by sarahnity on Fri Apr 18, 2008 at 02:43:58 PM PDT

        •  most legal documents

          contain a term that expressly negates any oral understandings, called a merger clause:

          http://en.wikipedia.org/...

          by elmo on Sat Apr 19, 2008 at 07:11:57 AM PDT

•  Regarding vacations

  my wife and younger son were in Costa Rica and thought it was great.  In fact, everyone I know who's been there thinks it's great.  And it's not as far as some of the places listed (e.g. Bali).

  by plf515 on Fri Apr 18, 2008 at 12:08:16 PM PDT

  •  I've heard that too

    The only friends I know who went to Costa Rica and had a less than fantastic time (not that they hated it or anything) were those who tried to travel around on their own.  It turns out that there is very little public transportation and many of the well maintained nature areas are privately owned.  So if you are a tourist, you can't just take a bus out to a public park and go for a day hike on the spur of the moment.  It's best to arrange a day tour with some company that will take you some place you can hike or zipline or boat or whatever you want to do.

    by sarahnity on Fri Apr 18, 2008 at 12:14:19 PM PDT

•  Depending on income and tax complexity

  think of hiring an accountant.

  What you'll pay varies by your income and the complexity of your taxes, but I think it can be a good investment, particularly if you, like me, freelance at least some of the time.  

  by plf515 on Fri Apr 18, 2008 at 12:09:43 PM PDT

•  Buying a house because markets

  are slumping is, IMHO, a very dangerous plan.

  It's the real estate version of market timing, and the word for market timers is 'bankrupt'.  With housing, it's worse, because housing is a lot less liquid that stocks.  If you buy stock in anything but the smallest company, you can always sell.  You may lose money, but you will find a market.  The same is not true for housing.

  by plf515 on Fri Apr 18, 2008 at 12:14:18 PM PDT

  •  I agree

    If the slumping market is your only reason for buying, don't do it.  But if you are interested in buying a house in the next few years, the next 12 months may be a good time.  I also think that if you can't envision holding the house for at least 5 years, you may want to reconsider buying at all.  I would expect to lose about 5-10% of the value due to transaction costs when you sell.  It's not a liquid investment, it's something you want to be in for the long haul.

    by sarahnity on Fri Apr 18, 2008 at 12:18:17 PM PDT

    •  We're just trying to hang on...

      ...to what we've got (good first mortgage, lousy second) right now. The market bubble never burst here, though it has stopped growing dead in its tracks. Which is a good thing - land and houses are still selling, they're not taking big losses.

      So I wouldn't advise buying here now, because I'm suspecting the prices will have to come down eventually. We bought our 13 acres and cabin (and outbuildings) for $60K 10 years ago, and that was a somewhat inflated price. Building lots in this neighborhood (usually 3/4 acre) are going for $85K raw (no infrastructure or building) right now, and that's half what smaller lots are going for in the next county over.

      This makes our taxes go up every year, though the land's not getting any younger and the cabin's not renewing itself either. A way of transferring the land from the locals to the retiring Boomers and their endless gated enclaves. Log McMansions everywhere you look. ARRRRGHHH!

      by Joy Busey on Fri Apr 18, 2008 at 01:03:42 PM PDT

•  My favorite of the Mother's Day gift ideas...

  is the stamps.com customized postage.  It's personalized, it's practical, and it's clutter-free!  Gotta put that in the "frugal gifts" file...

  by AnnieJo on Fri Apr 18, 2008 at 12:20:28 PM PDT

•  Wow - good stuff

  There is a ton of good stuff here. I am going to take more time tonight and make a list of things I can do.

  And I'll do the modern equivalent of how my mom used to clip articles and send them to me... I'll forward to my kids.

  by 1864 House on Fri Apr 18, 2008 at 12:23:04 PM PDT

•  I keep trying to get over here to rec & comment

  but MF keeps shutting down IE - and just the DK windows, not the other windows I have open. Grrrr

  by anotherdemocrat on Fri Apr 18, 2008 at 01:30:56 PM PDT

•  on the "not using credit cards" thing

  I have little post-its on each one that say "Is this purchase more important than going to Ireland?" since that is my vacation goal. It at least makes me pause momentarily before just whipping out the plastic.

  by anotherdemocrat on Fri Apr 18, 2008 at 02:11:35 PM PDT

  •  I'm curious

    How often does it work and make you stop buying whatever it was you were going to buy?  Or is it so ingrained that it's there that you go through that thought process before you get to the counter now?

    by sarahnity on Fri Apr 18, 2008 at 02:40:16 PM PDT

    •  well, I rarely buy

      things that I don't have to buy, but it does give me pause at places like Half Price Books. But when I'm putting $40 worth of gas in the car, I just feel bad that my vacation is that much farther away.

      by anotherdemocrat on Fri Apr 18, 2008 at 02:42:40 PM PDT