To find the best deal, it's all about timing

You've wanted to buy that that to-die-for Michael Kors peacoat since you spotted it mid-summer (haven't we all, honey?), but it's already getting cooler and, well, coats are flying off racks faster than you can say "Minus 10 degrees with wind chill." If you had planned ahead, you'd be strutting around right now in your new warm and toasty Michael Kors coat, coffee cup and cute bag in hand. Unfortunately, due to lack of a good sales price and everyone wanting the same popular coat, the only thing that fits in your budget is a bad Rampage knockoff from Burlington Coat Factory. (And you have yet to ever fully feel warm in the godforsaken unlined thing.)

From now on plan ahead when you'll buy the bigger purchases in your life to maximize the savings you garner with each item. Time, it seems, really is of the essence!:

What: Airline tickets
When to buy: 1 a.m. on Wednesday
Why: This is the best time to find a deal because airlines reset their fares every Wednesday just after midnight, says Women's Health magazine. I wrote a whole blog post in July on how to snag cheap airfare, if you're curious.

What: New suit
When to buy: January or July
Why: The spring collection hits stores in January, so find a deal on fall suits; they'll be marked down as much as 30%. It's the reverse in July.

What: Gym membership
When to buy: July and August
Why: New memberships plummet midsummer, so you might find a deal because gyms are in a negotiating mood.

What: Car
When to buy: November and December
Why: Don't, as many experts say, buy the previous year's model in late summer when the new models hit. There's a year of depreciation on them already. Instead, buy next year's model late in the year, when dealers are antsy.

What: Caribbean vacation
When to buy: March and April
Why: There will still be plenty of chilly weather at home to escape in early spring, and you'll save 25% or more by avoiding the peak season of December to February, says Orbitz travel expert Kendra Thornton.

What: House
When to buy: October to December
Why: Real estate varies from place to place. But in general, supply exceeds demand in the fall, after the school year begins. [Women's Health Magazine]

Do you have any good, not-so-obvious tips on when to buy certain things?

What we've learned from the economic crisis

In an open letter to two his two daughters published this week, Money Magazine assistant managing editor Pat Regnier recently mused on what the current economic crisis has taught us, and how his children -- and really all of us -- can benefit by learning from the mistakes that were made before it all came crashing down. I love this letter because it's simple, reflective and neatly summarizes how current sentiment came to fruition.

What we're experiencing now is indeed a historical event -- one that we may not see again in our lifetimes, at least to this degree. It's important for us, like Regnier, to pass on any reflective wisdom we've managed to pull from the situation so we can educate future generations to not make the same mistakes. Granted, it's normal for the economy to go through recessions and experience both ups and downs, but this is a "down" moment we can all learn from:


Dear Lucy and Emile,

You are both too young to read this letter now. But in a decade or so, I suspect you'll be hearing about the events of autumn 2008 in your history class. You might wonder what it felt like to live through a global crisis. And when you learn about the years just before the crash -- the houses that magically doubled in value, the no-questions-asked mortgages -- you'll surely ask what all of us crazy old folks could have been thinking. I'd like to take a stab at answering those questions today, while the events are still raw and before we know how this story ends. Your mom and I are learning some big lessons right now, ones we might not recall so well after the good times return.

First let's talk about the hardest question: Why didn't people see this coming? Well, we sort of did. Talk of a real estate bubble was common by 2003. But bubbles do funny things to your head -- you'll see that when your generation's bubble comes along. You may read in your textbooks about the euphoria and optimism of boom times, but what I remember most was the worry.

In 2005, a year when home values in our neighborhood jumped 25%, your mother and I would talk anxiously about not having a giant mortgage. We didn't want to stretch for a loan before we had saved for a big down payment. That conservatism hurt: Our chances of joining what was called the ownership society seemed to become more remote with each uptick in real estate prices. We were worried that our new family would never be financially secure. Or even truly at home.

So this is how you'll know when a strong market has turned into a bubble. If you stick to prudent rules you learned before the market took off, you are bound to feel at least a little bit stupid for a while. Learn to regard that sinking feeling in your gut as a sign that you are doing something right.

Another thing we're discovering is how quickly the rules can change. For years the good jobs were in construction, real estate and, of course, financial services. All those industries are shrinking right now. And for Dad, who has spent most of his adult life either working in or writing about finance, this is...uncomfortable.

I wish I had a few more tricks up my sleeve. Unfortunately, it's hard to fully hedge your career bets -- there are a lot of struggling actor-waiters, but I know only one money manager-neurologist (my magazine's own William Bernstein).

At least educate yourself to be flexible. Try to hone a couple of concrete but transferable skills, such as writing plus some basic science (and not just the "rocks for jocks" courses). Keep learning after 21, and take some career risks -- but stretch for experience, not just money. Do this especially early on, when the cost of failure is low.

Finally, remember that it's not all about you. The next couple of years are going to be bumpy, and one of the odd consolations is that it's happening to everybody. A financial or career setback is slightly less ego-bursting when you can blame it on a bum economy. By the same token, though, that means you ought to be humble about your success when the wind is at your back. The practical lesson is to live a bit below your means in the flush years to give yourself some backup.

But more important, back up others. My deepest regret today isn't how much I saved or what I did at work but how little I've pitched in - with money, with time - in our community. It's obvious to me now, when I'm anxious about what's ahead for my own family, how important it is for people to pull together. Wasn't that just as true a year ago, when plenty of folks were already hurting? I've learned this year that I owe much more. And I'm writing this down so the two of you can hold me to that.

Love, Dad

You can survive being laid off

A couple of my friends and I got together this evening, including my good friend who was laid off from my company two months ago. (You might remember her as as my guest poster a while back.) We rehashed how the past week or two has been on the unemployment front over Baja Fresh tacos and subsequent lattes (I happily picked up the tab), and the overwhelming topic of conversation (no surprise) was unemployment, the state of the economy and how we're all drastically cutting back on our spending to pad any "worst case" scenarios, should they happen.

My friend was laid off in September and has yet to find a job as the end of November is rapidly approaching.

"What should I do? Am I going to be okay?" she asked in her car, as she dropped me off for the night. (This is after broke, laid off ex-colleague #2 sped off with a parking ticket flapping from under his windshield, which was highly amusing and ironic.) I looked at her and answered back with brutal honesty: "You're going to be completely fine."

You all are. With Citigroup's recent announcement yesterday that they were eliminating another 50,000 jobs, law firms folding right and left, and unemployment over 6% in the United States, any of us could be wiped clean from our organization's payrolls in a second. For all you Grey's Anatomy fans out there, being laid off is as instanteanous and jarring as Erica Hahn performing cardiothoracic surgery one minute and then leaving Seattle Grace for good the next, minus all the McSteamy drama to cushion the blow.

So, to quote my friend, what should you do? On the jobs front, all you can do is keep applying to as many openings as you can and stay on top of interviews and callbacks. Don't take it personally if you never hear back after submitting your cover letter and resume -- it's not you, it's the economy. Seriously.

On what to do on the finance front after you've been laid off, SmartMoney Magazine wrote a fabulous article with tips on staying afloat:

DO...

• Negotiate. While not required to do so by law, many employers offer laid-off employees severance packages. Typically, these packages are on the table for a limited amount of time. Pay is usually based on the employee's length of service. (One employee may qualify for an amount equal to two weeks of salary while another, for as much as a year's worth.) The good news: Employees, especially those who've been at the company for many years and have a stellar service record, can often negotiate a better deal.

Try to cash in unused vacation days, for example, says Laura Moskowitz, staff attorney at the National Employment Law Project (NELP), a nonprofit that helps low-wage workers and the unemployed. Employers in 24 states — including California, Massachusetts, Kentucky and Illinois — are required by law to include unused vacation pay in an employee's final paycheck, according to Workplace Fairness, a nonprofit promoting worker rights. Employers in other states may do so voluntarily, or are bound to do so by corporate policy. Unused sick days, on the other hand, won't be included unless it's mandated in an employment contract. So be sure to inquire about your employer's policy.

• File for unemployment benefits promptly. Even while receiving a severance package from your employer, you're entitled to unemployment benefits. Just make sure to file for those benefits right away because once you apply, there's usually a few weeks lag time until the first check arrives.

Depending on the industry you worked in or the circumstances of your layoff, extended benefits or subsidized training may be available to you through a government program called Trade Adjustment Assistance (TAA). The TAA assists those who've been laid off due to increased imports from, or shifts in production to, other countries, says Maurice Emsellem, public policy director at NELP. Lose your factory job because the company moved its manufacturing facilities to China, and you may be entitled to up to two years of subsidized retraining and up to 52 weeks of extended unemployment benefits, according to the Department of Labor.

• Access health-insurance options. If you can't join your spouse's employer-sponsored health plan, consider either extending your previous coverage through COBRA or buying an individual policy.

Under COBRA, workers keep the coverage they had through their employers without worrying about getting turned down due to illness or a pre-existing condition. This option is pricey, though: You'll pay the entire premium plus a 2% administrative fee, which for a family, could top $1,000 a month. If you're the head of a family or middle-aged, for example, and have higher use of medical services, then COBRA would make more sense.

If you're young and healthy and just want coverage for medical emergencies, then look into private insurance. These health plans have lower premiums — on average $344 a month for families and $148 for individuals — but carry much higher deductibles.

DON'T...

• Tap into your 401(k). You're out of a job, have bills to pay and your savings account is dwindling. Your 401(k) might be calling your name, but tapping into the retirement account should always be your last resort.

Beyond the fact that you're dipping into your nest egg, the biggest problem here is Uncle Sam: Say a laid-off worker in the 30% tax bracket withdraws $10,000 from his tax-deferred retirement account. Not only will he pay $3,000 in income taxes, he'll also pay a federal penalty of 10%. Once everything is paid out, he'll be left with just $6,000 in spending cash, the article states.

• Overuse your credit cards. Interest rates alone should be enough to keep people from using their credit cards too much. If a payment is late — even by one day — your card issuer may jack the interest rate up to 20% to 25%, says the article. Credit-card companies are also tightening lending standards and lowering credit limits for high-risk cardholders, which makes it that much costlier should you get into the habit of overcharging. If you're desperate for cash, take money out of a standard savings account or taxable investment account, such as a stock portfolio, before turning to your credit cards or 401(k). [SmartMoney Magazine]
  

No cash to donate? Then use your card!

The New York Times reported on Friday that the Salvation Army is experimenting with a plastic alternative for people who do not have cash to throw in a holiday red kettle.

This season, five bell-ringers in El Paso County, Colo., will be the first to test accepting debit and credit cards along with spare change and bills. Salvation Army officials say the kettle tradition needs to be tweaked as consumers increasingly carry only plastic.

When I first read this I thought it was a terrible idea. Just what the economy needs, people donating money they don't have, on top of paying off debt they shouldn't have charged. Brilliant. But the more I think about, the more it makes sense -- as long as the card in question being swiped is of the debit variety, where the cash will come straight out of your account.

Like I said before, I never really carry cash, so a set-up like this would more fit my lifestyle. There have been times when I've wanted to drop a few dollars into a shiny red Salvation Army kettle, but came up short with some lint, a hair tie and a couple bobby pins from the bottom of my purse. Unless it was a charity for Macguyver, I don't think they'd appreciate my offer.

On the other hand, charging donations just doesn't seem like a kosher thing to do, especially in the current state of the economy. What do you guys think? Can you picture a bell-ringing Salvation Army elf with a card swiper affixed to the inside of his jacket? I think I've seen stranger things.

You may already have that insurance...

Before you commit to that insurance coverage (from car to health, and everything in between), make sure you're not already covered! Many organizations like credit card companies and even AAA offer automatic insurance on certain things just by being a member. Sneaky, sneaky. You may have insurance without even realizing it. Save and don't overpay by figuring out what you might already have:

• Your homeowner’s policy may cover lost luggage, as well as items stolen from your car and other locations, such as your purse. It also may cover items you have borrowed, property damaged by vandalism, or property damaged in a move.
  
  
• Your credit card may provide accidental death insurance for you if your airline tickets were purchased with the card.
  
  
• Some credit cards offer $1,000 in life insurance for cardholders, free for the asking.
  
  
• AAA insures its members for hospital and death benefits if they are in an auto accident.
  
  
• Your auto policy includes medical coverage, so if you are in an auto accident, your costs may be fully covered regardless of the co-pay and deductible provisions of your health insurance policy.
  
  
• Your health insurance may cover children who are away at college—check before you buy separate insurance for your college-age kids.
  
  
• Clubs, fraternal organizations, credit unions, and other groups may have free life insurance benefits with their memberships.
  
  
• Your auto policy or credit card may cover damage to rental cars, saving you money on expensive rental car insurance. [from It's More Than Money - It's Your Life!]
  

Debit or credit?

"Debit or credit?" Ah yes, the conundrum posed by many a sales associate at the culmination of your shopping trip. I almost never think twice about my answer every time I swipe my (debit) card -- and this is even for purchases of as little as a few dollars (I never carry cash, it's a bad habit).

"Debit," I answer. Of course. It is a debit card, after all, so why would I use it as credit?

According to CreditUnions.com, 26.6 billion transactions were made with debit cards in 2006 alone, so all signs point to plastic being more popular than paper nowadays. (Not sure if that's such a good thing, being mired now in this credit crisis, but that's beside the point.)

When a cashier asks you "credit or debit" (in what tends to be a somewhat monotonous tone -- they could really care less) do you consciously ask yourself which is the best alternative -- the PIN or the pen? Surprisingly there is a difference, and depending on what kind of spender you, your answer can drastically alter the rewards you reap in the end. There may actually be more perks to using your check card as a credit card over one of the debit variety.

Usually people spout off an answer based on pure personal preference alone, tied to however they are feeling in the heat of the moment. Even I've been guilty of this, which I guess isn't all that surprising -- I do get caught up in emotional impulse more often than rational logic, the latter of which I have Love for.

Within the debate, fees are a defining characteristic according to which side of the debit v. credit coin you land on. Type in your PIN and you make the merchant happy because the cost of processing your debit transaction is less than if you had chosen "credit." (The fee tacked on to the merchant's cost is usually just a few cents, but if you're a retailer like Target, a few cents here and there definitely adds up.) Choose the pen over debit and sign for your purchase, though, and then Visa and MasterCard will be elated -- they can then process your transaction through their networks, and not through the retailer.

Of course for you as the spender, the merchant versus card company fees issues don't play into your decision; the money will come directly out of your bank account either way. But according to a 2004 MasterCard survey, 70% of debit card holders didn't know that swiping their check cards as credit was even an option -- one that may actually be the better choice.

Here's why:

• Signing saves you fraud headaches. When you pay with a check card, your transaction has two ways it can go (depending on whether you choose debit or credit): If you enter your PIN, then your transaction gets processed through an EFTS (or "electronic funds transfer system") such as STAR or NYCE. Unfortunately EFTSs don't offer liability protection. On the other hand, signature transactions get processed through Visa or MasterCard, for example, who guarantee you won't be liable for any fraudulent use (that is, if you report it in a timely manner). As I mentioned a couple months ago, I had $600 withdrawn from of my bank account from ATMs being simultaneously used in Cuba, Chicago and Mexico. Luckily my bank (Bank of America) refunded all the money that had been stolen (after I had to go through much paper work), but what they found was that my PIN had been stolen and duplicates of my card had been made. I've had never written my PIN down or told anyone what it was, so I was shocked and suprised, but thieves have a myriad of ways they can find out your code these days. If typing in your PIN is more your style, be careful.
  

Also, don't forget that in case your bank doesn't cover your stolen amount, you should still report the fraud ASAP. Federal law says that if you report the fraud within two (business) days, you're liable for no more than $50. Wait up to 60 days and you're liable for up to $500. Beyond 60 and you can most likely say bye-bye to getting any back. Sometimes procrastination just sucks.

• Paying by PIN could lead to small fees for you. A Federal Reserve study released a couple years ago stated that 14% of banks add a fee for PIN-based transactions. Those that do, the study reported, charge you about 75¢ per use. Of course this doesn't pertain to the big wigs like Bank of America and Wells Fargo, but if you're with a smaller bank, don't forget to ask about their policy on PIN use.
  
• Extra "rewards" can come with signing. Many cards have promotional deals affixed that can earn you "points" or "rewards" toward snazzy deals like cruises, airfare deals and...magazine subscriptions. To reap all these rewards though -- who wouldn't want a free year of Horse and Hound? -- you usually have to sign for your purchase.
  

So why use a PIN at all? Now that I'm rethinking the PIN vs. pen debate in my own life, one giant use comes in handy when answering "debit" -- it gives you cash back! For a girl who never carries cash (again, I really need to break that habit), I often find myself in a position where I verily need paper money, but there is nary a Bank of America in sight. Of course, this is precisely when all other banks seems conveniently parked on every street corner. "Where is a Bank of America when you need one?!" I grumble -- until I spot a 7/11 emerge from the flock of Wells Fargos and Wachovias. Sweet. Not only do I get to buy a slurpee, but I can also get a $20 back in the deal.

Use just any bank's ATM and run the risk of being hit with severe fees (these are a huge pet peeve of mine). Usually the ATM will charge you at least $1.50, but I've even seen fees as high as $3. And that doesn't even count whatever fees your own bank will slap you with (generally another $1.50 to $2). As someone on a budget, I can't think of a worse personal hell than being stuck having to withdraw a $20 from a nondescript ATM, and mentally tacking on the $5 total in fees that come nefariously attached to my cash. It's a violating feeling, to say the least, and a PIN acts as a definite savior in the situation.

Cheap airfare sale for this winter

If you're still wondering whether you can afford expensive plane tickets to head back and visit family for the holidays, there may be hope for you yet!

Southwest Airlines just announced a special fare sale that will include Winter holiday travel! (Exciting news, considering most airfare sales always block out December and early January as not applicable.) The news gets even better considering the savings you accrue from Southwest being one of the only fee-free airlines to fly in the United States.

The firesale offers one-way tickets for $49 to $109 (Monday through Thursday and Saturday) or $59 to $159 (Friday and Sunday) for all dates between December 2, 2008 through February 11, 2009. One caveat, though: The travel deal isn't available from Orange County, CA or Washington DC (Dulles). Bummer.

Act fast though: You have to book your flight by midnight tonight (November 13th), or else your one-way coach will turn into a pumpkin.

For those of you who planned to wing it solo for the holidays, the sale makes that mini-vaca to Aspen for snowboarding thatmuch more attainable. Now you'll only have to worry about what to wear on the slopes!

For more details, visit Southwest.