Tuesday, June 22, 2010

Potential Pitfalls of Retirement

There are plenty of pitfalls lurking in almost any retirement no matter how much we plan or how well we think we've covered our bases. While there are certainly some obvious pitfalls to avoid, here are a few that you might not yet have considered and that could sneak up on you in your golden years.


Monday, June 21, 2010

Going Generic on These Items Can Save You Hundreds: Part II

Here is a follow up to a post I did in May.

While utilizing generics or store brands may not be for everyone, and certainly not for every product or situation, there are times and products upon which the switch might prove useful and save you money.


Sunday, June 13, 2010

How Much Allowance Will You Give Your Kids?

It can be difficult to know how much of an allowance to give to your kids -- or whether to give them one at all. What should the structure of an allowance be based upon and how do you make it a valuable learning process for your children?

While you probably want to teach your kids to appreciate and value money, how to save and to spend, you may not want to overdo it with a large allowance, which can spoil them and do just the opposite. At the same time though, giving them more money, while increasing the number of items they much buy for themselves, can teach fiscal responsibility. This can make deciding upon an allowance amount a difficult balancing act, and one that will likely have to be tailored around your personal financial situation as well as the dynamics and relationships within your family.

Here are a few areas to consider when deciding how much of an allowance to give your kids.

Setting an Amount
Setting an allowance amount is often easier when a child is young. A quarter or 50 cents a week can seem like a great deal of money when they are just three or four. However, as a child grows and begins to realize just how much the things he or she wants to buy really cost, expectations of a regular and meaningful payout from mom and dad often increase as well. This is where things can get a little tricky.

As families differ widely in their incomes, expenses, savings, and spending habits, there may be a great disparity between allowance amounts as well and what amount you feel is sufficient for you child’s needs. Sure, you probably want your child or children to be able to splurge once in a while and buy something they’ve been wanting. But you likely also want them to learn the value of a dollar and realize that the things we often want in life must be saved for (even though many parents don’t seem to realize this).

Therefore, consider thinking of your child’s allowance as you would your weekly or bi-weekly paycheck. Your child will be paid for doing minor tasks around the house – things like taking out the trash, cleaning his or her room, feeding a pet, etc. If you decide upon a dollar a week as an allowance, you may want to grow this amount over time, as your paycheck would, to adjust for cost of living increases. Every year, consider having a review to judge performance, much like you may have at your workplace. Review how the child has performed assigned duties and base the allowance increase upon this performance.

As a child grows, so will his or her financial wants and needs. This can leave the standard allowance amount a bit lacking at times, needing to be supplemented by extra work or bonuses. Again, think back to your work, and how each year you may have duties added to or taken away from your particular job description as you and your work grow and evolve. Similarly, as a child grows and becomes more adapt at certain jobs, consider increasing payment for this work. You can still maintain a standard allowance amount each week, but you may choose to add duties for the child to accomplish, and therefore increase their set allowance amount. You may also decide to pay separately for things such as yard work, painting the house, washing the car, taking siblings to and from school or extracurricular activities, and so on.

You might also consider special bonuses for items that your child accomplishes without being asked or certain thresholds or achievements met by the child. However, these bonuses could take the form of a special family dinner, a trip to the movies, or other activity. Not everything must revolve around the attainment of money, otherwise you may risk your child growing up thinking he or she should only do things for cash rather than out of the kindness of his or her heart.

Making it a Learning Process
Receiving an allowance as a child can be a wonderful learning experience. But you can’t expect children to understand the process of receiving, saving, and spending money without guidance along the way. It is important to take time to explain why they are getting this money, how it could be used and for what, and what the consequences are of improper money management or lack of effort in their job duties.

Consider helping your child to open a savings account and as they age, possibly a checking account. If they are interesting in the stock market or other investments, your guidance could prove invaluable to them as they take early steps to financial independence. Being open and honest about money and finances (if you are knowledgeable yourself) can help a child immensely and may assist them in avoiding financial mistakes as they move into adulthood.

As a child, I had a friend whose father (a single parent) would give him $50 (what I thought was a huge amount of money) allowance every week. I was extremely jealous and thought my parents should do the same. However, this friend was to use the money for his food, clothing, and other necessities, as well as entertainment. I thought this was the coolest thing, because at age 9, he was already learning what things cost, how to spend and manage his money, and what would happen if he spent it too quickly.

Continuing the Growth Process
As a child grows into a teenager and eventually moves into adulthood, this doesn’t mean it’s time to let the learning process stop. Sure, we all have to learn and make mistakes on our own, but this doesn’t mean that parents should sit idly by and watch their children fail at personal finance. And while you might not want to get involved or step on any toes, there are ways to teach without necessarily ‘nagging’.

During their early adolescence and teen years consider letting your child sit with you as you pay bills, study investment performance, and review credit card or bank statements. While this process might seem boring to you, your child might find it extremely interesting and educational. I only wish I had known how much utilities cost, what a home mortgage ran, and that we actually had to pay taxes on our property when I was a teenager. I certainly would have set my income expectations a bit higher had that been the case.

Monday, June 7, 2010

Cooling Your Home on a Tight Budget

Cooling a home during warmer months can be aggravating, especially when battling a tight budget. Rather than getting hot under the collar when the electric bill arrives, keep your cool. The following tips can alleviate the summer sizzle and help maintain a tight home cooling budget.

Remember those movies in which sailors seal hatches to keep water from pouring into their storm struck ship? Well, on a hot day, you’re the captain of the S.S. Tight Budget, and it’s your job to keep out warm air. The same spaces that allow cold air to seep into homes during the winter, may allow warm air inside during the summer. It is therefore important to inspect the following areas:

* Window seals
* Doors
* Seldom used rooms
* Attic
* Basement

Holding a lighted candle or even just your hand in front of windows or doors can help detect airflow from cracks. Caulking or sealing these spaces may decrease air seepage. Also, you might consider partitioning areas that aren’t used frequently. Closing doors and vents to unused rooms when cooling a home can make a difference of five to ten degrees or more. Ensuring an attic is properly insulated can maintain a tight budget as well.

It’s amazing just how much appliances can add to the temperature of a room or home. Dishwashers, ovens, toasters, refrigerators, washers and dryers all produce heat that can bust an already tight budget. If it’s necessary to use these items when cooling a home, consider the following:

* Use a microwave instead of stove or oven for cooking
* Use appliances at night when energy rates and temperatures are typically lower
* Use cold water to wash clothes
* Dry clothes outside
* Air dry dishes
* Vacuum refrigerator coils and vents every couple months

Don’t forget, even items such as televisions, lights/light bulbs, stereos, DVR, DVD, and CD players emit heat that can hurt your chances of cooling a home.

Ambient light is a leading cause in increasing room temperature and can destroy any chance of cooling a home while abiding by tight budget constraints. There are several ways to combat this solar foe.

* Close blinds/curtains on sunny days
* Plant trees/shrubs to block sunlight
* Use awnings

On the other hand, Mother Nature can be used to your advantage. Opening windows allows breezes to cool a home and can be a great money saver. Using fans to circulate air can save on a tight budget and be particularly helpful in cooling a home.

If you are looking for a new air conditioner, bigger isn’t always better. Larger units may run for shorter periods and eat up more electricity when cooling a home. If you find it necessary to run an air conditioning unit, consider using a programmable thermostat. This can allow you to leave the air off, or set it at a higher temperature during times when you are away, thereby cooling a home on a tight budget more effectively.

Sunday, June 6, 2010

Spring Cleaning Cooling Checklist

While spring months may already have come and gone, you may still not have yet had the opportunity to fire up the old air conditioner. Having a professional inspect your cooling system may be a consideration for your spring cleaning process. Such an inspection may help avoid costly repairs down the road and make your cooling system more efficient, saving you money over the long run. There are however, some simple, spring cleaning steps that you can take on your own to prepare your cooling system for peak performance.

Whether your cooling system consists of central air, wall units, or three box fans and a tray of ice-cubes, it is best to do a spring cleaning test run before temperatures begin to rise. Testing your cooling system can alert you to problems before temperatures reach the boiling point. There are several things you can check for when completing your test.

* Check for even and consistent operation.
* Listen for any unusual sounds.
* Ensure all vents are functioning.
* NOTE: You should make sure the outside temperature is above 60 degrees when conducting the test upon your central air unit. Operating an air unit below this temperature could cause damage to the system.

A spring cleaning test can also allow you to do a bit of preventative maintenance before your cooling system is expected to perform its job. There are several quick and easy tips that can make your air conditioning unit more efficient and circumvent issues that could become major problems.

* Check, clean, and replace filter.
* Ensure drain hoses for humidity removal are not clogged, and are draining properly.
* Inspect humidifier pad.
* Check for signs of corrosion on pipes and air conditioning unit.
* Remove winter cover from the outside condensing unit.
* Clean the condensing unit to free it from accumulated debris.
* Make sure condensing unit is free from grass or foliage that may have grown around it.
* Check to see that inside vents are open or closed and unblocked, depending on the areas of your home you choose to cool.
* If using a programmable thermostat, check to see it is properly set for your comfort level.

These are reasonably easy steps that can prevent future issues and better direct a service professional to problem areas if needed. Also, you might consider planting trees or shrubs around the exterior condensation and fan unit to keep it shaded. Direct sunlight can affect the performance of the cooling system. Just make sure that there is at least a three foot clearance or more to avoid obstructions falling into the fan or clogging the unit.

Finally, there are a few items on the spring cleaning checklist, which you should probably leave for a cooling system professional to inspect. These include:

* Inspecting refrigerant lines and electrical connections
* Checking and lubricating fan motor and belts
* Looking for air or water leaks
* Checking the condensate line and drain pan

Following up with your inspector to ensure that these areas can be checked off the spring cleaning checklist, can save time, trouble, and money down the road. Remember, preventative maintenance can be the key to an efficient and smoothly running cooling system.