Why this deal makes us big winners

IT IS the historic deal that promises “enormous benefits” for all Australians. Here’s why we were big winners from the trade talks.

Source NEWS.com.au | Business http://ift.tt/1WJKncu

Tighter controls over ‘free range’ label

MILLIONS of eggs sold in Australia last year were not as ‘free range’ as buyers probably wanted. The ACCC has stepped in to define what the term really means.

Source NEWS.com.au | Business http://ift.tt/1japo4q

‘Disgraceful’ banking outage finally over

FAMILIES on overseas holidays may have had their travel plans curtailed, but at least they can finally access their accounts with Westpac-owned banks.

Source NEWS.com.au | Business http://ift.tt/1QVFY2f

‘Slap him like I did to the pr*ck on Warner St’

A WAR of words has erupted between the taxi industry and ride-sharing app Uber following reports of escalated violence against Uber drivers.

Source NEWS.com.au | Business http://ift.tt/1j2400t

The most obvious free-range guide ever?

THE consumer watchdog has just issued Australian farmers a “common sense” guide to free-range claims. And sadly, it is very necessary.

Source NEWS.com.au | Business http://ift.tt/1Ohlm5v

LinkenIn to pay disgruntled users millions

LINKEDIN will pay nearly $20 million to disgruntled users following a class-action lawsuit relating to emails sent by the company.

Source NEWS.com.au | Business http://ift.tt/1QVuxHI

Airline bosses made to run for their lives

AIRLINE workers angry at planned job cuts have stormed a board meeting and torn the shirts off executives as they tried to flee.

Source NEWS.com.au | Business http://ift.tt/1Rru1Cj

You’re Wasting $600/Year On Something You Could Get for Free

Did you know the average American spends more than $50 a month on bank fees?

You probably don’t even realize it’s that much, but a bunch of small fees can add up quickly.

Americans are paying an average of $4.35 in fees every time they use an out-of-network ATM, according to Bankrate. And we’re doing this, on average, 7 or 8 times per month.

Slap on anywhere from $8-$12 in a monthly service fee many customers aren’t even aware of.

And if you don’t maintain the monthly minimum balance? That’s another $15.

The average minimum balance required, by the way, is over $6,000. I’ve seen them on the lower end, too, but even a few hundred dollars can be a challenge some months. You shouldn’t be penalized for that.

Want to Save That $600? Here’s How

The crazy part is these fees are probably unnecessary. Several banks offer fee-free accounts with equal or better services. A free account or one that costs you money just to have it – it’s kind of a no-brainer, right?

We’re a fan of both Fidelity and USAA, because they automatically reimburse ATM fees and there are no minimum balances to keep your account free.

Fidelity also offers an interest rate on your balance; click the orange button below to open to take advantage of their special offer:

We want you to get the most out of your account. That means getting rid of these unnecessary fees that eat away at your balance.

I’m pretty impressed with this offer. The Fidelity account is in a tiny minority – only 4% – of interest-bearing checking accounts that are free to use.

I’m challenging you to make the switch. Click the orange button in the banner above to learn more about the offer.

Your Turn: Are you surprised to learn how much we pay in bank fees? Are you going to make the switch to the free Fidelity® account?

Sponsorship Disclosure: A huge thanks to Fidelity® for working with us to bring you this content.

The post You’re Wasting $600/Year On Something You Could Get for Free appeared first on The Penny Hoarder.

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Student Guide to Checking Accounts

There’s more to a checking account than just writing checks. Photo: Rikkis Refuge Other

If you’re in college, the idea of maintaining a checking account could be brand new to you. After all, this may be the first time you’ve been responsible for paying your own cell phone bill, rent, or utilities. Whether you’re just getting started or have been researching your options, here’s what you should know when you’re getting ready to open a student checking account.

Benefits of a Checking Account

For starters, there’s more to a checking account than just being able to write checks. Here are a handful of other benefits to opening a checking account:

• Electronic deposits: You may be able to get your tax refund or student loan refund directly deposited into your account — instantly — instead of waiting for a check in the mail. Your employer can also deposit your pay directly into your checking account, saving you a trip to the bank.
• Debit cards: Most checking accounts come with a debit card, which is accepted like a credit card but draws from the money in your account. This is especially beneficial if you can’t qualify for an actual credit card yet, or if you’re still working on financial responsibility and are afraid you’ll charge more than you’re able to pay with a credit card. You can also use your debit card to take out cash or make deposits at your bank’s ATMs. To learn more about debit cards, see Personal Finance 101: What is a Debit Card?
• Automatic online bill pay: Setting up online auto-pay for your bills can help you avoid late fees and make paying bills easier. In some cases, you may even get a percentage off your bill or some other incentive. For example, I received a 0.25% discount on my student loan interest rate for setting up automatic payments.
• Mobile banking: Many banks have apps that let you do a lot of your banking from your phone: Pay bills, track your purchases, transfer money to or from a savings account, send or receive money from a parent or friend, or even take a picture of a check to deposit it without a trip to the bank.
• Unlimited transactions: If you just have a savings account, did you know certain kinds of withdrawals are capped at six per month? When you go over that, your bank may stick you with a fee each time — or eventually close your account. With a checking account, you won’t have to worry about hitting this limit.
• It keeps your money safe: Your checking account deposits will likely be insured by the Federal Deposit Insurance Corporation, or FDIC. The FDIC makes sure you don’t lose a penny, even if your bank suddenly closes. That’s a big advantage over stashing cash under your mattress or in your sock drawer. It’s also safer to pay bills via check or online transfers, both of which cut down on the risk of stolen cash and provide proof that your money got to its recipient.

How to Choose the Right Checking Account

Once you decide to open a checking account, where do you begin? Before you choose, here are some factors to consider:

• Linked savings account: Are you planning to keep a savings account? If so, you might want to have it at the same bank as your checking account. This can help you easily transfer money between accounts, making it easier to build up an emergency fund or even lessen the impact of overdraft fees, which we’ll discuss later.
• Fees: Checking accounts can have various fees depending on the type of account, which we’ll cover in depth below. As a budget-conscious college student, you’ll probably want an account with no monthly maintenance fees, though such accounts often come only with basic features. You may also be able to get a more fully featured account and avoid paying a monthly fee by maintaining a certain minimum balance or linking up a steady direct deposit.
• Perks: What perks are important to you in a checking account? You might want a bank that sends text alerts to your phone or allows you to pay your bills online or deposit checks through a mobile app. Some banks, such as Wells Fargo and Bank of America, have automatic savings programs that deposit a small amount in a savings account for you each time you use your debit card.
• Location: Many banks will charge you a fee for withdrawing cash from another bank’s ATM — in fact, you may even get charged twice: once by your bank and once by the bank that operates the ATM. So you’ll want to pick a bank with ATMs readily available in your area — near your home, your school, or your work. If you’re planning to make regular deposits, you may want a bank with a branch nearby, but don’t discount online-only banks. Some online banks such as Ally Bank have large ATM networks or reimburse a certain amount of ATM fees each month.

Checking Account Fees

Even if you find a checking account without a monthly maintenance fee, it doesn’t mean you won’t be hit with any fees at all. When you’re choosing your bank, find out what services are complimentary and which require a fee.

For example, you might be subjected to a fee if you have insufficient funds or need to stop payment on a check. Opting for paper statements instead of online statements can even cost you a couple dollars a month. There could also be fees for using non-bank ATMs, using overdraft protection, getting a replacement for a lost ATM card, getting a copy of checks, or getting checks in the first place.

To give you an idea of how fees can add up, here are some recent numbers on common checking fees from MoneyRates.com and MyBankTracker.com, two websites that track average bank fees around the country:

Type of Fee	Average Amount
Monthly maintenance	$13.09*
ATM fee for non-customers who use bank’s machines	$2.71*
ATM fee for bank customers who use out-of-network machines	$1.61*
Overdraft/non-sufficient funds	$32.44*
Stop payment	$32.40**
Wire transfer (outgoing/incoming)	$27.40/$15.50**
Cashier’s check	$9.10**

* Source: MoneyRates.com
**Source: MyBankTracker.com

All those numbers may seem abstract, but consider a 2015 study by Wallethub.com on how much checking accounts can really cost certain customers under typical usage. The study created profiles for five types of customers, including “young” and “cash-strapped” customers (likely the closest two profiles for a typical college student).

The main differences between the two: A young customer uses direct deposit frequently, while a cash-strapped one never does; a young customer banks online frequently while a cash-strapped one does so only occasionally; a young customer never writes paper checks while a cash-strapped one does so occasionally; and a young customer lets his or her balance fall below $0 occasionally while a cash-strapped one does so frequently.

The findings: With typical usage, a young customer could be paying as much as $504 per year to use his or her checking account, while a cash-strapped one could be paying a whopping $800. That just goes to show that it’s not only important to know about what fees your bank will charge so you can avoid them whenever possible.

What About Overdraft Protection?

When you open a checking account, you’ll probably be asked whether you want overdraft protection. This means that when you try to make a withdrawal or payment from your checking account but don’t have enough money, your bank will cover you so that the transaction won’t be denied. This can ensure your rent check doesn’t bounce when you’re a few dollars short in your account.

Nice, right? Well, kinda. There are pros and cons to overdraft protection that you’ll want to know so you can make an informed choice about opting in. The major pro, of course, is that your transaction will go through. After all, how embarrassing would it be if you finally got to take your crush from Econ out to dinner, only to be told that your debit card was declined? Similarly, if you’re in a bind or an emergency situation and lack other resources to draw from, you won’t be left hanging.

On the flip side, overdraft protection can be a very expensive convenience. As you saw in the table above, you could pay an average of more than $32 every time your overdraft protection kicks in, depending on the bank. Then you could rack up more charges if you don’t add money to your account to cover the transaction within a certain time period. If you aren’t paying close attention to your checking account balance, you may not realize you’re in the red until getting charged with hundreds of dollars in fees. That’s a pricey way to save yourself some embarrassment.

Bottom line: Make an informed choice about overdraft protection. If your bank allows you to hook up your checking account to a credit card, savings account, or other line of credit for an overdraft transfer, the bank can draw from this source to cover your overdraft. Fees aren’t quite as steep for these transfers (roughly $10 to $12 is average) so it could be a good middle ground.

Opening a Checking Account

Once you choose your bank, you’ll want to find out what they require to open an account. Here is a basic list:

• An initial deposit: For most student checking accounts, this usually ranges from $25 to $50, but double-check with your bank.
• Two forms of identification, such as a driver’s license and student ID.
• Mail with your address on it to confirm your home address.
• Basic information such as your Social Security number, mailing address, phone number, and e-mail address.
• Beneficiary: Who would receive the money in your account should you pass away?

Using Your Checking Account

Congrats: You’ve opened your account! And … now what? Here are a few ways to be a responsible checking customer.

Keep track of account activity.

First, you’ll absolutely want to check your balance daily, or at least get text alerts about your account. This is going to help you avoid overdraft or insufficient funds fees, know how much money you have, and double-check for any errors or fraudulent activity. Set up account alerts (for instance, for transactions over a certain amount) so you know as soon as possible if anything fishy is going on.

It’s also an especially good idea to keep track of your account activity on your own. Even though seeing your balance will probably be as simple as opening an app on your phone, most students don’t necessarily have a big cushion of cash. Sometimes transactions take longer than you’d expect to go through, so if you’re not keeping track, you might think you have more money in your account than you actually do.

What’s the best way to track, or balance, your checking account? You can use a spreadsheet, the register booklet that came with your checks, or a simple pencil and paper. If you want to keep everything on the phone, there are several apps that can help you out. Then, simply account for each and every transaction. Did you spend $5 on a latte? Write it down, and subtract it from your balance. Did you get paid $100 for house-sitting for a neighbor? Write it down, and add it to your balance. Do it as soon as possible after the transaction to keep your records accurate.

When you get your monthly account statement, you can then compare it to your own records to make sure nothing is amiss. (Note that your most recent transactions may not yet be on your statement.) According to Bankrate, you have 60 days to report any discrepancies or errors to your bank so they can conduct an investigation.

Know how to write a check.

You opened a checking account, and you have your first checkbook. You might not need to touch it for awhile, but one day the time will come when you’re required to write a check. How do you do it?

1. What’s the date? There’s a spot in the upper right-hand corner to write it.
2. Who are you paying? Write their name where it says, “Pay to the order of.” Be sure you have the correct name of the person or company; if you’re unsure, ask whom to make the check out to.
3. How much do you owe? In the box at the right, write how much the check is for in figures: $120.50, for instance. Then, on the line beneath the name of the person you’re paying, write out how much the check is for in words: “One hundred twenty dollars and 50/100.” (That weird little fraction represents cents.) Now draw a horizontal line through any remaining space on that line so no one is tempted to alter the amount.
4. What is it for? On the “memo” line, write what the check is for. For instance: “July rafting trip” or “custom silver necklace.” Often, this is optional, but if you’re paying a bill, be sure to write your account number for faster and more accurate processing.
5. Sign it. The line in the lower right-hand corner is for your signature; the check is no good until you’ve signed right there. Don’t sign the back — that’s where the recipient will sign.

Keep your account secure.

• Choose a secure debit PIN. Your four-digit PIN (personal identification number) will allow you to use your debit card when making a purchase or withdrawing money from an ATM. Be sure to choose a PIN others won’t be able to guess (don’t use “1234,” for instance), but one that’s easy for you to remember.
• Know your bank’s policy on debit card fraud.Typically, your debit card doesn’t offer quite as much fraud protection as a credit card. Wait more than a couple of days to report something suspicious, and you could be on the hook for up to $500 in losses. Wait more than a couple of months, and you may not get your money back at all.
• Keep and access your account information in a safe place. This goes for your debit card, checkbook, statements, and any other account info. Don’t leave it lying around your shared apartment or dorm room. If you’re studying abroad or taking a trip overseas, make a copy of the front and back of your debit card so you can make a proper report should it get lost or stolen. Also, avoid doing your online banking on a public computer, like at the library or a school computer lab. The next person may still be able to see some of your information, or data thieves may be able to siphon your information remotely without you ever knowing.
• Use two-step authentication. If your bank offers two-step or two-factor authentication online and via its mobile app, take advantage. This means you need something more than your average username and password to sign into your account. It might seem like a hassle, but this is an easy way to keep your information safer.

Five Great Student Checking Accounts

These national banks offer low- or no-fee checking accounts geared to students, but it’s worth checking to see what banks offer in your area. Some smaller banks on or near college campuses will cater to students with similar or even more enticing options.

Chase College Checking

• Fees: Chase waives the monthly service fee for up to five years while you’re in school. After graduation, you can still get that fee waived by enrolling in some kind of direct deposit or maintaining a $5,000 monthly average balance in the account.
• Requirements: You need to be a college student between 17 and 24 with a student ID; minimum $25 deposit to open the account.
• App and online features: Deposit a check directly in the app, and pay your bills online.
• Why it’s good for students: Chase boasts 15,500 ATMs nationally, so you can probably avoid those pesky ATM fees. Plus, Chase Quick Pay makes it a little easier for you to split the tab at a restaurant with friends or chip in your share of the rent.

U.S. Bank Student Checking Account

• Fees: None
• Requirements: You’ll need to be enrolled in high school, college, technical school or trade school.
• App and online features: Send money to friends and family, deposit checks remotely, use mobile bill pay, and check your balance via text message.
• Why it’s good for students: You get four free non-U.S. Bank ATM transactions per month, and your first order of checks is free.

Bank of America Core Checking for Students

• Fees: Waived for students under 23. If you’re 23 or older, you’ll pay a $12 monthly maintenance fee unless you have one qualifying direct deposit per month of at least $250 (so if you’re working and your employer offers direct deposit), maintain an average daily balance of at least $1,500, or you are a Bank of America Preferred Rewards client.
• Requirements: You’ll need to be a student under the age of 23 enrolled in high school or college.
• App and online features: You can get payment reminders and customizable alerts along with the ability to transfer funds, pay bills, and deposit checks with your smartphone.
• Why it’s good for students: For the student who wants to save, this checking account allows you to enroll in Bank of America’s “Keep the Change” savings program: Your debit-card purchases get rounded up to the nearest dollar, and the difference gets deposited into a Bank of America savings account.

Wells Fargo Everyday Checking Account

• Fees: You’ll pay a monthly service fee of $10 unless you can link your checking account to a Wells Fargo Campus ATM or Campus Debit Card. The fee will be waived if you make 10 debit-card purchases in the month, have direct deposits of at least $500, or maintain a minimum $1,500 balance. If none of that is an option, you may still qualify for a $5 reduction in the fee if you’re between 17 and 24.
• Requirements: Minimum of $50 to open the account.
• App and online features: You can get account alerts to your phone or e-mail. Manage your account in the app by checking your balance, paying bills, and transferring money.
• Why it’s good for students: Similar to Bank of America’s Keep the Change saving feature, Wells Fargo has a Save as You Go feature that allows you to contribute $1 to your linked savings account every time you make a debit-card purchase.

Fifth Third Essential Checking for Students

• Fees: None
• Requirements: You must be 16 or older and be a student.
• App and online features: Deposit checks right from your phone, and receive account alerts or balance information on your phone.
• Why it’s good for students: The bank offers five free non-Fifth Third ATM transactions each month, so you can avoid those extra charges.

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High Schoolers, Not Sure What to Be When You Grow Up? This Tool Might Help

As a high school or early college student, it’s tough to figure out what you’re going to do with the rest of your life.

Not only is it annoying — because everyone keeps asking — it’s important. College is a big investment, so you don’t want to end up with loans for a degree you never use.

Knowing what career you want to pursue can help you determine whether you need to go to college — and if you do, where you should go and what you should study.

How to Find Your Calling

If you’re stumped, you’re not alone: 24% of high school seniors have “no idea” what career they want to pursue, according to a recent CareerBuilder study.

Of those who do know, 23% said they made their choice based on “something they saw in TV or in a movie.”

Choosing a career because it looked cool in a movie? Definitely not something we’d advise.

Instead, check out a new site called Find Your Calling, just released by CareerBuilder. It’s a unique resource that combines a personality test with up-to-date career information and real-time labor market data.

We haven’t seen anything like it before, so we think all young Penny Hoarders (and their parents) should know about it.

After answering a simple six-question personality test, the platform populates with relevant jobs, which you further narrow by state and career category. What makes the site particularly useful is the fact that each job is accompanied by hard data: average salary, projected growth, required education and daily tasks.

We love that Find Your Calling presents all of this information in one clean and appealing interface. Though we’re bummed it wasn’t around when we were in high school, we hope it helps some of you (or your kids!) make smart choices about your education and career.

Your Turn: Do you know what career you want to pursue? Do you think this site will help?

Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at susanshain.com, or say hi on Twitter @susan_shain.

The post High Schoolers, Not Sure What to Be When You Grow Up? This Tool Might Help appeared first on The Penny Hoarder.

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How I’m Earning $2,000 in Credit Card Bonuses This Year

Earlier this year I filled my gas tank for $43. On a slip of paper in my wallet, I crossed off $881 and wrote $924.

When I hit $1,000, I got a $300 statement credit on my American Express business card account, and then I switched to the next card. Free money.

That wasn’t the only bonus I’ve received this year. In the first eight months of 2015, credit card companies gave me more than $1,800 in bonuses and awards.

I took in more than $1,000 last year, and my goal for 2015 is to earn $2,000 in credit card bonuses. If you have decent credit and organizational skills, you can do the same.

The Basics of Credit Card Bonuses

Credit card issuers offer bonuses to get you to apply. You can find these offers listed on websites like CreditCards.com.

To get a bonus, you typically have a spending requirement. For example, you might have to charge $1,000 on the card within three months to get a $100 bonus.

Normally, you get points in one or more of the following ways:

• A cash credit on your account
• A check in the mail
• Gift cards
• Flights
• Hotel rooms

If the bonus is in the form of cash, account credit or gift cards, the ratio is usually 100 points per dollar (5,000 points gets you a $50 statement credit or gift card, for example).

Sometimes you get better payouts for specific redemption options, especially with travel credit cards. For hotel rooms, you typically “pay” different amounts of points according to the category of hotel.

Of course, you can lose everything you gain if you end up buying more stuff than normal. So, follow this rule:

Meet the spending requirements by using your cards only for purchases you normally make, and pay the cards off every month.

Start With the Best Bonuses

Find the best credit card signup bonuses for you.

To claim a bonus, you have to meet the spending requirements in the time allowed.

There are a few tricks for doing that, which we’ll get to, but don’t gamble too much. If you have two months to spend $4,000 and aren’t sure you can put that much on the card, don’t apply for it. Find cards with lower spending requirements and more time to meet them.

Look at the bonus/spending requirement ratio to choose cards and maximize your haul, since you can only spend so much on credit cards in a year. For example:

• A $150 bonus for spending $1,000 is a 15% ratio
• A $100 bonus for spending $500 is a 20% ratio

The second example is the one to start with (and it’s often offered by Chase Freedom). After you get that bonus, if the other is still available, you can apply.

Or look for another $100-for-$500 deal, so you make $200 total for putting $1,000 of your normal purchases on these cards, instead of only $150, as in the first example. Look for cards with the best bonus/spending requirement ratio.

The exception: Credit card companies may reject your application if you have recently opened too many accounts (see the warnings section below). In that case, you’ll want to go for the largest bonuses in order to get what you can before you max out the number of cards for which you can apply.

Track Your Spending Closely

As soon as you meet the spending requirement on a card, you should switch to a new one. To do this, you’ll need to track your spending carefully.

I keep a running total on a slip of paper for each card (just add the expenditure to the total). If you jot down the amounts of purchases, planning to add them up later, you might discover you went $500 over the requirement, wasting good spending you could have used for more bonuses.

But go a little over on each card, just to be safe. You might return something you purchase, which could knock you below the requirement if you barely met it.

Track Your Cards and Bonuses

To get the most perks, you have to switch from card to card, collecting a bonus on each. Perfect timing would be getting a new credit card in the mail the day you meet the spending requirement on the card you’re currently using. It won’t work that well, but aim for good timing.

You also have to keep track of which bonuses you’ve received. Some come automatically, while you have to actually claim others. Note the following:

• Date you applied for each card
• Date you were approved (that’s when the clock starts on the spending requirement)
• The spending requirement
• The deadline for the spending requirement
• Any other requirements (read the fine print)
• Your login information for accessing your account online

Set your spending requirement deadline two weeks ahead of the actual date, just to be safe. Purchases may count only when they post to your account, which can be a few days after you make them.

Do it right, and tracking takes very little time.

What Do You Really Get?

Here’s how I figure the dollar value of the bonuses I get.

Check in the Mail

I consider this the same as getting cash.

Statement Credit

You normally just spend a credit card statement on your card. That’s the equivalent of cash.

But if it can only be applied toward certain purchases (travel cards sometimes only allow credit toward flights on certain airlines, for example), value it at what you would have spent otherwise (see my hotel example below).

Gift Cards

A card for a place you normally shop at is equal to cash. For example, I received two $100 Walmart gift cards recently, and we buy groceries there every week.

On the other hand, my $25 movie theater card had a value of $15, because without it we would have gone to a cheaper theater.

Hotel Rooms

Tally these according to what you would pay otherwise. Our recent free room at the Andaz in Savannah, Georgia (using Hyatt card points) was normally $239, but we would never normally spend that much. We would have booked a room elsewhere for $100, so that’s the value I used.

Account for credit card fees, too. I don’t like to pay fees, but it’s worth it at times. For example, my Hyatt card has a $75 annual fee, but we get a free night every year plus more for the points accumulated.

Of course, I prefer cash or direct equivalents, which add up to $1,276 of the $1,466 I’ve received so far this year. That includes cash-back awards in addition to signup bonuses.

Tricks and Tips for Maximizing Credit Card Bonuses

The basic routine for getting bonuses is to apply for the best cards and switch them out as you meet the requirements. But here are some additional tips and tricks to add to your repertoire, so you can make more money.

1. Ask for a Check

Many credit card companies will send a check when you have a credit balance on your account. When you get that bonus as a credit, don’t spend it — you need it to go toward another bonus. Instead, call and ask for a check.

2. Make the Right Comparisons

Look at all your options when redeeming your bonus points.

Getting a $250 credit toward a $500 flight might seem like a better deal than taking a $200 check, but you have to look your other options. If you can book a flight to the same place for $350, you’re better off taking the cash and going with the budget airline.

3. Time Your Bonus Expenditures

Make spending count toward new bonuses by waiting until the right time to spend bonuses you’ve already earned.

When you’ve completed the spending requirement for a card and you can’t find another good offer for a month, that’s the time to use those gift cards or redeem that free hotel night. If your bonuses have expiration dates, note them on a calendar.

5. How to Meet Big Spending Requirements

Apply for offers with large spending requirements when large expenditures are due.

The Citi Thank You Premier Card offered me 50,000 bonus points, redeemable for $500 cash or $650 toward travel expenses, but with a $3,000-in-three-months spending requirement. So I waited and applied when my home insurance was due. I put the $896 payment on the card and met almost a third of the requirement the first week.

6. What to Do When You’re Short

What if you have a $1,000 spending requirement to get your $200 bonus and you’re $150 short with the deadline coming soon?

Make normal expenditures ahead of time. In other words, stock up on toilet paper and canned food, or pay a few bills early.

7. Here’s One for the Expert Card Handlers

If you can manage two bonus cards at once, alternate them for appropriate purchases.

One of my American Express cards pays 3% cash back for gasoline purchases, and one of my Chase cards offers 5% for meals at restaurants (during certain months). When using them, I alternated to maximize the total received from signup and cash-back bonuses.

8. This is Tax-Free Income

If you get a bonus for opening a bank account, you have to pay income tax on that money. On the other hand, credit card bonuses are considered a discount by the IRS, so this is tax-free income.

That means my $2,000 this year (if I make my goal) is worth the equivalent of almost $3,000 in earned income.

And Now, a Couple of Warnings

After applying for a dozen credit cards within a few months, I finally had one application rejected because I’d opened too many new accounts.

My credit score actually went up, probably because my credit utilization ratio went down. But I suspect that’s temporary and I’ll take a hit of 10 or 20 points once the ratings are updated.

It’s no big deal for me, since I have no plans to get a mortgage or ever borrow for anything, but be aware you could do some minor damage to your score from opening so many accounts.

Also, closing credit card accounts can hurt your credit score. Again, I don’t worry about it; it will bounce back in time. If there’s an annual fee I’ll close an account after getting the bonus. But be careful if your score is anything less than excellent to begin with and you might be borrowing for a home soon.

It’s worth noting that closing older accounts and increasing your utilization ratio from closing accounts is what hurts credit scores the most. So, if you close only newer accounts and you use very little of your total available credit lines at any one time, you may not see much of a drop.

Your Turn: What’s the most you’ve made in credit card bonuses? What tricks have you used to get more money?

Steve Gillman is the author of “101 Weird Ways to Make Money” and creator of EveryWayToMakeMoney.com. He’s been a repo-man, walking stick carver, search engine evaluator, house flipper, tram driver, process server, mock juror, and roulette croupier, but of more than 100 ways he has made money, writing is his favorite (so far).

The post How I’m Earning $2,000 in Credit Card Bonuses This Year appeared first on The Penny Hoarder.

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5 Reasons to Switch Medicare Part D Plans

How to decide when to move on to a new prescription drug plan.

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6 Careers with Great Benefits

A good salary and benefits can be some of the most attractive things about your job. Learn about six careers with great benefits at HowStuffWorks.

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6 Careers with Great Benefits

A good salary and benefits can be some of the most attractive things about your job. Learn about six careers with great benefits at HowStuffWorks.

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5 Techniques to Get 5 Stars: How to Get More (and Better) Online Reviews

Everywhere you go, you see reviews.

Whether it’s a physical or digital product, if it’s worth talking about (in good or bad ways), it has reviews.

Some of this feedback is simply comments on blogs and forums.

But mostly, reviews exist on large e-commerce sites where companies sell their products.

The most important thing about reviews is that people care about them.

About 30% of Internet users check out reviews on Amazon before buying a product. And that’s just Amazon.

Another 13% head to Google.

Before, people would ask their friends about products. But now, they rely on online reviews.

People trust reviews to inform them about their decisions, and reviews play a huge role in people’s purchasing decisions. 

Although there’s no way to definitively say that reviews are good for business, just about every study or anecdotal case suggests that they are.

For example, Capterra analyzed the effect of adding reviews for software products and found that conversion rates increased significantly as more reviews were added.

Furthermore, a more general analysis found that conversion rate could more than double if you had a large enough number of reviews.

Although there is a mini-plateau after 20 reviews, conversion rate begins to increase again soon after.

You don’t have to be a big e-commerce site to add reviews to your personal website store.

Adding reviews increased Figleaves.com’s conversion rates by 35% and eSpares.co.uk’s by 14.2%.

These are massive increases in conversion rates that can result in tens or hundreds of thousands of dollars per year.

Potential buyers trust reviews for a few reasons:

• They represent a real use situation
• They are less likely to be biased (than a sales page)
• They give visitors confidence to buy, proving there won’t be any issues with the purchase

Getting reviews is hard: If you’ve been selling online, you’ve probably noticed that it is difficult to get customers to leave reviews.

People want their products, but they don’t really want to do any extra work. Writing a good review can take 5 to 15 minutes without providing much of a benefit to the reviewer.

People typically leave a review for one of three reasons:

• They hate the product
• They love the product
• They’re somewhere in-between but would like to clear up any confusion around the product for other potential buyers (essentially just doing something nice)

The first two reasons are pretty self-explanatory.

Obviously, you don’t want people leaving reviews if they hate the product. That’s how you get negative reviews and one-star reviews that actually decrease your conversion rates.

So, how do you prevent it? Simple: have a great product along with great customer service.

If you create a product that everyone loves, you’ll get tons of reviews.

In reality, most products have customers that fall into all three camps.

What you need to do is focus on the people who already love your product and the ones that like it. A solid three- or four-star review can still help your conversion rate.

And that’s what the rest of this post is all about.

I’ll go over the best ways you can maximize the number of reviews you get from your customers.

You might not like this, but it’s what you have to do…

Most business owners love to create products.

But only some business owners love to sell those products.

Selling often feels like you’re doing something wrong and imposing on the people you genuinely care about.

Asking for anything can be difficult.

But it needs to be done.

You need to start by realizing that selling doesn’t have to be underhanded. If you create a truly valuable product, sales is simply letting people know about it.

If your product is great, people will buy your product and thank you for the opportunity.

After you make the sale, however, you need to ask customers to review it.

If you don’t ask, most will never even think of doing it, even if they don’t mind.

Although it might seem like you’re imposing on them—asking for something without giving something in return—you aren’t.

Most happy customers are glad to help you spread the word of your product so that other people will also give it a shot.

So, stop thinking that you’re taking advantage of your customers and realize that you’re helping each other.

Ideally, you want to ask for reviews as soon as you can after the purchase is made and your buyer had the time to receive and test the product.

If you ask too early, customers can’t review the product because they haven’t had the chance to use it.

If you ask too late, they’ll have forgotten about it and are less likely to review it (although late is better than early).

Amazon typically sends an email reminder asking you to review a recent purchase a few days after you’ve received it:

Customers don’t hate giving reviews—if you ask right…

It’s important to carefully approach the subject of reviews with customers.

First, you want them to receive the product and be happy with it.

The more satisfied they are, the more likely they are to not only leave a review but leave a positive one.

Before asking for a review, I recommend contacting customers and asking them if they had any problems with their order.

If they have had problems, they’ll let you know, and you’ll have the chance to fix them.

If they haven’t had any problems, some will let you know, but the others just won’t reply. It’s safe to ask any of these customers for reviews.

Finally, the way in which you ask for reviews is important.

Being persuasive with your request can double or triple the number of reviews you end up getting.

Tip #1 – Be appreciative: To be frank, reviewers don’t really get much out of the process. It’s just a nice thing they can do for other people reading reviews in the future.

However, many reviewers will do reviews if they know that they are important to you.

After all, you’ve just created a great product for them.

Even though they have paid for it already, many customers will feel that they should have paid more. This leaves them feeling indebted to you.

Many customers will leave a review if you tell them how important they are to you because then they can consider the two of you “even.”

For example, RealSelf is an online medical professional directory. It publishes reviews on all types of cosmetic doctors so that you can find one you can trust.

After you have found a doctor through the service, RealSelf asks you to contribute a review to the site.

There are two parts of the email in particular that make it work so well:

1. “…would love for you to share your experience…” - They’re not just asking you to leave a review for the fun of it. They’re making it clear that they appreciate it and value it.
2. “…will also help others make informed decisions” - Since the customer was just in the tough situation of trying to make a good decision, they are likely to be empathetic to other people in the same situation. Some customers will leave a review just to help others.

Tip #2 – Make it simple: So we’ve established that most reviewers leave reviews because it’s a nice thing to do.

However, there is a limit to how much most people are willing to give to be nice.

If you make customers jump through hoops to leave a review, most aren’t going to bother.

The solution is easy: make leaving a review as easy as possible.

First, if you’re asking for a review on any third-party sites, always link directly to the review forms on the specific sites:

Alternatively, if you’re asking customers to leave a review on your site, let them start the process by clicking on a star rating within an email. All the biggest sites do this for a reason. It works.

The other benefit is that it makes it really clear that you’re looking for the customer to leave a review (they know what stars represent).

Tip #3 – Do NOT offer an incentive: Want to get every customer to leave you a review? Just offer them $100 if they do.

Incentivizing reviews is a gray area.

It has obvious moral issues. In some ways, you’re essentially bribing your customer for a good review.

Even if you don’t intend your incentive to be a bribe, most people feel compelled to provide good reviews if they’re being compensated for it (without any other potential buyers being aware of it).

A potential problem that might be even bigger is that you could be fined huge amounts if caught by the FTC (if you do any business in the United States).

Not all countries have these rules, so it’s up to you to check if there’s an equivalent organization in your country and determine if you’re morally okay with incentivizing.

If you are going to offer an incentive, you should ask your reviewers to disclose that fact in their reviews. If the review discloses the incentive, not only is there no moral argument, but it’s also not violating any laws.

Tip #4 – Be clear about what you’re looking for: If you just have one textbox that says “your review,” customers could write about anything, even irrelevant things.

However, if you break down the review into descriptive fields, your reviewers will have a much better idea of what to include:

One way to improve the above form would be to add a description into, above, or beneath the “review” box.

You can prompt the customer to talk about certain aspects of the product that you believe influence buying decisions (shipping, packaging quality, durability, etc.).

Speaking of great reviews…here’s what’s in them

You can dictate the contents of a review by prompting your customers to think about certain topics.

This is important because most people don’t know what a good review consists of. They’ll often leave reviews like “great product” even though that’s not really very useful.

Instead, you want to prompt them with any (or all) of the following:

• including their background situation
• any special features of the product or buying process
• their overall impression
• would they buy again?

When you send your review request, just tell your customers that they can include any information they’d like. However, they should consider things like…(pick from the above list).

Part #1 – A quick background: Not everyone buys a product for the same reason or knows as much about a specific type of product as others.

The best reviews include a quick statement about why a customer bought a product. If another potential buyer is in a similar situation, they will automatically become more interested (it resonates with them).

Additionally, any mention of expertise also makes the review more credible (e.g., “I have purchased x types of product”).

Here’s an example:

Part #2 (optional) – A brief description of product and buying process: Unless you’re selling your products through a well-known fulfillment service like Amazon, shipping speed and safety are still big concerns for online shoppers.

They affect almost every purchase:

You should obviously make your shipping information very clear on your sales pages.

But people also want to know how fast and secure your shipping is in real life, not just in theory.

If a potential buyer sees multiple reviews praising your shipping process, they’ll feel assured.

Part #3 – The overall result: The most important part of any purchase is how good the product is. That’s going to be the focal point of any review.

If you’ve done your job right on the product creation end, customers will have great things to say about your product:

However, you can still guide what they mention.

You could include a question in your email or on your review form like: “How did you like X feature of product Y?”

They will be more likely to take some time to think about that specific feature.

Part #4 – Would you buy again? Customers can often find at least a few good things to say about a product. Nice people leave nice reviews—it’s that simple.

However, the ultimate test of a great product is if it earns the loyalty of a customer.

When customers say that they will definitely buy from you again in the future, anyone reading the review will know that the reviewer is serious when they praise the product:

Get automatic reviews with a system

Getting reviews shouldn’t be something that you try to do periodically. It should be something that you do with every single customer.

To maximize the number of positive reviews you get, you need a foolproof system.

We already looked at Amazon’s system:

1. You buy a product
2. You get the product
3. You get a request to leave a review on Amazon a few days after

They’ve done their own internal testing and determined that this particular timing worked best for the majority of their customers.

However, your customers may be different, so always test.

Timing is important: Why are customers different when it comes to this? Most of it comes down to the type of customer you have and the product.

First, certain people expect online shipping to be faster. They want their product right away so they can start using it. This is typically true if you have a young demographic.

Secondly, some products take longer than others to test thoroughly enough to leave a good review. A frying pan only takes a few minutes to test, but a large book can take weeks to read.

If your product takes a longer time to test properly, give your customers a bit more time.

How to get consistent results: The only way to ensure that your customer gets your review request “X days” after they’ve purchased something is with an autoresponder.

After they buy something, add them to a new list just for customers:

Then, set up your autoresponder to send out an email asking if everything went well.

Finally, send your review request sometime after that first message.

I recommend trying different time delays to discover which one produces the most reviews.

The best way to get great reviews if you’re starting from scratch

Every business faces its own unique challenges when it comes to getting online reviews.

The hardest stage is right at the beginning when you have no reviews.

When you have no reviews (or very few), potential buyers are hesitant to be the first buyers. They want to see that other people have bought your product and liked it.

To make things worse, people often don’t want to leave the first review. Unless they are an expert on your product, they don’t want to leave an opinion and look stupid if they’re wrong.

Instead, they’d rather look at other reviews first, get a general consensus, and then leave a review if their own opinion matches everyone else’s. This is also why it’s important to get off to a good start with a few glowing reviews.

Do not get fake reviews: Incentivizing reviews is a gray area, but buying fake reviews is clearly over the line.

If you go on Fiverr or Google phrases like “buy 5 star review”, you’ll find a ton of people willing to write you a five-star review without even seeing your product.

Even without considering the ethics of doing this, it’s obvious that these reviews won’t be very useful.

Sure, you’ll get five-star reviews, but they’ll include no actual information that your potential buyers will care about.

In addition, most fake reviews are extremely easy to spot. And if a potential buyer sees multiple fake reviews, their warning bells will go off and cause them to buy someone else’s product instead.

So although you could buy reviews, you are better off focusing on earning them.

To do so, follow these steps.

Step #1 – Pick a site to focus on: There are tons of third-party sites that aggregate reviews on products or businesses.

For example, both Google and Yelp focus on local businesses, while Amazon obviously focuses on physical products and e-books.

To start with, pick just one review site to focus on. You can always expand to other sites once you’ve gotten some traction.

Step #2 – Offer a free sample or product: As I said, you need to earn your reviews, which means getting them from actual customers.

This is where it’s a good idea to offer a discount, sample, or even free product in exchange for a review.

Wait, what? “Didn’t you just say NOT to offer incentives?”

If you remembered that, well done. That means you’re paying attention.

Incentivizing reviews is murky territory, but only if you don’t disclose it. If you do, they are perfectly compliant with the law and just about anyone’s ethical code.

And when you need those first few reviews to get the ball rolling, a few reviews that aren’t perfect are still extremely valuable.

Additionally, just because your customer needs to disclose that you offered them something doesn’t mean the review will suck.

Here’s an example of what one might look like:

As one of the first customers to buy (product name), I was lucky enough to be offered a free sample to try.

I received the product after 3 days in perfect condition. Since then, it’s worked exactly as expected.

In particular, the (feature) is better than every other (type of product) I’ve tried.

I’ll definitely be buying more in the future.

Obviously it’s not a perfect review (since I’m dealing with a non-existent product), but if you could get started with 5-10 reviews like that, you’d be set.

The disclosure reads naturally and doesn’t really take away from the rest of the review as long as the reviewer is being honest.

Step #3 – Provide instructions: Figuring out how to leave a review is easy for you and me. However, for the non-tech-savvy person, leaving a review might be a head-scratcher.

To make sure that customers have no problems leaving a review, provide detailed instructions on how to leave a review:

Even if they shop on a well-known platform like Amazon, most people have never left a review before. You need to walk them through it.

Step #4 – Make sure their experience is amazing: This is something we’ve already noted, but I want to re-iterate it.

To earn a great review, you need to provide a great experience.

The buying experience is composed of many different parts:

• the branding
• the packaging
• the shipping process
• the product itself
• follow-up/customer service

Too many businesses make a great product but ignore the rest of the buying experience.

Then, they get three-star reviews saying the product was fine, but the shipping sucked, or they couldn’t get fast replies from the company when they needed help.

It’s not hard to make sure these other parts of the buying experience are great, but you need to spend some time and effort making sure that they are.

If you do that, the quality of the reviews will take care of itself.

One other great source of reviewers you should use

Let’s say you are starting from absolute scratch. I’m talking zero previous customers.

It’s hard to get customers to leave reviews to encourage more people to buy your product when you have no customers in the first place.

In this case, you can go for paid advertising to get your first customers. This is great if you have a budget and a little PPC expertise. However, it can get costly since not all customers will leave reviews.

Otherwise, if you have a tight budget, you’ll probably be going the content marketing route, which can take months to draw any customers.

However, there is one more opportunity that you can take advantage of to not only drive sales but also reviews.

Here’s the basic procedure.

Step #1 – Look for reviews of competitors: For this series of examples, let’s pretend that I just created the best keyword research tool ever.

Since there aren’t stores where you can sell this particular type of tool, I need to get some reviews to put on my sales page.

To start, I need to assemble a list of all my established customers.

This is pretty easy. Just Google “best (type of product)”.

Ideally, you’ll find a big expert roundup that has all your competitors in one spot. Alternatively, you’ll just have to go through the first few pages of search results and record down competing products.

In my case, I was able to easily find the 10 most popular keyword research tools right away (lucky me):

For each of these tools, I’m going to find people who have reviewed them and then approach them to get them to review my product.

To find reviews, just Google “(product name) + review”:

Then, make a list of all the reviews you can find (which can be up to 100 for each product).

Step #2 – Contact the bloggers and make a proposal: Now that you have a large list of reviews, you need to get in touch with the reviewer.

Important note: Bloggers get pitches all the time through their “contact” forms, and most of them are terrible and just get ignored. To stand out, the best strategy is to join the blogger’s email list.

When you join an email list, you obviously get emails from that blogger, which contain their email address.

Then, you can create a personalized message that will definitely get to their inbox.

If you can’t find an opt-in form on the review page itself, go to the homepage:

You’ll usually be able to find an obvious opt-in either front and center on the homepage or near the top of the sidebar:

When you get an email from them, you can send one back, requesting a review of your product.

A template like this will work:

Hi (blogger name),

I came across your review for (competing product) today and was impressed with how detailed you were.

I actually just released my own keyword research tool, called (product name). I’m not sure if you’ve heard about it yet.

Considering how great your previous reviews have been, I wanted to see if you’d be up for giving my product a try. (I’ll provide you with a free license, of course).

The reason why I believe (my product name) stands out from all the others on the market is because of feature X: (describe feature).

If you’re interested, just let me know.

Thanks for your time,

(Your name)

Again, you are incentivizing the blogger to create a review, but as long as they include a disclosure somewhere on the page, there’s no issue. Most blog readers are used to such disclosures by now and don’t consider them in their decision-making.

Once you get a review, you can then publish the appropriate parts of the review on your website and attribute them to the blogger (let them know about it).

The results of different reviews: If you get a review done by a popular blogger, you can drive some serious sales.

That being said, popular bloggers are the toughest ones to get reviews from since they get pitched so frequently.

I’m not saying don’t go after them, but be aware that you will face a lot of rejection.

Lesser known bloggers, on the other hand, will be more receptive to your approaches. If all you want are reviews (and you’re not too worried about sales), target these bloggers first.

Conclusion

If you sell anything online, remember that reviews are one of the biggest factors that affect your sales, so don’t ignore them.

First, come up with a plan of attack to determine what type of reviews you need.

Next, optimize your sales funnel to maximize the number of customers who leave you reviews—and not just any reviews, great ones.

Finally, if you’re starting from scratch, use one of the methods I’ve laid out to start generating reviews for your new product.

Have any other ideas or questions about reviews? I’d be happy to discuss them in the comments below.

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3 Ways to Thrive in a Co-Working Space

How to find a shared workspace, be productive and make friends.

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The 5 Biggest Time-Sucks at Work

Get more done by avoiding these common time-wasters.

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Think Small for Big Returns From the Stock Market

Small businesses might not seem safe, but opportunities abound that the big game hunters overlook.

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Cars We Remember: Readers recall Crosley as American-built small car

Q: Hi, Greg. I want to let you know I was born in 1935 and was a “motorhead” by the age of 15. Your column on the first small and compact American cars brings back my memories of the two-passenger Crosley, which was very small and came with a two-cylinder engine. I owned a 1951 Crosley Station Wagon that by then had grown up a little and came with a four-cylinder engine with room for four passengers. I drove my Crosley for a year and remember this car was [...]

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Silvio Calabi: Honda repackages its Odyssey for value

Honda Odyssey owners — the two we encountered recently, anyway — seem to fizz with enthusiasm for their vehicles. Sports-car people do this, too, if not to the same degree. It’s expected of them, while Odyssey drivers may feel they have to overcompensate slightly. As in, She may not be Miss Universe, but boy can she cook!Forgive the gender-ism and stereotyping, but the point is that owners quickly realize that the Odyssey is more than just a breadbox family [...]

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Buying a House? The USDA Might Give You a Loan, Even If You’re Not a Farmer

Buying a house can be daunting.

Socking away enough cash for a down payment, choosing from a wealth of lenders and learning about the real cost of home ownership could send anyone’s head spinning — and that’s on top of finding your dream home!

But if you’re willing to let go of big-city living, consider a lender you might find surprising: the United States Department of Agriculture.

Where Can You Live?

Unless you plan on keeping chickens and cows, or living in the boondocks, you might think a loan from the Department of Agriculture won’t work for you.

As it turns out, the “rural” requirement isn’t as limiting as you might think. Check out the eligibility map at USDA’s website — lots of qualified territory is downright suburban, especially in the Northeast.

How Does It Work?

Aimed toward low- to middle-income households, USDA loans are a great option for those with an imperfect (or nonexistent) credit history. They require a low (or no) down payment, and you don’t even need to be a first-time home buyer!

The USDA began the loan program in 1991 to stimulate rural home ownership, but since “rural” means very different things for Massachusetts versus Montana, you might be able to use the loans toward a home in your area.

Plus, the loans have low interest rates and payback periods of up to 38 years. Curious yet?

Are You Qualified to Receive a USDA Loan?

There are two types of USDA loans — Direct and Guaranteed — with varying qualifications and restrictions, but if you earn lower-than-average income for your area, you probably qualify.

Holly at The Simple Dollar does a good job breaking down the differences between the two. Here’s a quick summary:

Direct loans are just that — loans directly from the USDA, intended for lower-income home buyers making up to 80% of the median income in their area.

The qualifications are a little more stringent on this type of loan. For instance, you must be without decent, safe and sanitary housing.

Guaranteed loans are procured through an approved third-party vendor and backed by the USDA, and are therefore more flexible.

You might qualify even if you make up to 115% of the median income in your area, and you’re allowed to use the funds for a larger variety of restoration and upgrades.

Even if you’re not sure you’re qualified, it could be worthwhile to check. The USDA might make an exception for you or present other options for assistance.

How to Apply

Head on over to the USDA’s website and locate a service center in your area. Once you find your contact, pick up the phone or shoot an email to being your homeownership journey.

Your Turn: Would you give up the urban lifestyle to score a loan for a more rural home?

Jamie Cattanach (@jamiecattanach) is junior writer at The Penny Hoarder and a native Floridian. She’s passionate about learning, literature, chocolate and finding ways to live the good life as cost-effectively as possible.

The post Buying a House? The USDA Might Give You a Loan, Even If You’re Not a Farmer appeared first on The Penny Hoarder.

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Questions About Ally Bank, Savings Rates, Old Laptops, Tidying Up and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Defining frugal goals and projects
2. What is a “savings rate”?
3. Enjoying life without going out
4. Tiered accounts at Ally
5. Personal finance acceleration
6. Repackaging generics at home
7. Life-Changing Magic of Tidying Up
8. Uses for old laptops
9. 4% withdrawal rate question
10. Everyday carry and identity theft
11. Kitchen needs in the city
12. Collectibles and getting ripped off

Many readers have asked for updates on the health of our daughter. She’s recovering well from her ordeal. As you read this, she should be returning to school with some limitations on her activity and might possibly be doing only a half day today depending on her energy levels. The school has been great to work with on this matter, as have her doctors.

Honestly, she’s doing about as well as we could have hoped at this point. I was pretty certain early last week that there would be little chance of her returning to school already, but she has just done tremendously well the last few days and we think she’s ready for it.

Thank you so much to all of the readers who contacted me in various ways. It means a lot.

Q1: Defining frugal goals and projects

In March while doing my taxes I came to the realization that I needed to fix some things financially in my life. I had little savings and when I came up with some taxes owed I did not have the means to pay them. I had zero progress toward retirement or any other goal I had for the future.

Six months in and things are going well. I have a savings plan in place for retirement hopefully early and for replacing my car. I have eliminated about half of my credit card debt.

I am a very planning and project and goal oriented person and those things fit well with that. What is harder is finding projects that center around cutting my spending. It seems to me that frugality is mostly “tactics” in that it is how you make it possible to save more and move toward your other goals.
– Adam

For the most part, you’re correct. Frugality, at least in terms of the money it saves you, is often “tactical,” meaning that it is a very immediate move you make that will contribute to your bigger plans, like saving for retirement or paying off your debts. Choosing to not go out for dinner and instead make something at home is a tactical choice as part of the overall strategy of paying off your credit cards.

However, there are most certainly larger projects and goals that one can set that are purely frugal. I often have frugality-related projects and goals in the works. Right now, for example, I’m working on a project to fill up all of our Gladware containers with frozen make-ahead family meals and individual meals. That’s a big project, one that will easily take a couple of weekend days to pull off and a few weeknights of planning, too.

Another example of a project is the roughly annual purging of my closet. I often pick up things on sale or at Goodwill that I think I can easily flip for a profit and I stick those in the closet. Every so often, I go through that closet, pull out a ton of items that should be sold off, and then conduct those sales. To me, that’s frugal – I’m maximizing the value that I get from various sales.

There are many things like this that you can do. Go through all of your clothing, get rid of what’s worn, and also get rid of stuff you’ll never wear. Clean out your pantry and reorganize it to be as convenient as possible for food preparation at home. Learn how to prepare your, say, ten favorite dishes at home, and learn how to do it so well that it seems silly to go out to eat in comparison.

Q2: What is a “savings rate”?

What do you mean when you talk about saving 10% of your income? Before or after taxes? Do you include things like investment gains in that number?
– Tommy

Personally, when I talk about my savings rate, I am talking about the percentage of money that I put into savings and investments as compared to my gross income as reported on my taxes before any deductions.

So, let’s say, for example, that Sarah and I made $60,000 per year combined gross from our work. (After taxes, that might be something like $48,000.) If we contributed $6,000 per year to our investments and savings, I would simply divide $6,000 by $60,000 to get our savings rate – 10%.

Now, let’s say that we earned $3,000 in dividends and interest from our investments. That means our true gross income was actually $63,000. Of course, we just chose to roll those dividends and interest over into the accounts they were in, so we actually saved $9,000 this year – our $6,000 in cash contributions plus our $3,000 in rolled-over interest and dividends. Our savings rate then would be $9,000 divided by $63,000, which gives us a 14.2% savings rate.

I do not count any changes in balance within tax-advantaged retirement accounts or educational accounts when looking at these things, and the same is true for things like 401(k) matching from an employer. Once our money is in a Roth IRA or a 401(k) or a 529, I don’t consider any growth in there to be part of our savings rate. My savings rate consists of the portion of my taxable income that I choose to save or invest, and Roth or 401(k) or 529 earnings are not taxable income as long as it’s in that account.

Q3: Enjoying life without going out

When I look at the fun things I do with my wife they’re all straight off of your list of things that are giant money wasters. We go out to eat and enjoy delicious varied foods. We go to bars and have a few drinks and actually have fun. There isn’t much else to do in this relatively small college town. I guess we could sit at home and be bored but what is the point of life if you’re just sitting around waiting to die?
– Markus

For starters, I don’t actually find either of the things you mention to be particularly enjoyable. I vastly prefer preparing my own meals at home rather than going out to restaurants because I have far more control over what I’m making, from the ingredients to the flavor. I find it deeply engaging and enjoyable and satisfying to make meals at home. I also don’t enjoy the bar scene unless I’m drinking a craft beer with some friends, in which case I’d still rather be at my home or their home because it’s cheaper, not nearly as noisy, and there’s space available to do other things like play a game.

For another, I don’t know what “bored” is. I haven’t been bored since I was a teenager. Right now, I feel like there are more interesting things that I want to do than I will possibly have time for over the rest of my natural life. There are books to read, trails and wilderness to explore, friends to make, things to learn about, games to play, projects to tackle… my list of things I’d like to do would fill up a book. I haven’t spent a moment of my life “sitting around waiting to die,” and I don’t plan to.

I can’t make you want to spend your free time on things besides going out to eat and going to bars. That’s your own choice. But to say that the only other option out there is to “sit at home and be bored” while “waiting to die” is ludicrous and childish. Just because you chose to pass on the tens of thousands of other things you could be doing with your time without spending much money (or any money) is your choice.

Q4: Tiered accounts at Ally

I got an email notice from my bank (Ally) that talks about moving to tiered accounts. I use Ally for savings and a local bank for checking and earn 1% on my balance there which is way better than my local bank. This tiered account thing has me worried as it sounds like it’s just an excuse to cut interest rates and make more money for them and not for me. Thoughts?
– James

I’m pretty sure James is talking about this announcement from Ally Bank where they discuss moving to tiered savings accounts. A key quote:

“At Ally Bank, we’re committed to banking in your best interest, including offering consistently competitive rates. As part of that commitment, we’re introducing the following balance tiers on November 7, 2015.

Our new balance tiers reinforce our commitment to adding value to customers’ online banking experience and enhance savings. For dedicated savers, balance tiers may help you earn more as your balance grows.

What are balance tiers, and what does this change mean? A tiered rate account is an account that may provide a different interest rate based on the balance of an account. Ally will offer three tiers:

account balances less than $5,000
balances from $5,000 – $24,999
balances over $25,000

Our rates are determined by several factors, including conditions in the marketplace and the competitive environment. If rates eventually rise, balance tiers will provide Ally Bank with the flexibility to potentially offer customers a different rate based on account balance.”

If this change is in any way comparable to the tiers offered by other banks, what it means is that the interest rate you have on your account is now tied to the balance you carry in that account. Typically, that means that accounts with a higher balance will earn a higher interst rate – I’ve never seen it work differently than that.

Since they don’t provide any specific information in this notice, my guess would be that the lowest tier – balances below $5,000 – will see a drop from the current rate offered on Ally savings accounts (which seems to be 1.00% at the moment). The middle tier and higher tier remain to be seen, but my guess is that the middle tier will likely be fairly close to the current rate and the top tier will either match the current rate or be a bit higher.

So, is Ally still a good online bank? I think it won’t make much difference to people with a balance over $5,000. For those under $5,000, I expect Ally won’t be as good as it once was, at least in terms of a competitive interest rate.

However, I generally find that the most valuable thing that a bank provides is customer service, and Ally has a pretty good track record in that department. I’ve had some miserable experiences with banks in the past, so I am happy to forego a little interest to have a bank that has great customer service.

If you have a low balance, you may want to start shopping around and watch what the specific rates are when they are announced. If you have a higher balance, this probably won’t mean much of anything for you.

Q5: Personal finance acceleration

I would encourage you to tell all of your readers about how one’s finances start to accelerate as you start turning things around. Your net worth goes up so slowly at first abut as time goes on it goes up faster and faster and faster. For me that’s really motivating seeing it go up faster now and knowing that it will keep speeding up as I stick with the plan!
– Shawn

This is something that often comes as a surprise as people are turning their finances around. It all accelerates! At the start, you might only see your net worth improve by $100 a month or so, but it won’t be long before it’s jumping upwards by thousands a month even if you don’t add to your income.

How? Every time you pay down a debt, you’re being charged less interest in future months. That reduction in interest basically means an increase in your net worth because you’re sending less to the bank in the form of interest (and theoretically more as a payment on your actual debt principal).

It’s also true with investments. The bigger your balance is, the more money you gain when there’s a 1% increase in the value of that investment. Also, you gain more when there are dividends if you own more of it. Let’s say you buy one share a month, for example. After three months, three shares will produce dividends; after six months, six shares will, meaning you’ve doubled the money you’re earning in the form of dividends.

It all starts to accelerate. Even if you don’t change a thing about your earnings or about how much you’re spending, your net worth will start going up at a faster and faster rate the longer you stick with it. It’s just barely noticeable at first, but it slowly gets faster and faster and faster. It’s invigorating!

Q6: Repackaging generics at home

When I was a little girl my mother used to buy a lot of store brand products and we used them at home without any problem. Recently, in order to save a little money and get rid of our student loans a little quicker, I bought a bunch of store brand items (Up and Up, Archer Farms, Market Pantry from the Super Target down the block). My husband got really upset and said that he wasn’t going to feel poor in his own house. I think the reaction is silly but you’ve got to pick your battles. So, my idea was this – why not just save some packages of name brand items and refill them with the generics? He eats Cheerios a lot of mornings, so I could just buy store brand Cheerios and replace the bag inside the box.
– Maggie

It’s kind of a silly game to play, but it would save you a bit of money. I think most of it comes down to subconscious brand preferences drilled into our heads by a lot of years of advertisements. If it’s a simple tactic that allows you to “pick your battles,” then go for it.

When I was a kid, I had a friend whose mother did this exact thing. She would buy a lot of generics at the store and either refill blank containers at home (she had flour jars and past jars and so on) or actually store stuff in name brand containers even if it was generic. I think she was self-conscious for some reason about having generic brands in her house.

At our house, we don’t care. In fact, we sometimes actually point this out to our kids when we’re buying them at the store. “Look at these two boxes of cereal. Can you tell the difference other than the box art? Well, here’s the difference – this box is $2 cheaper. Now which one should we buy?” Our kids always choose the cheap one because we strive to eliminate their brand preferences.

Q7: Life-Changing Magic of Tidying Up?

Have you read The Life-Changing Magic of Tidying Up by Marie Kondo? I was reading it and thought that most of it could be an article on The Simple Dollar! The idea that really stood out to me from the book is that you should look at each item you own and ask yourself whether or not that item gives you a spark of joy in the here and now (not just the memory of a joy that you’re repeating). It’s like something you would write!
– Amy

Someone sent me a copy of that book shortly after it was published, and while I couldn’t really think of how to incorporate it too much into The Simple Dollar, the ideas in there really did strike a chord with me.

The “spark of joy” idea has a deep connection with how I decide what possessions to keep and which ones to sell off when clearing out my closet. While I follow more of a “have I used this in the last year?” philosophy when deciding, I’ve found that I sometimes bend that rule both ways based on my sense of a “spark of joy” from that item.

If you really take that book seriously, though, it can really become a strong call to minimalism. If you truly get rid of everything in your life that doesn’t bring you a “spark of joy,” I think you’ll wind up with a surprisingly small set of possessions. I know I would.

Q8: Uses for old laptops

A local university sold some old used laptops to the public recently for $100 each. They were in really good shape and I bought one but it turns out that there is nothing installed on them whatsoever. It starts and shows a Dell logo and asks for a disc. I am wondering what your recommendation is for this. I would like a machine to do nothing more than look at websites and do email. Thanks in advance!
– Ron

I would install Ubuntu on it. Ubuntu is a free and very user friendly version of Linux, which is an free and open source operating system. Using Ubuntu is actually a lot like using Windows, provided you don’t dig in too much.

To do this, you’ll need a bootable CD. If you have another computer and a blank CD, it’s pretty easy and this page will explain how in the “Easy ways to switch to Ubuntu” section.

I have an old laptop that I’ve installed Ubuntu on not that long ago. It’s great for doing things like web surfing and it’s pretty much impossible to get spyware on there. It is a little different than Windows and there isn’t nearly as much third party software available, but it’s free and it has everything you need for things like web surfing and email.

Q9: 4% withdrawal rate question

For several years now I have been planning to retire when I can live off of a 4% withdrawal rate from my investments. I figure that when Social Security kicks in later it will be enough all together to get me through the rest of my years. Lately though I have become worried about that 4% number. Do you think it is enough?
– Mark

Mark is sharing a number of ideas here all at once, so let’s spread them out a little bit.

First of all, he’s referring to a 4% withdrawal rate from his investments to live on. In other words, he’s saying that if he withdraws 4% of whatever the balance of his investment is on the day he retires, and he withdraws that same exact amount each year, he plans on living out his years on that amount. So, let’s say he retires on the day his investments add up to exactly $1,000,000. His plan would be to withdraw $40,000 a year, every year, for the rest of his life, and his investments would hold out.

That 4% rate is backed up by a very well known study called the Trinity Study, which says that if you use a 4% withdrawal rate, your investments are pretty much a mortal lock to last at least 30 years and quite likely to last longer than that.

Mark is also taking note of Social Security benefits. Let’s say, for instance, that Mark gets $10,000 a year from Social Security. In that case, he would only need to withdraw $30,000 a year at that point from his investments, which means that they would last even longer.

But is that enough? For me, it depends on how close you are to starting Social Security benefits and also whether I intend to do anything that might earn some income after “retiring.” The closer I was to Social Security age – say, 58 rather than 40 – the better I’d feel about making the leap. Similarly, the more likely I was to earn at least a little in “retirement,” the better I’d feel about making that leap.

If I were far away from Social Security (say, 40 or 45 years old) and didn’t have any good prospects for earnings post-“retirement,” I would not feel confident in “retiring” with a 4% withdrawal rate. I would want 3% at the bare minimum, and probably closer to 2%.

Q10: Everyday carry and identity theft

I’ve been rethinking all the stuff I carry in my wallet like my ID and credit cards and stuff. I recognize that if I lost it or it were stolen, I would be in a real pinch for a while. What is the best practice for choosing what to carry every day to balance identity theft risk and daily ease of use?
– Tommy

Personally, I carry just my driver’s license and one single credit card most of the time. I usually leave my bank card at home, along with almost every other card I have. I keep them all in a fairly well hidden place in my home where my risk of losing them is extremely minimal. With just those items, it’s easy to keep them in a front pocket, which means that pickpocketing, while not impossible, is pretty tough.

Regarding things like customer rewards cards, I’ll grab them if I know I’m going to use them, but most of the time I leave them at home. If there’s not much chance I’m going to that particular store, I just don’t bother with the card. Most of the time, there’s not much “reward” to them anyway.

I guess I’m just a minimalist in terms of everyday carry. Most of the time, all you’ll find in my pockets are my driver’s license, a credit card, a pen, a tiny notebook, my keys, my phone, and a pocket utility knife.

Q11: Kitchen needs in the city

I am about to move from the suburbs to urban living. My girlfriend and I are planning on renting a townhouse or apartment. The things that I do presently for recreation (gardening, hunting, fishing, hiking, etc.) are obviously going to change significantly. What amenities should I be looking for in an apartment or townhouse to keep our recreation bills down so we don’t just go out to eat or drink all the time?
– Alex

The first thing I would do if I were you is look at your food preparation situation at home. What space do you actually use for food preparation? What equipment do you use? A stovetop? Oven? Microwave? Do you have a refrigerator? A freezer? Then, look for an apartment or townhouse that has those features that you use so that you’ll feel fine prepping food there.

As for food sourcing, I’d look primarily at things like discount grocers (like Aldi) and farmers markets for your food. Again, it doesn’t sound like you go out to eat very much right now and that you source a lot of your own food through gardening, hunting, and fishing, so you’re mostly just going to replace your sources of ingredients more than anything else.

There is a large jump in price from buying food staples to going out to eat all the time. While you will be losing the advantages of food from gardens and hunting and fishing expeditions, those weren’t exactly expense-free either.

Q12: Collectibles and getting ripped off

How does a person avoid getting ripped off when it comes to collectibles? It seems to me that if you just take them to a dealer to sell them that the dealer is going to lowball you as that’s just good business practices for the dealer. The only other option I see is to invest a ton of time researching which reduces the value you might get from them.
– Darren

The best route is to hire a dealer or some other expert for appraisal of your collection. Make it clear that you are not going to sell, but are simply appraising for insurance purposes. I’d usually suggest getting multiple appraisals just to be clear.

Once you have a clear appraised value of a collection and perhaps some appraisals of individual items, then you can move on to deciding what to sell and how to sell it.

It’s worth noting that some collectibles, such as comic books and trading cards, have professional grading services that will help you accurately determine the condition of high-value items, making it easier to trade and sell them. This is good for establishing the actual value of a great item, as many people won’t buy them without a very clear indication as to the condition.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

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