Back in August, Cash for Clunkers was the big news in government relief for taxpayers. The program encouraged consumers to buy nearly 7,000 more fuel efficient vehicles in less than 30 days. A similar program from the Department of Energy through the American Recovery and Reinvestment Act of 2009 is now in the works. The State Energy Efficient Appliance Rebate Program, or “Cash for Appliances,” aims to encourage Americans to upgrade to more energy efficient appliances.

Cash for Appliances Features

• State-Run: Unlike Cash for Clunkers, where the Federal Government ran the program, each state is responsible for its own Cash for Appliances program. That means program rules, dates, and savings vary by state.
• Old Appliances: Your old appliances won’t be exchanged for the rebate on your new appliances. The good news is that those who are buying, for example, a new washing machine and have never had one before, will still be eligible for the rebate. The bad news is that you’re responsible for getting rid of your own old appliances. Be sure to recycle though because some states, like New York, will offer additional incentives for doing so!
• Energy Star: The new appliances must be ENERGY STAR® qualified in order to be eligible for any rebate. Categories eligible for rebates include: central air conditioners, heat pumps (air source and geothermal), boilers, furnaces (oil and gas), room air conditioners, clothes washers, dishwashers, freezers, refrigerators, and water heaters.

Overall Thoughts

As with Cash for Clunkers, this program shouldn’t make you run out and buy a new appliance you don’t need or can’t afford. The rebates can be as little as $50 so that definitely wouldn’t be a wise decision. However, if you’re in the market for a new appliance anyway and your state is offering one of the better incentive programs, it probably makes sense to take advantage of this program while it lasts…remember how quickly Cash for Clunkers ran out of funds!

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If you find yourself with questions you can’t quite find the answer to online, want to make sure you are handling a special situation as well as possible, or just want reassurance that you are on the right financial track, you may want to consider hiring a financial planner. This article will help you understand what a financial planner can do for you and what to expect when working with one for the first time.

Why Hire a Financial Planner?

These are just some of the things a financial planner can do for you:

• Determine and prioritize your financial goals.
• Use your personal goals and risk tolerance to create a sustainable investment strategy that maximizes returns.
• Create personal financial statements such as a balance sheet and income/expense statement.
• Use key financial ratios to check you overall financial health, and provide suggestions for improvement.
• Analyze your insurance portfolio to ensure that you are minimizing personal risk.
• Develop strategies to minimize income, capital gains, self-employment, gift, and estate taxes.
• Create and execute a plan for you to retire at the age you want with enough assets to live comfortably.

Meeting with a Financial Planner

A financial planner will want to get a general understanding of where you are in life – how old are you, do you have any children and how old are they, do you (or your spouse) plan to attend any more school, do you own a house, do you plan to support aging parents in any way, etc.

Depending on the planner, you may be asked to fill out a questionnaire in advance of your initial meeting. Others will meet with you first to get the basic information and then have you fill out more details either during the meeting or after the meeting. You should inform your planner of anything unique to you or your family that you think will impact your finances now or in the future.

Your planner will also ask a variety of questions to understand your current financial situation, future income needs, and risk tolerance (for investment purposes). It is important that you are 100% honest with your planner – she will not judge you and is not allowed to disclose any of your personal information to anyone without your consent. In order for your planner to craft a plan that will actually help you, you must admit to all your financial mistakes, be honest about your future aspirations, prepare to hear an honest assessment of your situation, and be willing to work with your planner to improve your finances. If you have certain things you aren’t willing to give up or certain savings goals that are non-negotiable, speak up – your planner is only as good as the information she has to work with.

What to Bring to the Meeting

When you meet with a financial planner, you should bring the following documentation:

• Bank/credit card statements showing expenditures for at least one year and current balances.
• W-2s/1099s showing income for at least one year.
• Tax returns for at least two years (up to five can be helpful if they are available).
• Mortgage and other debt information.
• Life, health, home, auto, long term care, and liability insurance policies and information on current premiums.
• Retirement account balances and asset allocation.
• Investment account balances and asset allocation.

If you have a small business you should also bring the above information for your business.

Choosing a Financial Planner

If you think that you could benefit from hiring a financial planner, ask family members, friends, or colleagues for a referral. I may be biased since I am studying to become one, but you should consider looking specifically for a Certified Financial Planner (CFP) professional. CFP practitioners are required to take an ethics pledge, have an annual continuing education requirement, and are governed by the CFP board.

It’s ok to meet with a few planners before deciding on one – a good planner will give you a free initial consultation. If you hope to build a long-term relationship it is important that you choose a planner you are comfortable with from the start. You can also get estimates from multiple planners to get an idea of the going rates in your area.

Once you have chosen a planner and worked with him to create your initial financial plan, you should plan to check in and revise your plan at least annually or whenever a life event changes your financial situation. Some planners may want to work with you as often as every three months, especially if you have large investments, or short time horizons for some of your savings goals.

Fee Based Financial Planners

You should also look for a planner that is fee-based, meaning they charge you by the hour rather than charging a percentage of your assets or charging commissions on products they sell you. You can search for fee-based planners by location through the Garret Planning Network.

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Programs Funded By Your Tax Dollars

Below is a list of resources that are free or subsidized by your tax money. Check with your local county or city government to see if these programs and services are available in your own area.

1. Free tax prep service for low to middle income families. Instead of paying for an accountant or tax prep professional next April, use the volunteer tax service your tax dollars have prepaid for.
2. Subsidized compost bins and free compact fluorescent lightbulbs (CFLs). Many local governments, electric companies, and communities have implemented programs to increase environmental awareness and to decrease energy use. Take advantage of this by purchasing a subsidized compost bin for your garden, signing up for a free CFL lightbulb, etc.
3. Free classes. Most communities offer free classes in accounting (for personal finance), Spanish language, ESL (English as a second language), basic computer skills, exercise (outdoor community yoga is always fun!), resume writing and job searches, etc. Some other fun classes I have found are for learning how to compost, local gardening instruction, and cooking. You may be surprised what classes are offered.
4. Parks, and environmental education. Parks are a wonderful opportunity to get outside and enjoy nature. Many parks offer free canoe rentals (or a subsidized cost that is cheaper than a private canoe rental place), tours, environmental education classes, outdoor barbecue pits (bring some foil if you don’t like the idea of cooking after someone else), fire pits, etc. You can use park grounds for birthday parties, anniversary parties, or other parties for free or a small donation, saving you money on event planning. Upkeep of the parks and all of these programs are funded through your tax dollars.
5. Use of facilities­. Community fitness centers are much cheaper than private gyms (memberships are often half the price). Libraries have books to borrow as well as DVDs, and you can take advantage of the Interlibrary Loan System (ILL) to borrow books and DVDs from many libraries around your state, giving you much better variety with a little bit of patience.

What programs have you used that were paid for with your taxes?

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However, like many of you, health care is not an area I am willing to be patient in, or to compromise on quality. I always carry a health insurance policy, whether working and having access to a group plan during open enrollment, or in between jobs and purchasing an individual health care plan. If I need medication, I no sooner leave the doctor’s office than go straight to a drugstore and fill it. Does this mean that I must compromise on cost savings? Certainly not.

How to Save on Health Care

Here are six ways that both group-insured and self-insured people can save money on health care and medical costs:

1. Go Hybrid. If you are purchasing your own health care plan, then raising the deductible you will have to pay to use the service will decrease your monthly premium costs. To make up for this high deductible you could potentially pay out, make sure you keep a savings account to essentially insure yourself the amount of a deductible should a medical issue arise.
2. Use Prescription Drug Coupons. Go to websites like Internet Drug Coupons and see if there is a coupon for co-pays for your prescription medications.
3. Make Use of MinuteClinic. Take advantage of the MinuteClinic at CVS and various drugstores/pharmacies for minor issues that on-staff nurse practitioners can diagnose such as the flu, strep throat, bladder infections, sinus problems, and wellness checkups. For example, currently Houston area CVS MinuteClinics are offering over $150 in Health Services for free on particular dates (includes screenings for blood pressure, diabetes, bone density, cholesterol, and even dental and chiropractic services are available at certain locations). Also available are doctor consultations, medication reviews, and certain referrals that you normally may have to go to a general practitioner appointment to get.  
4. Transfer Prescriptions. Transferring prescriptions is very simple, and each time you do it, you can get a gift card for $10-$35 at many stores (CVS, Randall’s/Safeway, Walgreens, Target, etc.). Keep a look out on the internet or in Sunday newspaper circulars for coupons to transfer your prescriptions (or to fill a new prescription) and clip them to keep on hand in case you unexpectedly become ill and need medication. Just take your current prescription bottle, your insurance card, and the coupon to the pharmacy department at the store and they will do all the work for you!
5. Generics. Always ask your doctor to prescribe generics, and also call them to see if there is a generic available for the prescriptions you are currently taking.
6. Use Your Phone. One of the best ways to save in copays on office visits is to not go into a doctor’s office. If you feel comfortable doing so, ask the doctor if you can do your follow-up over the phone. If you have chronic conditions that require the same medications, ask for the doctor to call-in refills over the phone.

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And there are multiple ways to achieve this: you can open a savings account or purchase certificates of deposits in order to earn interest, or invest in the stock market in order to earn dividends. When the interest paid to you begins to earn its own money, called compound interest, or your stocks earn you dividends purely because you own them, it becomes even more riveting.

It is commonly known that the riskier the vehicles for earning money that you choose, the more potential you have for both reward and loss. But what if you could go with the riskiest option without shouldering any of the risk, and with reaping all of the potential rewards?

Investing in the stock market—whether for short term gains or long term income replacement (IRAs)—offers the greatest amount of potential return, but then it also makes some people’s stomachs turn. Therefore, investing someone else’s money sounds like the solution for the weak-kneed investor because it will eliminate your personal risk all together.

Where to Find Money

So where can you find other people’s money? Most households in America have extra money that trickles in during the year from sources other than their paychecks. Perhaps you receive:

• A Christmas bonus
• Credit card or bank card offers
• Reward points for purchases that can be cashed in
• Monetary gifts from relatives for various occasions
• Online surveys that earn you money
• Bonuses from signing up for bank offers
• A good tax return in April that you weren’t banking on

This money is unaccounted for in your household, so it is generally a pleasant surprise. Why not make this money work for you?

How to Get Started

Open up a savings account where you can deposit all the extra cash that comes into your household throughout the year. Then choose a time frame for investing this money. Perhaps enough extra money will accumulate for you to invest it quarterly, or maybe you will have to wait until the end of the year. Remember, you can start investing at $4.00 on sites such as Sharebuilder where you can split stocks into half shares in order to afford them.  

Budget your bills with the salary that you know you can count on.  This way, you are not risking what you know you are working for, and will always have money to put food on the table. If at the end of this you lose everything (which is not likely if you choose investments with lower risks), you are not any worse for it. You have essentially taken away your investment risk. Any extra money you earn from your investments will be icing on the cake, and you can thank your boss, Uncle Sam, your relatives, or anyone else who has unknowingly contributed to your interest earnings.

This approach may not make you wealthy, or allow you to retire at your desired retirement age, but it will certainly get you in the investing game without feeling vulnerable to risk.

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Am I in Love with Money?

One of my favorite retorts to the occasional person who feels that I am in love with money is, “I don’t love money. I love what money can do for me.” I say this with confidence because the actual value is not inherent in this piece of paper, but rather is captured in its owner’s ability to trade it for the things that do hold value for them—food, clothes, trips, jewelry, a home—all of which are tangible and gratifying.

There is nothing immediately gratifying about money. Why hang onto a green piece of paper when I can purchase a candy bar to satisfy my chocolate craving? Or a new HD television that is more pleasing to my eyes? Or a sporty car that will make me feel young and prosperous? Money cannot satisfy nor compete with any of these feelings of need and desire.

This is where the dilemma is for so many people, and perhaps one of their biggest obstacles to saving money rather than spending it. If money has no value and does not offer you gratification, whereas purchasing things with money can and has satisfied your needs and desires in the past, then each time an opportunity arises to spend money, you will. It just makes logical sense.

Give Your Money Value

If saving money seems like a futile exercise or perhaps saving money is a priority that you just cannot seem to keep, then you need to give money value. For me, money symbolizes independence and freedom. I value my personal life and my ability to live on my own and to make decisions based off of my needs and wants, not based off of others’ opinions. By saving money I can live by my own standards.

Case in point: I saved throughout college, and the week after graduation I was able to leave home and move into my own apartment. After I was laid off from my first job, I was able to move down to West Palm Beach, Florida and start a new job with the money I had saved. When it came time to move in with my fiancée in Houston, once again I paid to move me, my cat Lyla, and my belongings halfway across the country. These were my choices, and I was able to make them because of the money I had saved.

Find Clarity in Your Purchases

What are your basic values in life? Perhaps you want stability, independence, a new car, to purchase a house of your dreams, to travel the world. Whatever it is that you hold near and dear to you, attach this to your money. By giving your money value, you will find clarity and priority in the day to day purchases that you make because each dollar you spend is being taken from the blueprint of your principles and your dreams.  

Give your money value, and then bank that value. You will be amazed at how much more quickly your savings will grow.

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Over the last two years, I’ve developed some decent strategies for keeping my grocery costs as low as possible – saving as much as 50% from my first grocery store experiences! Here are some of the tips I’ve used.

How to Save Money on Groceries

1. Shop monthly: The absolute biggest way I cut my grocery bill is by making a maximum of one major grocery trip per month – sometimes I wait as long as 6 weeks! The only thing I buy between major trips is milk and produce. The big trip may take me up to 1.5 hours and cost $100 or more – but it gets both the time and money out of the way for weeks, and cuts down on those “extra” purchases that always manage to creep into my basket. If you shop weekly and add just $10 of unplanned or unnecessary items each time, that’s $520 per year. Shop monthly instead and cut that number down to $120 – a savings of $400!
2. Use coupons: I subscribed to the Sunday paper solely to get the coupons. The key is to cut coupons regularly (at least every week), keep them together, and pay attention to expiration dates. Only cut coupons for items you normally use or that you will substitute for items you normally buy (like one brand of toothpaste for another). Otherwise coupons will encourage you to spend more rather than save.  Many stores double coupons up to a certain amount.
3. Stock up on sale items: Go over your grocery store’s circular, or sign up for their e-mail list. Note the items that you usually buy that are on sale, and plan to purchase them. If anything is a particularly good deal buy as much as you can reasonably store before it goes bad. If you aren’t sure how to use a particular item, visit Supercook, where you can search for recipes by ingredient. Grocery stores put items on sale at least once every 12 weeks if not more often – hold on to your coupons until you can pair them with a sale to save even more.
4. Make a list: Before you shop, open your pantry, refrigerator, and freezer to see what you actually need. An even better way to keep a list is to leave a pad on the fridge and add to it as you run out of a certain item. Making a list and sticking to it will help you get everything you need (thus minimizing repeat trips) and also help you avoid buying extra items.
5. Buy in bulk – strategically: Look for savings on larger packages, but beware – the larger package is not always the best deal. If your store labels do not show unit price, calculate it yourself. Also make sure that you have room to store what you buy and that you can actually eat it before it expires – otherwise you lose your savings when you throw it away.
6. Make the freezer your friend: Buy large packs of meat (often cheaper per-pound) and freeze in meal-sized portions. You can also make a casserole or large batch of soup and freeze the excess in individual portions for an easy lunch or quick dinner. This allows you to eat a home-cooked meal even when you don’t have time to cook, and lets you buy items in larger quantities.
7. Use less meat: If you buy ten pounds of meat, you can make 10 meals with 1 lb of meat each or 11 meals with .9 lb each – you just increased the number of meals by 10%, and probably won’t notice the very small difference. Since meat is the most expensive portion of most meals, that can be a significant savings. You can reduce your portions even more and simply increase your veggies or other (cheaper) side items to make up the volume.
8. Purchase produce wisely: If an item is priced by the number of pieces, buy the largest/heaviest available to maximize your dollar. If an item is priced by weight, buy smaller or lighter pieces. Also remember that just because an item is packaged a certain way doesn’t mean you have to buy it that way – a former roommate taught me that you can indeed buy half a bundle of asparagus or pound of grapes! This is especially good if you live alone like I do. Get the best deals by purchasing in season – and when quality is truly lacking, turn to frozen veggies instead. Finally, recognize that different varieties of an item can vary widely in both size and price per pound. For instance, Honeycrisp apples can be as much as $2.00 per pound and weigh up to one pound each, while you can get 2-3 smaller apples per pound and pay as little as $1.00/lb. If the smaller apple will truly suffice, why pay the premium?
9. Go generic: A grocery store’s own brand is almost always cheaper than the national brand, without noticeable difference in taste or quality. I’ve tried generic items from pasta sauce to canned soup to cheese and more. Give generic items a try – and if you truly don’t like a certain item, then it is ok to switch back. Be practical – if a sale plus coupon combo makes the name brand cheaper, go for it.
10. Avoid convenience items – unless they make sense: If you can do it yourself, the grocery store will probably charge more to do it for you. So cook your own pinto beans instead of buying canned. Steam your own broccoli in a covered pot with an inch or two of boiling water instead of buying a microwavable package. But when it makes sense, go for the convenience: at my grocery store, pre-shredded cheese is the same price per ounce as the big block. So no hand grater for me!
11. Love leftovers: if you are cooking for one or two it can be hard to make the exact amount you will eat for dinner – it seems like recipes always make 4-6 servings! Stretch your grocery dollar further by eating dinner leftovers for lunch – this eliminates the need for sandwich or other lunch items and also stops you from throwing away excess food. If you don’t have a full meal left, repurpose pieces of different meals to create a whole new meal.

More Grocery Saving Tips

There are also a few grocery tips that other people recommend, though I haven’t used them. If you have, I’d love to hear your thoughts!

• Shop at discount grocery stores.
• Grow your own produce.
• Visit multiple grocery stores in one day or week to search out the best deals.
• Find deals using paid websites like The Grocery Game or free ones like A Full Cup.
• Keep a price book.
• Use canning techniques to preserve food.

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Until recently this might have been an odd question. Bank failures, government bailouts and increased fees are causing many people to stop and think about their choice of bank. In this day of direct deposit, ubiquitous ATM’s and increased competition some people are realizing that all of their banking needs can be met in other ways – often with better rates and lower fees!

Retail banks offer a variety of financial services, but the majority of people use them for checking and savings accounts. The #1 criteria for choosing a local bank is often convenience. People tend to give their business to the bank that is closest to where they live or work even though a better deal can be found elsewhere.

Where can a better deal be found? Two sound alternatives to retail banks are credit unions and online banks.

Credit Unions

Credit unions are similar to banks with one key difference: they are nonprofit, member-owned cooperatives. Credit unions return any profit to members, generally resulting in higher checking and savings account interest rates and lower fees than retail banks. Deposits are federally insured.

Credit unions may offer a more limited range of services than a retail bank. They may also provide restricted access to ATM’s and have branches that are less convenient to visit.

For more information about credit unions visit the Credit Union National Association.

Online Banks

Online banks are retail banks without branch locations. Eliminating the cost of operating local branches results in a savings to the bank that is usually passed along to customers in the form of lower fees and better interest rates. Paying bills or transferring funds is incredibly easy and efficient. Online banks are open 24/7 for your convenience. Deposits are federally insured.

Obtaining money from on online bank isn’t as easy as a retail bank. ATM cards are provided so you can withdraw cash, but ATM access may be restricted.

Two popular online banks are ING Direct and HSBC Direct. Other options can be found at The Best Bank for Your Money.

Where do You Bank?

Do you still bank at a traditional retail bank? Have you switched to one of these alternatives and love it? Are there other worthy bank alternatives not mentioned in this article?

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Ways to Save on Appliances

1. Ask for Appliances Up Front.

   The easiest way to save money on appliances is to choose an apartment that comes with appliances (most do), or to negotiate them into your home contract. If the sellers have older appliances that are still functioning, ask if they will leave them in the home for you.

   Most of the time sellers will want to purchase new appliances for their new home anyway, and if the appliances are older, you may be saving them some headache in storage and moving fees. If you are left with several appliances, then you can focus on purchasing newer appliances one at a time versus having to purchase them all at once.

2. Finding the Balance Between Low Upfront Costs and Energy Efficiency.

   It would be nice if we all had unlimited budgets to shop for the newest, best appliances. Because this is not the case for most of us, it is important to balance out saving money in upfront costs, and buying appliances with an Energy Star rating which will cost more up front but will yield greater savings over its lifetime.

   How should you prioritize your budget? Some appliances run 24 hours a day—a refrigerator or freezer—while others run on a need basis, such as a washer and dryer. It makes a lot of sense to spend the extra money up front on an energy efficient refrigerator; however, purchasing energy efficient washers and dryers may not be necessary. To make the washer and dryer more energy efficient, perhaps you could purchase an indoor/outdoor clothesline and run less loads of wash.

3. Have Patience and Wait for the Energy Star Rebates to Come.

   Patience can get you far in purchasing appliances. However, it should be noted that some appliances you cannot do without for long. Part of the American Recovery and Reinvestment Act is the Energy Star Rebate program. States are being awarded out of a pot of $300 million allotted by this Act to be used for consumer rebates who purchase energy efficient appliances.

   States began receiving this money in August 2009, and will receive the remainder of it by November 30, 2009. If you wait a few more months, chances are that you can get a rebate for purchasing more energy efficient products, which will save you both in upfront costs as well as in long-term electricity costs.

   If you do not have time to wait, check with your electric company and see if they offer any rebates or discounts on energy star appliances. Many of them do. Also, search the Energy Star website to see if any rebates are currently active in your area for specific models.

4. Shop Outlets and Scratch and Dent Stores.

   Here’s a secret to saving big bucks on appliances: scratch and dent stores. Once an appliance is shipped and taken out of its box, it is legally considered used. Sears, Lowe’s, Home Depot, etc. cannot take the product back and resell it as brand new.

   This not only includes products that have been scratched or dented during shipment, but also products that are sent back because someone did not measure their space correctly, or decided that they do not want it after all. This is great news for the rest of us because these appliances end up at scratch and dent or outlet stores where you can find savings on brand new appliances between 40-70%!

   As an example, my fiancée and I just went to a Sears Scratch and Dent outlet and found a brand new, stainless steel, Frigidaire refrigerator with an Energy Star rating for 50% off (original price was $1500; we got it for $755). It had one dent on the front door near the bottom. For an extra $60, we are having it delivered tomorrow.

5. Purchase Floor Models.

   If you see an appliance that you fall in love with, but the cost is just too high, check out the floor model. Typically stores will sell their floor models at a discount. Make sure you inspect the appliance from all angles and see if there are any dents/scratches/missing pieces, etc.

   Then, decide what sort of discount you would like. Speak with a manager and use your negotiation skills. A lot of times managers are happy to be able to sell their floor models and recoup some of their costs.

6. Purchase Used.

   Another great way to find appliances is through Craigslist. There are always people who are moving cross country, who are looking to downsize, upgrade, or who just need money and they are selling their appliances at a percentage of what they paid in retail.

Depending on how you look at it, appliances can be very expensive burdens, or energy-saving investments. With the tips above and some planning on your part, you can save significant amounts of money both now and for years to come.

I would love to hear some of your own ideas and experiences in appliance shopping!

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Let me start at the beginning. Three years ago I bought 6 Douglas Fir trees to serve as a screen from my backyard neighbors. The twelve foot trees cost me $700 in total. The nursery wanted $1,500 to plant them! Double the amount of the actual trees. I thought it was completely and utterly ridiculous to spend 68% of the project for labor costs. It’s not even that bad when you go to the auto mechanic!

Look for Ways to Cut the Cost

Living in a new neighborhood has some perks. I must say, the dirt flying around everywhere from construction isn’t one of them. Being that my builder is still building, there is no shortage of contractors working.

I noticed some landscapers working on the street adjacent to me and asked them if they were free to plant some trees. They were more than happy to get some extra work.

I highly advise that if you have some work that needs to be done, put the telephone book and your referral list away and drive to a new neighborhood and find a contractor that performs the type of work you’re looking to get done. Chances are they’d be more than happy to do it outside of company time. This will save you money and make them money. I have done it for my HVAC as well as the landscape job.

Long story short, I was able to get all six trees planted for $300, not $1,500! That’s a $1,200 savings!

Delay a Portion of the Project

Now, bringing you to the present, this week. The next step to the project was to mulch around the trees. Ever hear the saying, “Don’t put off to tomorrow what can be done today?” Well, when it comes to spending money, “Put off to tomorrow what can be spent today!”

Eventually you may realize the expenditure is unnecessary. But worst case, you will have more money saved for the project thereby effectively reducing its cost.

Save the Difference

I followed this reasoning and took that $1,200 I had saved and put it in a 14 month, 4.2% CD and when that expired I rolled it over into a 4% 12 month CD. With the original $1,200 savings plus my interest, I was able to not only pay for the twelve tons of stones and the two workers, I am putting the rest toward finishing my basement next year.

Granted I may have been able to get the stonework done three years ago when I planted the trees but I was able to keep my thousand dollars in CDs earning interest while concurrently having the benefit of time to evaluate what exactly I wanted to do in my yard. Heck, I could have saved even more money by putting mulch down, but do I want to apply mulch every year? No!

Increase the Principal

The interest earned on the CDs was not much considering the small principal amount. But over time if you can delay one small project, and another, and then if the projects become increasingly more expensive and elaborate, your principal amount increases, thereby increasing your interest.

Never underestimate the power of small numbers growing over time! You will stand to save thousands! Not to mention your peace of mind of having the extra savings as backup in the event of an emergency.

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Here’s my personal experience with one of the leading online banks – ING Direct.

ING Direct: Background

ING Direct has existed in the United States since 2000. It is the domestic outpost of the ING Group, a worldwide financial institution that began in the Netherlands. ING offers the following services:

• Savings (Personal and Business)
• Checking (Personal and Business)
• Certificates of Deposit (Personal and Business)
• Mortgages
• Mutual Funds – through Sharebuilder
• Home Equity Line of Credit

My ING Experience: The Good

I opened a savings account with ING about two years ago, and opened an Electric Orange checking account about a year ago. I have also held three CDs through ING, although I only hold one today. Here are some of the things I like about ING:

• Competitive interest rate: Although all interest rates are low right now, ING stays competitive with other online banks. It’s not the best, but it’s nowhere near the worst!
• Easy online interface: I find the ING website incredibly easy to use. If by chance I can’t figure something out, the FAQ section provides detailed answers to the most common user questions.
• Tips and Tools: This section of the website offers resources to help you on your financial journey – ING feels like real partner to me.
• No fees: All ING savings, checking, and CD accounts are absolutely free with no minimum.
• Customer referrals: ING offers me the chance to earn up to $500 by referring my friends and family members.
• Security: ING is FDIC insured, so I know my money is safe. And their security policy makes me confident that my personal information is safe as well.
• Association with Sharebuilder: I have a brokerage account with Sharebuilder, and appreciate the ability to see that account balance when I log into ING. Additionally, I am able to transfer money from ING to Sharebuilder instantly with no charge. And I can invest in ING no-load mutual funds with the click of a button.

The Not-So-Good

While I’ve been generally happy with ING, a few things do bug me at times:

• Slow log-in process: ING’s commitment to security means that I have to go through a few extra steps each time I want to log into my account.
• Interaction with financial aggregator sites: Because ING requires you to answer security questions each time you log in from a new computer, it’s difficult to see your ING balance/transactions using a website like Mint.com.
• Slow transfers: It takes up to 4 days to transfer ING money to an outside account, so plan your transfers ahead of time – or make sure to have an ING checking account with debit card! This one is a characteristic of all online banks, not unique to ING.
• No paper checks: This is about the only thing that keeps me from using ING as my only bank – instead of writing paper checks you can do electronic checks or have ING send a check in the mail for you. If you need to write an unplanned check, you’re out of luck.

Overall

My personal experience with ING Direct has been mostly good – and the positives far outweigh the negatives. While I don’t get the absolute best interest rate out there, I feel confident that my money is safe and in the hands of a good company. If you’re looking to open your own ING account, be sure to get a $25 sign up bonus.

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But what about when it comes time for you to ante up the money for something preventative with no immediate tangible benefits? Trust me, the experience is quite different.

Buying Our First Home

My fiancée and I are in the process of buying our first home. We fell in love with a gorgeous house in Houston, Texas that is located just ten-fifteen miles away from both of our jobs, has a cute backyard that is big enough for a vegetable garden, and has enough bedrooms to convert one into my very own office.

After making an offer against three competing bids and winning, we celebrated our success. We knew we were now going to be taking out a loan bigger than any other loans we had ever taken out combined, but this was an expected expense. What we hadn’t expected, and what came next, were the preventative measure costs.

Inspection Costs

At first it was the General Inspection and a Termite Inspection, which racked up $350. And then it was the additional AC/Heat diagnostic inspection, for $130. Add in a survey and an appraisal, and suddenly we were looking at $1030 extra in the name of prevention.

Even in this instance where the preventative costs were high, these inspections truly were an ounce of prevention when you take into consideration the total investment we are making.

Checkout the possible problems these inspections found and the actual costs we could have been looking at down the road had these problems not surfaced until after the sale of the home (in other words, once we were living in it):

• Several weep holes, which allow the inside of walls to breathe in the very humid Houston region, were closed off. Possible future mold issues. Future cost: depending on severity, up to $20,000, although average issues cost between $500-$4,000.
• Flash seals on the roof were sticking up in several areas, which could allow water from future rainstorms to seep into the ceiling of the house. Possible plaster, walls, and mold issues. Future cost: depending on severity, see above.
• Deficient AC/Heating systems throughout the house. Possible high electricity bills as soon as we move in (owners currently paying nearly $500 a month in the summertime to cool off the home), and $10,000-$12,000 in future system replacement costs.

Negotiation

We paid the prevention costs, and because it gave us knowledge of these issues, we were able to negotiate with the owners to fix the problems before they had the opportunity to become budget-disasters for us. We were also able to target options in a home warranty plan that would be valuable to us in the future and protect us from possible outcomes from other issues that surfaced during the inspections.

An Ounce of Prevention

There are no guarantees in life, plain and simple. But some services allow us to take a sneak peek at something that could go wrong, and then act accordingly to insure ourselves against the possible outcomes.

Nobody likes to spend $1030 before purchasing a home, and certainly not my fiancée and me. But how much would we like to shell out $3,000 for future mold issues, or $10,000 to replace two AC units? In this case, the answer was obvious: no matter how much this ounce of prevention hurt, we said goodbye to the $1030, and are thankful for what it will save us in the future.

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As I mentioned in my post on my financial tracking system, I save a fixed amount each paycheck and split the money into multiple categories to correspond to my savings goals. 

The System

I choose to keep all my savings in one account rather than having multiple accounts. But since I am saving for different things, I need a way to see how much money I have saved towards achieving each of my goals. As with my budget tracking system, I use a spreadsheet to list my savings categories, goals (either total saved amount or a fixed regular contribution), and timelines.

How to Save for Multiple Goals

As you can see, in this example I’m saving for 6 goals.

Prioritization

When starting a savings plan, the most important thing is to name and prioritize your categories. You can’t reach all savings goals overnight, and it’s easy to get frustrated. So take a deep breath, grab a piece of paper, and dig in. Write down the 5-10 things you want to save for, how much you want to save, and timeframe for completing the goal.

Then figure out how much you are going to save each month or pay period – it can be a set dollar amount or a percentage of your paycheck. Whatever it is, make sure it is realistic or your savings plan won’t work!

I choose to put a fixed amount of money for travel and gifts into a savings account and draw from those accounts as needed. I am also saving for a certification exam, new furniture after a move, a car (far down the line!), and of course building up the ever-important emergency fund.

In order to reach all your goals, you must prioritize – what is the most important thing to you? For me it is my emergency fund. But you also have to consider what needs to be done first – for example, I have to pay for my exam in early October so I have to save all the money for it by the end of September – even if that means decreasing contributions to my emergency fund. Place a priority by each of your savings goals and know that you should save for them roughly in that order.

Planning

Now it’s time to actually create your savings plan. Take the total amount of savings you have per paycheck and determine how much of that amount will go to each category. Make sure you fund the categories with a stricter timeline (for me, the exam) before the goals with a looser timeline (for me, a car). Also make sure you focus on the categories that you gave a higher priority, regardless of what the timeline is.

I’ve created a simple spreadsheet to do the subtraction for me, but you can do it by hand just as easily. My spreadsheet also shows the estimated balance by date.

Why it Works

It’s easy to put money in savings and then take it out because you don’t know what you are saving for. It is also easy to just spend money rather than saving it. When you dedicate a specific amount to savings, and plan in advance where every dollar will go, it’s harder to spend the money.

It’s much more fun to watch your savings balance grow and get ever closer to reaching your goals! I challenge each of you to create your own savings plan today. Let me know how it goes!

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Here’s a rundown of where I do my business and my favorite in each category.

Online Savings Accounts

The Best: ING Direct

The Rest:

• Etrade
• HSBC Direct
• Virtual Bank
• WTDirect
• Pentagon Federal Credit Union

Index Fund Managers

The Best: Vanguard

The Rest:

• Barclays Global Investors
• Fidelity
• Charles Schwab

Investment Brokers

The Best: Scottrade

The Rest:

• Zecco
• ShareBuilder
• Muriel Siebert

529 Plans for the Kids

The Best: Ohio College Advantage

The Rest:

• New Hampshire UNIQUE
• Iowa College Savings
• Wisconsin Edvest
• California Scholarshare

More of the Best

Peer to Peer Lending: Lending Club

Insurance: Allstate

Online Checking Account: Charles Schwab High Yield Investor Checking

Credit Cards: American Express

I also have lots of local banks that finance our rental properties, helocs, and business accounts, but I excluded my local banks and credit unions, since they won’t do most of you any good.

Which banks are your favorites?

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After a year of shopping at Costco, it’s practically our main stop for groceries, gas, and various other things. We happily drove over to Costco and spent our rebate check stocking up on diapers for the babies!

Costco Financial Incentives

I found that the best way to make Costco worth our while is to stack the financial incentives. Here are my favorites:

• Executive Membership. This is what earned us our $75 rebate check. You get 2% back on all your purchases. No, don’t worry, we didn’t spend that much in groceries, a large portion of it was due to the new bunk beds the kids got for Christmas.
• Credit Card Rebates. We use the TrueEarnings Card from Costco and American Express to earn cash back. The card also offers a $25 Sign Up Bonus.
• Coupon Book. Each month, we check the Costco coupon book for our favorites. It’s a nice bonus!
• Banking Deals. Costco offers other financial deals too. One that I like is the ShareBuilder $70 – $90 Sign Up Bonus. They offer a $90 sign up bonus for executive members and a $70 sign up bonus for gold star and business members.

Action Plan

We’ll be renewing our Costco membership shortly. When warehouse shopping, there are lots of ways to save buying in bulk, but you have to be careful not to get carried away.

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