From the monthly archives:

August 2008

The Family Wallet participated in the Carnival of Personal Finance this past week which was hosted at Broke Grad Student. I also participated in the Festival of Frugality hosted at Fire Finance. Both the carnival and festival featured a lot of great articles. Here are my top picks from each:

From the Carnival of Personal Finance:

Consumerism Commentary with financial tips for students entering college.

10 Reasons Not to Pay for Your Kids College at Your Money Relationship.

From the Festival of Frugality:

Saving money on diapers and formula at Modernparent.org.

Practically free kids furniture at Money and Such.

Seven ways to save on college textbooks at Fiscal Zen.

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Having the right insurance is never more important than it is when you have a family. Insurance is sometimes the only thing that stands between your family and financial disaster when a catastrophe strikes. But, more importantly, insurance can also isolate your family from some of the stress about day-to-day life in the face of a tragedy. Although paying insurance premiums may sting a little, when the time comes to call upon your insurance agency for help, you’ll be glad you made room for them in your budget.

There are many different types of insurance available today. Carrying some types of insurance is a no-brainer while other types of insurance may seem a little excessive to you. If you have a family, however, there are certain insurances that you must maintain.

Health Insurance – With the costs of preventative health care skyrocketing higher and higher each year, every family should have health insurance. If you’re among the lucky ones who can count on their employer providing healthcare coverage, you can avoid some of these chunky premiums. However, if your employer doesn’t provide this coverage or pay for it, you must find a way to secure your own coverage. Having regular access to medical care is just too important to be left to chance.

Life Insurance – Ideally, you should have life insurance coverage for both parents in a family. Even if only one parent works outside of the home, the other parent is still performing a very valuable task. If the worst happens and one parent is taken from the family, the remaining parent will want their family’s routine to continue as much as possible. Life insurance benefits could replace the income of the working parent or give the working parent the funds to get help running the household. Getting over the loss of a parent is bad enough without having to ride out a financial crisis, too.

Homeowner’s or Renter’s Insurance – Families who live in a home they own should carry coverage (and are probably required to carry coverage by their mortgage holder) to protect their home and its contents in the event of a catastrophic event. Imagine for a moment the trauma of watching your house go up in flames. Now imagine not being able to replace you and your family’s belongings. Although being able to replace clothing and household items won’t relieve your distress, it will help you get on the road back to normal. Families who rent their homes should purchase renter’s insurance to cover their belongings.

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Many personal finance experts tout the benefits of going to a “cash only” spending system. They say that making this switch will provide all types of benefits to your financial life from helping you budget more accurately to encouraging you to spend less. And, for the most part, they’re right. But can you ever switch to a truly “cash only” spending system?

The answer is that you probably can’t. Mortgage payments aren’t easily made in cash. Many people don’t have a local mortgage holder that they can hand cash each month. Utility companies and car lenders are other vendors that are notoriously hard to pay using cash. You could spend as much as a day driving around town making your monthly payments, if you are even able to get drive to all of your vendors.

Despite the inconvenience, using cash rather than credit cards can work wonders on a family’s budget because of the psychological effect it has on the spender. While signing a credit card receipt after a shopping spree is relatively easy, handing over a wad of cash is much more painful. You see your bank account balance dwindling and the money in your wallet diminish. The perceived difference in the effect of your shopping is the reason why paying with cash is so preferential to using credit cards.

Perhaps, however, the key isn’t to switch to a truly “cash only” system of payment. Maybe a better plan would be to switch to a “no credit” system of payment. You are still avoiding that disconnection from the cost of your purchases that is associated with using a credit card, but you don’t have to chase every one of your vendors around town. It’s the best of both worlds.

Next month, promise yourself that you will pay absolutely nothing with a plastic card. You can begin by using your bank’s online bill payment, or actual checks from your checking account, to pay all of your regular expenses. Your mortgage payment, utility payments, and credit payments will all disappear from your account in a timely manner. Then, you can divvy the remaining money into cash amounts that you plan to spend on food, entertainment, and other variable expenses. Once the cash is gone, you are done spending. You’ve just mastered the “no credit” system of payment.

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Feeding the Hungry Hordes: How to Save Money When Your Child’s Friends Come to Eat

August 26, 2008

When your kid’s friends come by for a visit, do you worry that they’re going to eat you out of house and home? Watching a group of kids make their way through your refrigerator and pantry can often leave you feeling your home has been invaded by locusts. You don’t want to seem [...]

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Teaching Kids the Benefits of Saving Money

August 25, 2008

What was the hardest part of the financial makeover you’ve been undergoing? Was it learning to create a budget? Maybe it was stopping the urge to use credit cards. If you’re like many people, one of the toughest parts of getting your finances under controls is learning to save money.
Now [...]

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Software Review: Quicken Deluxe

August 24, 2008

If the thought of keeping track of your finances makes your head start to hurt, Quicken Deluxe may be just the software for you. Now, before you say that the last thing you want to do is tackle learning how to use a financial software system, take a breath and relax. If you [...]

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Weekend Roundup 08/23/08

August 24, 2008

The Family Wallet participated in the Carnival of Personal Finance hosted this past week at Everyday Finance. Here are my favorites from the carnival:
No Credit Needed details Setting Up Automatic Contributions To Retirement And Education Savings Accounts.
Personal Finance Analyst talks about 529 Plans: Helping To Ease The Burden of College Expenses.
BrokeFamily.com shares [...]

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Four Financial Moves to Prepare for a Recession

August 21, 2008

All of the talk about whether or not our nation is in the throes of a recession can be pretty scary. If we are in the middle of an economical recession, are you prepared to deal with it? Although nothing will guarantee your financial security during these uncertain times, there are a few [...]

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What Can You Downsize to Save Money?

August 20, 2008

Downsizing is becoming a prevalent theme on the nightly news programs lately. Each evening seems to bring stories of large companies downsizing in an effort to stave off economic problems. Although no one wants to hear about layoffs and business closings, these companies are making sacrifices to ensure the financial security of the [...]

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Using Cost of Living Comparisons to Make Relocation Decisions

August 18, 2008

If you’ve been faced with the daunting task of finding a new job in these shaky times, you may have already realized that you may have to expand your job search area. More and more, people are looking to other towns or cities for employment when an appropriate job isn’t available in their home [...]

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