Tuesday, September 30, 2008

Of bargain hunting and CEO pay

Well, after yesterday's steep decline into the vermilion, stocks fared much better today. Phew! (Wipes slight perspiration from brow.) Both the Dow and the S&P 500 closed up about 5% each today, punctuating the highest close in six years.

But before you hop on to eBay to buy those designer boots with the affirmation that "everything is okay now," the stellar numbers today do not guarantee that we're free and clear of economic trouble.

Uncertainty still lingers. The lift in the market this afternoon mainly hinged on the fact that bargain hunters bought in big time to stocks that are trading at levels far below what they're worth. You know when you peruse a Macy's sale, and end up scoring an adorably gaudy giant lavender cubic zirconia cocktail ring for $20 when it was originally $80? Yeah, today's bargain-hunting investors hopped on that super-saver boat -- except with stocks and not cocktail rings!

Bargain hunters aside (pssst: now may be one of the best times to invest in the market with stock prices so low, or so says Suze Orman), the market also reacted positively today to news that the failed bailout proposal may not be entirely dead. The near-term fate of the market now largely hinges on investor optimism that the $700 billion bailout plan (which was shot down Monday by Congress) is still salvageable. The House reconvenes on Thursday, so it'll be interesting to see whether legislators will come to a timely decision on the bailout proposal and how much more the market might suffer if deliberations drag on.

In the meantime, the giant swings the market has made recently into positive and negative territories illustrates just how volatile and sensitive the economy is right now and how everything can crumble -- big time -- at a moment's notice.

And whether you're for or against the bailout plan (I'll leave that up to you to decide, I am but a financial scribe!), the current economic unease cannot simply be boiled down to CEOs who need their compensation packages reworked. David Forrest and Bill Mann over at the Motley Fool wrote a great post on their blog today that echoed what I wrote about yesterday. I think what they had to say is worth re-posting here:

"While the politicos in D.C. navel gaze and ponder how to win their next election, Rome is burning. You see, the markets don't care about your Senate seat or whether the 'fat cats' are going to get bailed out.

"What matters right now is that the credit markets are at a standstill. People can't borrow and businesses around the globe that rely on the short-term liquidity of the credit markets are being badly hurt. We won't hear about the brilliant entrepreneur denied her small business loan, but how about McDonald's franchises being denied credit to build new coffee bars, or General Motors needing to raise billions just to cover basic operating expenses? Retailers like Home Depot are closing stores, and apparel retailers like Macy's face their toughest holiday season in years. And airlines like Southwest and American Airlines parent AMR are cutting flights.

"Sure, you still see advertisements for mortgage loans, but have you tried to get one? A colleague of mine with an excellent credit rating made the attempt and was quoted 11% for a 30-year fixed mortgage with a 20% down payment. That's the equivalent of the "open" sign being left on, but the doors being locked. A survey conducted by The Association for Financial Professionals of many large-company finance executives found that the locked-up credit market has already caused them to stop hiring and to cease capital spending projects.

"The media isn't focusing on that so much (and shame on them). They'd rather focus the attention on raw-meat issues like limiting CEO compensation. As if that matters right now."

Monday, September 29, 2008

We're all tied to the market's well-being

Unless you live under a rock (no offense to those who do, I hear it's a nice respite from the hot weather), the stock market plummeted today. As in, those little streams of ticker tape skimming across the bottom of the business news channels were all bleeding red today. Yeah, yeah, it seems like the stock market plummets all the time nowadays, so what's the big deal?

First we had Bear Stearns go belly up, then Lehman Bros. followed suit. Bank of America lapped up what was left of Merill Lynch, AIG was "rescued" by the U.S. government (as were lending giants Fannie Mae and Freddie Mac), and most recently, Washington Mutual was acquired by JP Morgan Chase, while Wachovia was bought out by Citibank. The startling frequency that these bankruptcies and buyouts took place within was stunning. Think of what's happened in the last month or two as a giant checkerboard, with one side gobbling up the less powerful side, until finally the board's left with a few winning chips. Too bad, though, that the real thing isn't just a game.

To put things in perspective, the Dow collapsed 400 points in TEN MINUTES today -- something that normally happens in hours, if not days. By the time the market closed, the Dow had fallen 778 points, its largest drop in financial history. The S&P 500 fell 8.75%, the worst drop its seen since black Monday in 1987. Today alone, $1 trillion was vaporized in the stock market, which is almost unprecedented. You may think, "So what ... I don't trade in stocks anyway, so it doesn't affect me." Unfortunately, chickadees, it affects each and every one of us in a breathtaking amount of ways, illustrating how intricately connected each of us are to our government, our economy and, quite frankly, to each other.

How? Well, with the climactic carnage that ensued in the political and economic spheres today, loans will be that much harder to lock in, which means small businesses won't be able to borrow that much money. This leads to less jobs for U.S. citizens, which leads to less spending/saving power, and less bills subsequently paid. "If no one in the financial community trusts each other to lend money, then we're going to have a complete and total financial collapse," White House spokeswoman Dana Perino told ABC News yesterday, just ahead of the bailout proposal vote. "And that's what we're trying to prevent."

An article on Yahoo Finance was spot-on with its analysis of the credit crisis in the face of the failed bailout plan:

"In plain English, banks are extremely reluctant to lend to each other, which means they're not going to lend to you and I as consumers, or businesses either. The Fed is injecting tremendous amounts of liquidity into the financial system to get banks lending again, to little avail so far.

"This isn't just a long-term concern: Corporate America relies on overnight lending and short-term commercial paper markets, and an inability to tap those sources of liquidity could result in mass layoffs in the "real" economy, which is something to fear."

"Markets around the world are under stress and that reduces the availability of credit that businesses across America depend on to meet payroll and to purchase inventories," Treasury secretary Hank Paulson argued this afternoon.

I have to admit I've had my fill of the tired "Main Street"/"Wall Street" analogy used by various media pundits, but I do think Art Cashin, UBS director of floor operations, made a fabulous point yesterday when he told Good Morning America that "Main Street is the basis of all of the economy, by which Wall Street trades and prospers. Major failures could occur in a matter of days -- and not just banks and finance, but in brand names known all across the globe."

ABC News reports that in past decades, many industrial companies tapped into the profitable lending industry, but the key players (such as GE and General Motors) have financing divisions that now could be hit by consumers defaulting on loans. Both General Motors and GE have taken a substantial loss from the crisis.

"In towns all across the country, businesses are slowing down -- no new hiring, layoffs are occurring," Cashin told Good Morning America.

Less jobs, of course, mean more mortgages that fail to get paid, more foreclosures, a tougher time securing college loans, more of a struggle to buy necessities (such as groceries), and less of an ability for Americans to save. If you can barely afford to beat back foreclosure or put food on the table without using credit cards, then forget saving for retirement. And in the face of today's shocking decline, having a 401(k) is not the essential padding it once was. I mentioned earlier that $1 trillion was lost in the midst of the turmoil. That money comes out of the 401(k) accounts that most of us have wrapped up in the stock market. Dwindling 401(k) accounts mean we can kiss that retirement (early or otherwise) goodbye for at least the foreseeable future.

Hopefully one positive effect from all this, after the dust has cleared and the market begins to look up once again, is that Americans will "rededicate themselves to saving rather than spending beyond their means," Yahoo Finance says.

Saturday, September 27, 2008

Fashion on a Budget: Stylish flats for under $50

It's been rainy and a bit cooler in D.C. the last couple of days, which might mean that Fall is finally here to many in the region. To me, though, it means it's time to go shoe shopping for the new season!

As a self-professed shoe addict -- yes, I awoke in the middle of night recently in a cold sweat, with visions of Burberry's latest kitten heel gnawing at my exhausted psyche -- I will take any excuse I can to purchase a new pair of lovelies. These excuses can include a get-together I've been invited to, any trip I take via airplane (I always feel I must dress as an international spy or Bond girl when jetsetting, Love thinks I'm crazy), or an extravagant ball replete with baccarat tables in an exotic locale like Monte Carlo (okay, that's just a fantasy ... sigh).

But in this tryptophanic haze of footwear that I get so wrapped up in, rarely do I ever daydream of flats. Like, ever. Can you imagine a Bond girl boarding a flight to San Francisco dressed in flats? I can't. Same goes with stepping into a Monte Carlo casino in ... flats. Out of the 50+ pairs of shoes I own, the vast majority are heels (pointy toe, mostly), and only two pairs are flats. But alas, it seems like most out there love heels as much as me in theory only, because even I'll admit that they aren't the most comfortable things in the world, though I do think they're the most fashionable.

So, to evade the risk of our feet morphing into bunion- and calloused-covered stumps (gross!), with an added bonus of mangled toes from years of excessive stiletto wear, I guess we must venture to the dark side of zapatos ("shoes"), and consider investing more heavily in this flat footwear phenomenon. Personally, I don't like spending more than $50 on a pair (they're flats, after all). After searching high and low, here are the most-fashionable, bang-for-your-buck shoes in the non-heel category:
Target, Merona "Maggie" ballet flats, $24.99 (above). (Also available in black, linen and zebra print!) The charming gold buckle detail gives this basic peep-toe flat a nice classic twist. The embellishment, paired with the deep, rich color of the shoe is reminiscent of Coach footwear.
Target, Mossimo "Davina" bucklet ballet flats, on clearance right now for $17.49. (Also available in tan for $12.49.) Again, the large buckle kicks these otherwise boring black flats up a notch, while the shape of the toe gives your foot a nice silhouette paired with casual jeans or slacks at work.
Amazon.com, Nine West "Gain" flat in brown croc, $49.95. (Also comes in four other textures and colors.) Remember those two pairs of flats I said I owned? This pair is one of the two. (The other is a gray linen, black capped-toe pair from Banana Republic). As far as flats go, I admit that I love these Nine West ones. They're stylish, comfortable and stand out in a chic and sophisticated way. The buckle on the toe has a dark wood surface, which is an interesting contrast against the brown croc. I bought these at Nordstroms on sale for $35 almost exactly one year ago, but $49 on Amazon is still a great deal!
Amazon.com, Steve Madden "Kobraa" ballerina flat, $64.95. (Comes in tons of different colors.) I know I said I don't like spending more than $50 on flats, but this pair might be an exception. I'm not a huge patent leather fan (in fact, I think it can be downright tacky if not done right), but I do think it's done right in this case because of the subtle snake-skin texture that compliments it. These scream Audrey Hepburn circa Funny Face, when she paired them with a black turtleneck and black cropped pants and danced manically around that beatnik coffee shop in Paris. What's better than a pair of flats that make you want to dance?
Zappos.com, Gabriella Rocha "Fabia" pointy-toe flats in cappuccino, $55. (Also in two other colors.) Just a smidge above my $50 mark, I love these flats because of the stiff pointy toe, slight buckle accent, and deep, rich cappuccino brown color. These would pair perfectly with a dark, distressed bootcut jean and khaki trench coat. They're also dressy enough to wear to work, perhaps with a pair of light brown herringbone or tweed slacks, an off-creme sweater and a supple buttery-tan leather handbag. Again these, like the first pair, are reminscent of a classic Coach pump.
Urban Outfitters, "Fairy Tales are True" leather skimmers, $34. (In three different colors). You can't beat $34 for leather shoes -- flats or otherwise. Unlike the Gabriella Rocha pair before this, these flats are more soft and casual ... perfect, for say, grocery shopping or perusing art at a local museum. The soft pointed toe still dresses up even the most casual of looks.
Urban Outfitters, leather knot ballet flat, $34. A step up from the casual "Fairy Tales are True" flat, the modern twist of leather on the toe updates this pair of basic black flats.

Old Navy, color-block croc-print flats, $10. (Also available in a myriad of other color combinations.) Ah, the capped-toe flat, one of the only flats I've ever had a love affair with. I first fell for the capped-toe flat when I was a little girl and spotted Chanel's classic creme flat with black capped toe on a stranger. I've coveted a pair ever since, but with the $400 price tag on the Chanel ones, I have yet to purchase some. Enter this Old Navy pair for $10, yes, you read that right. You can't even buy lunch for $10, much less a pair of shoes, and the fact that they come in Fall's "It" color (dark plum) and are fabulous knockoffs of the $300 Kate Spade capped-toe reptile skin flat that's currently in fashion, makes them all the more coveted.

NewportNews.com, "Bejeweled" flat, $29. Adorned with riveted "jewels" on the toe, these pewter-colored flats harken back to the popular riveted embellisments Gucci used on shoes, purses and belts that were all the rage a few months ago. If you insist on wearing flats out at night, this bold pair will definitely stand out in a crowd, perhaps paired with dark denim jeans (slim through the knee), a black slouchy top with riveted belt and a metal-tinged clutch. The delicate pointy toe, peeking out from under the hint of black grosgrain bow, gives these edgy flats a demure, ladylike look.

Lastly, I found an adorable pair of red flats for $24.95 at DSW.com, but since they redid their site to video views instead of pictures ones, you'll have to click on over there to check them out.

These are my picks of the litter. The most important thing for me when flats-shopping is that the pairs include something different -- be it a knot, peep toe, buckle or other embellisment. Plain flats can be, well, plain boring, so kick it into a high gear with ones that stand out a little more than their understated brethren.

Also, the shape and silhouette of your flat is as equally important. As you can see, most of the flats I've picked out start higher-cut behind the heel, slope downward to skim lower around the ball area of your foot and swoop back up to cover your toes. Since flats have a tendency to make even the daintiest of our feet look garishly stumpy and man-like, finding footwear that adheres to the aforementioned shape will make your feet look like the feminine and ladylike ones they are!

Thursday, September 18, 2008

Finance Fiesta No. 16

Yay! My "Don't Fall for Rebate Bait" article has been included in the latest edition of Finance Fiesta, hosted by OurFourPenceWorth. Ole! Click on over there to check out the latest articles in all things personal finance. (I especially liked the "Alternatives of 9 to 5" article by The Shark Investor and "10 Stupid Ways College Students Waste Money" by Broke Grad Student.) Happy reading!

Wednesday, September 17, 2008

How to prevent identity theft

David over at HowCast.com recently brought a whole batch of fabulous "How To" videos to my attention, from the serious ("How to Survive a Recession" and "How to Sell Your House") to the downright silly ("How to Evade Your Taxes" and "How to Get Money Out of Your Parents").

One of my favorite "How To" videos is "How to Prevent Identity Theft:"

The video is a little cheesy, but it's main character is a pizza slice, so what do you expect? (Bad pun, but I couldn't help myself). To prevent identity theft, they say to:
  • Watch your wallet
  • Be careful with mail
  • Beware of phishing
  • Beware of skimming
  • Get a free credit report
  • Never leave documents around
  • Destroy bills and documents
I know all you savvy savers out there are also savvy in keeping your identity theft-free, but this fund-suckling annoyance can happen to anyone with even the slightest unrealized misstep. Even I thought my identity was foolproof until I found out two years ago that $600 had been withdrawn out of my bank account from ATMs being simultaneously used in Cuba, Chicago and Mexico. Luckily my bank reimbursed me for the withdrawals, but for a few nights after that I slept in fear that members of some South American drug cartel would break into my apartment to steal the rest of my identity. (Kidding, kidding!). Love also fell prey to identity looters when his wallet, and thus his identity, was stolen from a Nordstrom's fitting room a few years ago. Just reminding him of this harrowing episode conjures up quite the amusing tortured look on his face that I'm sure accompanied each call he made to the credit bureau to fix the problem.

Have any of you had your identities stolen? Was the experience something you can laugh about now (like moi), or does the thought of it still stress you out (like Love)?

Monday, September 15, 2008

Set up your plan of attack

Sav·er \ˈsāver\: A person who regularly saves money through a recognized scheme.
bud·get \ˈbə-jət\: A plan for the coordination of resources and expenditures.

You say you're a saver, but every savvy financier should have a "recognized scheme" ... a plan of attack, so to speak. Do you? From what I've gathered speaking with various self-proclaimed "savers" lately is that they have no preconceived method to their spending habits. More often than not, when I ask whether they have any budget (stringent or lax) that they adhere to, I get the token "It's all up here" response, as they point to their head. Is it really all up there? Because last time I checked, you were complaining that your latest shopping spree left you on the light side to pay for groceries. Not that there is anything wrong with a shopping spree -- they're one of my guilty pleasures (along with slathering my face every night with uber-moisturizing lotion in the vain hope of looking young forever, and watching those addictive Hill's marathons. Did I just admit that out loud? Oops...) -- but you need to have a plan to frame your shopping sprees within.

This plan is more often than not referred to as a "budget," but I know that the very sound of the "b"-word can make guys and dolls who are new to the game cringe ... possibly because it conjures up visions of someone who is pedantic and cheap with their money. But having a plan does not make you pedantic or cheap. The idea is not to squeeze all the fun out of spending and shopping, it's simply to make you more aware of your everyday/week/year purchases. So, heretofore (well, at least in this post anyway), in the interest of erasing any stigma associated with the term "budget," I'll refer to it as your "plan of attack."

Why is a plan needed, you may ask, especially if you seem to get along fine day to day with your money? Sure, you may do fine in the short term, but has it been a struggle to achieve the longer-term goals in your life? Those may be buying a car or saving for a home, but also include the lesser-yet-expensive goals, such as being able to pay your pet's expensive vet bills that are bound to occur as he or she ages, getting new tires for your car of SUV, or a two-week-long wedding anniversary cruise on the Mediterranean. If you've found that you often have failure to launch with the bigger goals in your life, you can probably thank having no plan of attack as a culprit.

Setting up a budget ... er, I mean plan ... doesn't mean you have to wade through faded, crinkled receipts at the bottom of your purse and excel spreadsheets awash in numbers dating back to your 2 a.m. pizza-runs in college. If the fear of treading through an intimidating amount of numbers has been a factor in not setting up a plan in the first place, then I have fabulous news! There is a no-muss, no-fuss way of creating your very own plan of attack.

The ubiquitous "they" say that the golden rule to follow with saving is to "spend less money than you make." Duh. This is probably one of the most cliche and obvious statements in the saving sphere, and yet does not guide newbies to the trough of financial success. That takes your plan, which is probably already laid out for you if you do most of purchases with plastic versus paper.

If you conduct most purchases using a credit card (ahem) or debit card, print out your bank statements from the last month or two, grab four different-colored highlighters and have a seat on your couch (preferably with a raspberry Italian soda). If you pay for everything with cash (I'm impressed!) then write down your expenses for a week or two beforehand. No, this isn't coloring time. Color code three to four categories that you know you can cut down on and mark each with a corresponding highlighter color throughout your statements. It'll probably look something like this:
  • Entertainment (pink highlighter): Includes going out to the movies; popcorn/soda bought at the theater; magazines; DVD/CD purchases; your cable bill (do you really need 500 channels?); flat-screen TVs; your 8-at-a-time Netflix DVD subscription (can't you just watch one at a time?); your roller-coaster-riding addiction at your nearest Six Flags ... you get the picture.
  • Food (green highlighter): Includes snacks bought on the go at 7-Eleven/CVS/Rite-Aid; coffee bought at Starbucks or other caffeine joint; cookies/sandwiches bought at said coffee shop; work lunches; dinners out (these needn't be "fancy" dinners, even Baja Fresh counts, grasshopper!); happy hours and groceries.
  • Clothing and other vanity items (blue highlighter): Includes, well, clothing; shoes; impulsive bikini buys for any unscheduled surprise pool parties or exotic vacations; beauty items like lotions, make-up and hair products (curse you, Target!); accessories; dry-cleaning/laundry, etc.
  • Housing and transportation (orange highlighter): Includes monthly rent, house payments, upkeep costs with house, car payments, car insurance, car maintenance, phone bill, furniture/decor for house, appliances, etc.

Now add up the total for each of the four categories, and Voila! You've just created your very own plan of attack! Aww, my little budgeter is growing up (Sniff, sniff). Highlighting these categories doesn't mean to stop eating or buying what you love, it's merely a snapshot to make you more aware of how much you buy, where you buy it and whether you could substitute certain areas with cheaper options (i.e., sneaking in your own popcorn and soda to the theater versus buying theater fare, brown-bagging it at lunchtime versus your daily Quizno's visit, toting your own coffee around in a cute pink tumbler perhaps versus running to your nearest Starbucks for a pick-me-up, etc.). Can you downgrade on any insurance contracts or cable TV packages you're signed up for? Can you get by with one car versus the two you have parked in your driveway? It's not about cutting out, it's about cutting down on the extraneous. In essence, it's budgeting.

Now grab a new piece of paper (and another Italian soda, if you're running low). This next part of the plan of attack is to list out important financial goals you foresee in the next six months to five years. These could be taking that honeymoon you couldn't afford to go on, buying plane tickets to visit your parents for the holidays, paying off your credit card in full, taking that somewhat expensive yoga class or (gasp!) saving enough for a solid down payment on a house. The list should include the practical and impractical expenditures, just make sure to write them all down, however frivolous you think they are. Divide the cost of each item with the amount of time (in months) it will take until you hope to attain it. Now write this number down next to each goal -- this gives you the monthly "cost" of each.

Finally, keep this list with you in one of those out-of-the-way pockets in your purse, and if you're married, make a copy for your Love to keep in his wallet. It'll serve as a great reminder for you and yours to reference in case the onset of an impulse buy sets in, or if you think you really, reeeeally need something you can't possibly live without, such as a deluxe complete series box-set of "24." Hmm ... Jack Bauer ... or a three-day wine-tasting trip in the country? You decide.

Carnival of Personal Finance #170

Hey all,

Quick note to let you know that my "Tips to beat Foreclosure" article is featured in the latest Carnival of Personal Finance! Head on over there to check out my post (under the Real Estate section) along with other great reads!

Friday, September 12, 2008

Married and money-mindful? Don't make these mistakes

After you become engaged, your life as a woman tends to evolve into a whirlwind of finding the perfect flavored wedding cake, stunning wedding dress, and color coordinating the table centerpieces to the brides' maid dresses to your bouquet to your wedding invitations to possibly the grooms men's boutonnieres ... oy! (Wow, did I just say that?) It can all get very overwhelming, and with all these little details leading up to the big day, many couples forget the most important detail to keep in mind ... the one that will stand as a pillar before and after your big day: your financial life as a twosome.

If you've had the financial talk, that's all fine and fabulous, but none of us ever want to think that all those twinkling white Christmas lights, glasses of expensive champagne and unending toasts made to the rest of your life could ever end in something ugly like, okay I'm just going to come out and say it: divorce.

I'm not a pessimist (at least, I think my glass is half full...), but from many stories I've read lately, it seems that women, and men to a lesser degree, tend to lose their financial selves once the walk down the aisle has been, well, walked. Usually it's women who tend to think that the stone on their finger casts in stone some promise that the man in their life will always look out for the family's financial well-being. In a perfect world this would be true, but the rates of divorce in the past decade or two have shown that relinquishing responsibility, for co-balancing the family checkbook or researching the best accounts for the family's savings among other things, could have dire financial repercussions on a woman if the marriage goes awry.

Unfortunately, there comes a point in some couples' lives when "the honeymoon" is officially over. Sigh. If you're not prepared to deal with the consequences of having forfeited your knowledge of where you are on the family money map, you could end up penniless and confused, with nary a credit score to your name (more on that in a second).

Pop quiz: Who's more likely, the husband or wife, to give up their career to raise the kids? Even though it's 2008, men still make more on average than women, so it's the wives that generally end up staying home with the brood of bambinos. And there's nothing wrong with that. I think it's a great thing if you have the freedom to swing it, but being up to your ears everyday in pacifiers, burp rags and reruns of Sesame Street doesn't mean you should acquiesce your responsibility of being on top of money matters.

I'm not sure when this became an "either/or" thing. Why do so many of us view it as an "I-take-care-of-the-kids, you-take-care-of-the-finances" deal? Is it because there's a belief that the person bringing home the money should also be the one in charge of it? If you're the stay-at-home mom or dad, you've earned a right in the say of that money too. After all, you work hard in a different way for the good of the family -- you just might not have a biweekly paycheck to prove it. But that doesn't mean your daily work, or you for that matter, should be a lesser voice in financial decisions.

I've heard it said that one of the biggest mistakes women can make in a marriage is walking away from their careers. I say to each his own. It's a personal decision that every woman has a right to make and that should not be judged. The feminist movement advocated giving women the option to have a career and family, not to make it the standard. So I wouldn't say leaving your career for the sake of the family is a mistake, per se, but I would say that giving your husband (or wife) full control and responsiblity of the family's finances is.

If you've noticed that you've lost track of the last time you really looked over the household bills or expenses, retirement balances or savings account totals, now is the perfect time regrab one of the reins and steer that horse together as a team, not just a second rider! Once a month, set aside some time with a cup of coffee and a notebook and list out all the accounts you two have set up (mutual funds, savings, checking, credit cards, etc.) and keep a running tally of how each account is holding up. It will give you a good, clean snapshot of where you stand as a couple and how much further away, say, your financial goals stand. Believe me, from the personal stories I've heard, it's better to be informed in this way than to realize the family savings have dwindled to near zero or that large portions of paychecks might not be getting deposited into the accounts you two agreed upon (i.e. hidden accounts). Not the most desirable info to find out, but it happens. Don't forget to also keep a running list of reoccuring bills, insurance policies and wills.

Oh and don't give up your credit card just yet! Be aware that if you cancel all your credit cards and add yourself onto his cards, it can be very, very hard to earn back all that good credit you accrued in the first place if the marriage ends in divorce. Why? An additional person on a credit card is looked upon as simply an "authorized user" by many companies, which means that after a period of time goes by and you want to apply for a credit or a loan by yourself, all those years as an "authorized user" will not have accumulated any credit history for you. In a way your credit status would be similar to a college student with a blank slate of borrowing history. Obviously this means that if you apply for a credit card or home loan, for example, without having held a credit account for more than six months in your name, than you'll be unable to have a credit score calculated for you, which means buh-bye to any credit line with a reasonable APR or spending limit.

I think the best solution to cover your credit in case of a disastrous event like divorce is to split the number of credit cards you two have, so on half the cards you're the primary account holder while on the other half you'd be the "authorized user." Same goes for him. That way you're still sharing your accounts, with no hidden agendas or "I-want-to-keep-this-part-of-my-life-separates" (you're married after all, doesn't that mean sharing everything?), while setting it up as an insurance policy of sorts on each of your credit scores.

And don't forget to keep saving for retirement, even if the breadwinner is saving for the two of you. If you are juggling a career and family, contributing to your company's 401(k) and/or a personal IRA should be a must on your to-do list. Saving on the side is especially important for the stay-at-home spouses who might work or run a small business from home and really have the ability to sock away savings in the case of an emergency. Look into contributing to a spousal IRA if you're unemployed or work sporadically.

Women statistically spend more than they save, so I know the temptation to take whatever extra cash you have and put it toward fickle purchases may seem okay in the short term, but if you don't put aside a little here and there for your future, it could have disastrous consequences, divorce aside. If something horrible happened and one of you had high hospital bills or disabilities that insurance would not cover in total (which is often the case), your retirement savings would be one of the first places you'd inevitably pull money out of to pay the bills, after your savings account and emergency fund are depleted. Saving as an individual, along with as a couple, gives you extra padding and ease of mind in case the unexpected occurs.

And if a divorce is on the imminent horizon (sigh), don't just ask for the house and think that will solve all your worries. According to insurance company Nationwide, "Studies show that women suffer more financially than men when a marriage ends." They cite that:
  • A quarter of all divorced women in America live at or below the poverty line
  • A woman’s standard of living decreases anywhere from 27 to 45% in the first year after a divorce while a man’s rises by an average of 10%.
So say you got said house in the divorce settlement. Would you be able to continue paying the mortgage on it with your single wage? If you gained sole custody of your children, would you have the time to work enough to make house payments while putting food on the table and also paying for childcare (since you won't be around as often)? These are all questions to consider when you've reached the end of the line.

Marriage is a fabulous thing, and I can say that from first-hand experience. Though it's only been about a year in for me, I'm happy with my decision and glad I married someone who although may be opposite of me in some ways (think Jane Fonda and Robert Redford in Barefoot in the Park), we still see eye to eye on the important issues such as career, family and money. Just remember to be open and honest with your joint accounts and expenses, and to work as a team on your financial matters and decisions rather than as a driver and passenger!

Wednesday, September 10, 2008

Tips to beat foreclosure

You're struggling to keep up on house payments. Hey, it happens to the best of us, as evidenced by the foreclosure wave that's crashed across the country, leaving mass destruction in its wake.

Pointing fingers and assigning blame only delays the inevitable need to find a desperate solution. Yeah, maybe the banks tricked unwitting people into signing mortgages with poor future caveats, people signed mortgages that they didn't fully research and understand ... and none of us could have predicted that the real estate market would collapse and homes would become a fraction of their worth, etc., etc., etc. (Wow, I'm starting to sound like Yul Brynner a la The King and I.) But the cold, hard fact of the matter is that foreclosures have become a reality -- one we need to deal with as a palpable occurrence that could happen to any of us for a myriad of reasons.

Picture it: You're struggling to pay your Comcast bill, much less your home loan, when you begin to get menacing calls from your bank. Though you still haven't spoken to anyone from said bank yet -- you screen every call and let your trusty voicemail deal with the bad news -- you know they're looking for you. Visions of high-speed car chases of you fleeing from black Lincoln Towncars filled with angry bankers start keeping you up at night. Everytime you leave your house, you cautiously tip-toe out your front door, like a deer in headlights, and timidly peek around before darting to your car for cover to evade any briefcase-wielding men in suits. The hunt is on.

But you can only feign ignorance for so long, and playing the cat and mouse game is just a sandbag protecting you from the inevitable storm. So, what's a homeowner to do? (Besides jump in your car, drive south of the border and set up shop in Oaxaca ... although I hear their outdoor fiestas are fabulous!)

First off, prioritize your bills by making a list with the most important ones up top. Obviously your home loan is numero uno. Your superfluous bills should reside near the bottom of the list, and these you should probably cancel. You know, the ones you don't really need, i.e., your cable bill (sorry, you'll have to watch Grey's Anatomy at a friend's), your landline and/or cell bill (pick one, Grasshopper, and downgrade to the cheapest contract!) and your Netflix subscription (pssst, you can rent movies and TV shows for free at your local library).

Your credit card bill should fall after your home loan. Again, your mortgage should come first, before any other debt in your life. Many times, real estate is the only worthy investment of any real value that people have to their name, and losing it is not only a painful process, it creates a horrible blemish on your credit record. Yes, missing a credit card payment or two is also bad, but if you want to begin rating differing levels of "bad," it's far worse to have your home foreclosed. Ask yourself what's more important: Making sure your couch is paid off on your Macy's card, or making sure you (and your family) have a roof over your head. You do the math.

Once you're able to make payments again on your mortgage (hopefully without a struggle), resume paying other bills on your list from the top down. Don't worry, you'll get your Netflix subscription back, it just might take some time. This approach assures that you aren't spreading your money thin over a broad range of bills, nonessential or otherwise, and forces you to prioritize your payments.

If that's not enough, set up shop and sell your goods! Those crystal wine glasses may be beautiful, but what will you be drinking out of them if you've been kicked to the curb? Sell them. In fact, sell everything you can. Furniture, your DVD and music collection, collectibles, electronics ... anything that you know is worth value. It might get to the point of where you're sleeping in sleeping bags on the living room floor, and using milk crates as a dinner table, but that's okay. Yes, this will only sustain you for a few months, but that's time you can use to save more money. When times get desperate, you need to start thinking on a monthly basis. Ebay, Craigslist and Amazon are great places to peddle your wares.

And if that's not enough, you might have to venture out in search of additional work. I know, it's very, very hard to be on your feet for more than eight hours a day (hey, I worked retail in college!) or to sit at some desk, but this would only be a temporary thing to help save your house. Any monetary cushioning helps. It's understandably excruciating to spend six to seven days a week away from your family and only see them late at night when you come home exhausted, but doing this doesn't just show marvelous strength and character, it reaffirms your determination to overcome any obstacle thrown your way. Bravo!

You could also try refinancing your mortgage, which doesn't always work since it's done on a very individualized basis, especially in today's market. Another option, much like credit cards, is that mortgage interest rates can be negotiated. Think of it this way: When a bank forecloses your home, it ends costing them because they have to turn around and sell the house at a discount, along with lawyer fees. Bottom line: You won't know until you ask, so go ahead. Call your lender and ask if they can tweak your interest rate, even a tad.

Another option, since you already have your lender on the phone and all, is to ask about conducting a short sale, where your lender accepts less for the home than what your original loan amount is for. Although this seems like the most popular option these days, short sales don't apply to everyone and are only done on a case by case basis. For example, not all properties and sellers qualify for short sales, lenders may think they'll lose money on a short sale versus a straight-out foreclosure, etc.

Then again, the whole point is to hold on to your home and not lose it right? Yes, you could accept being foreclosed and go back to renting, but doing so would ding your credit horribly and financially hurt you for many years to come. Unfortunately you're in a pickle, but you can pull yourself out. Don't go down without a fight!

Tuesday, September 9, 2008

Fashion on a Budget: The high-waisted pencil skirt

Unless you've been hiding under a rock during the languid days of late summer, you've probably noticed that the high-waisted pencil skirt is one of the fashion must-haves going into fall. I admit, this classic spin on the traditional pencil has definitely caught my eye, in both fashion mags and store windows alike. Why? The sleek silhouette of the high-waisted pencil accentuates everything that's great about being a woman while at the same time retaining a conservative edge. The result is alluring, to say the least. Think seductive secretary Joan Hollaway a la Mad Men.

I'm a sucker for the pencil skirt (I own close to 10, in different variations), but I'm disappointed to see the dearth of high-waisted pencils worn by women in my area. The most I've seen any in one location is when lunchtime rolls around in DC's financial district and various working women (including moi!) model our latest fashions down our runway that is 18th Street. Granted, I know many feel they can't pull off this look, but you can and it doesn't take a size 2 body to look great in. Quite contrary, pencil skirts look absolutely divine on curves. All it takes is some self-confidence and a little pocket change ... you want to be a trendsetter, don't you?

Below I've put together six outfits. The first are three outfit ideas using a single skirt:

Outfit on the left:
  • Black high-waisted pencil, Charlotte Russe, $19.99 (used in all three outfits)
  • Red clutch, Target, $22.99
  • Striped blouse with bow, Charlotte Russe, $24.99
  • Black pumps, GoJane.com, $15.99
  • Black sunglasses, American Eagle, $12.99 (also used in outfit on right)
Outfit in the middle:
  • Pink sleeveless blouse, Forever 21, $12.99
  • White handbag, Target, $25.99
  • Tan patent pumps, Charlotte Russe, $22.99
  • Beige sunglasses, GoJane.com, $5.99
Outfit on the right:
  • Black chiffon scarf, Scarfworld.com, $11
  • Striped black and white top, Forever 21, $12.99
  • Red RSVP peep-toe pumps, Zappos.com, $70
  • Red knockoff Balenciaga motorcycle bag, FashionJunkie.com, $58 (pssst, the real thing costs $1,799!!)
All are perfect for everyday situations, from work to play to grocery shopping. (Yes, these outfits would even look adorable doing something as mundane as grocery shopping. Look out, Trader Joe's!)

And if you want some variation to your high-waisted endeavor:

Outfit on the left:
  • Black pencil with belt, Charlotte Russe, $19.99
  • White shirt, Old Navy, $10.50
  • Black bow pumps, TopShop.com, $120 (also used in outfit on right)
Outfit in the middle:
  • Khaki pencil skirt, Target, $39.99
  • Pink silk keyhole top, Old Navy, $9.99
  • Creme woven belt, Forever 21, $6.99
  • Bamboo cube clutch, Ebags.com, $55
  • Peep toe flower wedges, GoJanes.com, $15.99
Outfit on the right:
  • Leopard pencil skirt, Newport News, $39
  • Black sweetheart top, Forever 21, $12.99
For the latter three outfits, the sunglasses from the first three outfits can be used, along with mixing shoes and bags as you see fit.

And just because you're all fabulous, I'll let you in on the Michael Kors khaki trench I own, which I found today for cheap ($99 compared to $165) on Overstock.com:

This trench will go with all aforementioned outfits and fits as though it's been individually tailored -- perfect for fall. Very timeless, very chic -- think Audrey Hepburn in Breakfast at Tiffany's.

Sunday, September 7, 2008

When Frugal Becomes Cheap

(or, "Sometimes You Have to Spend More to Save More")

A few weeks ago, my good friend got a hankering to buy a new handbag. Nothing fancy with all the bells and whistles of a Gucci couture bag. She simply wanted a well-made, fashionable leather bag that would hold up better than her previous Target bags had fared over the course of only a few months.

So she set out on her quest, knocking on the door of every website on the web, desperately seeking not Susan, but a somewhat stunning, quality handbag sans the stunning, unaffordable price. I empathized with her purse plight. We're a lot alike in the frugality department, and both thrive on finding the best deal possible (maybe that's why we're such good friends!). Initially she wanted a Coach bag ... lower-end designer, a pinch more affordable than, say, Marc Jacobs, but still quality. Even though she had the money saved up for said handbag, the $350 to $400 price tag chilled her to the core when push came to shove. So she kept searching. The more she searched, the lower her price point became until finally she inevitably found herself in the below-$100-range, looking at handbags made not of leather, but what looked to be parachute vinyl and faux croco-pleather.

She had lost sight of what she wanted: A quality leather purse that could withstand the wear and tear of (at least) a few years. Instead she had become consumed with the number on the price tag alone. The cost, and not the value, had become the determining factor in her what-turned-out-to-be-vinyl-laden voyage.

Which brings me to the topic du jour: When is that line crossed when the art of frugality becomes just plain being cheap? How do you know when you've become too frugal? Is there really such a thing?

I think that frugal people see the inherent value in potential purchases, whereas cheap people only see the cost.

Lets face it: It feels great when you find a bargain, be it in the clearance bin at Circuit City, a special deal on flat screens at Target, or a mega sale at Banana Republic. But finding a bargain can become a habit -- one that may not always be the most cost-efficient over the long term. Case in point: I always buy my most frivolous purchases on sale. These include DVDs, books and CDs, where I turn to the Amazon marketplace and usually score any item I want for under $10. Also under the frivolous purchase category are trendy clothes that I want for cheap (usually bought at places such as H&M, etc.), coffee when I'm on the go and those yummy spiced-cinnamon-scented candles that remind me of Fall (they're a guilty pleasure). These sort of purchases are illiquid and don't hold much value.

I've conditioned myself to always find everything at the cheapest price possible -- it's become an exciting challenge of sorts, and gives me a fabulous feeling of pride and accomplishment when done right. This is great for when I buy knockoff jewelry I don't care about losing or some shirt I know will go out of season by Winter, but unfortunately, applying this mentality to even the slightly bigger purchases in life can end up costing more in the long run. How? Well, by buying the cheapest, say, laptop now instead of investing in the mid-priced one, you invite the probability of expensive problems occurring in the short term and the likelihood that the laptop will need to be replaced sooner than one with perhaps a better brand name or better parts. The same could be said for vehicles, vehicle maintenance, kitchen appliances (such as coffee makers, blenders and refrigerators), or (ahem) quality handbags.

Notice that I used the word "investing." These types of purchases should be viewed as investments into securing at least the next few years as dependable and maintenance-cost-free. Granted, if Home Depot is having a 4th of July sale on refrigerators, then by all means take advantage of those savings padded with the premise of red, white and blue. But don't wander into BestBuy and purchase a $20 Apex DVD player just because it's the cheapest find. Why? Because you'll probably have to replace it by year's end after it's eaten your copy of The Devil Wears Prada and refuses to give it back, even after repeated verbal pleas, coaxes and eject button presses. (I speak from personal experience.) Bargaining with said generic DVD player also doesn't work. ("If you give me back my Devil Wears Prada, I'll trade you with Love's copy of Minority Report. ... No? ... Sigh.")

So that $20 DVD player could actually cost you more in the long run, with the initial $20 cost on top of whatever you pay to either have it fixed or replaced with a slightly-more-expensive, better-quality one.

Going back to my handbag-hunting friend, if she invested in a more well-made, "pricier" handbag, her need to buy a new bag every few months would diminish. Say she bought a leather Dooney and Bourke bag for $300. The price seems shocking to us savvy savers, but considering that this isn't the type of purchase we make on a regular basis -- and it's one that will literally last years (think 10 to 20) -- it's okay. Really. After you've gotten over the initial sticker shock, consider how much you'd spend on a handbag from Target or Nine West, and how often each cheaper bag would need to be replaced.

A $50 handbag will probably last two years, on average. It varies from girl to girl. To replace it with new bags, whether because of wear and tear or because it's plain not in style anymore, would cost $500 over the course of 20 years. And let's face it, ladies: The cheaper the bag is, the more you feel "okay" about buying others to add to your growing collection of cheap bags. If you bought the more classic, well-made Dooney and Bourke bag for $300, that's how much it would cost. Plain and simple. (I recently bought a D&B giraffe bag as a birthday present to ... myself ... in April, and believe me -- the leather and stitching will definitely carry me into at least my 40s, if not beyond!)

That saves you at least $200, if not more due to the psychology of buying things cheap. What do I mean by that? I believe we feel that when we save money on items, we feel like we've earned the right to buy more ... we saved by finding that fabulous deal in the first place, after all. This, of course, negates the whole idea of finding the cheapest buy. But it feels positively marvelous leaving a mall or store with bags of goodies versus one bag with one or two items. Like we've gotten our true money's worth. But have we, really? I think we've gotten too used to the feeling that we need more items for our money versus less. Quantity, in essence, has become our mantra over quality.

So don't just look at the cost on the price tag. Look at how much your purchase will actually cost you overall. It may be a higher price upfront, but after you've gotten over the sticker shock, know that it could end up saving you more money in the long run.

Wednesday, September 3, 2008

Who's more "money," blondes or brunettes?

It's an age-old question with no clear-cut answer: Who's better, blondes or brunettes? The Jackies of the world or the Marilyns? The Kelly Kapowskis or the Kelly Taylors? You get the picture.

Well to quell any financial inquiry into the benefits of either hair color, earlier this year CNBC did a fun scan to see how the Dow and S&P (two stock market indices) performed every year since the Sports Illustrated Swimsuit Issue was created. The kicker? Their goal was to find out if there were any significant gains when the cover featured a blonde versus a brunette.

CNBC found that out of 44 covers from 1964 to present, there were 21 blonde covers, 19 brunette covers, 3 with more than one model on the front (all with differing hair colors), and one (yes, one) cover that featured a redhead. (Sorry reds, we still love you!).

Of the blonde covers, CNBC reported the average annual return of the Dow and S&P was 11.6% and 12.5%, respectively. Pretty solid results, considering the network found that the brunette magazine covers only averaged an annual return of 2.2% for the Dow and 2.3% for the S&P. (Sigh).

If you're of the dark-haired persuasion like moi, though, don't bust out the peroxide just yet! CNBC also found that models' nationalities also seemingly play a part in higher results. "According to Bespoke Investment Group," they said, "since 1978, the S&P has returned an average 13.9% when an American is on the cover versus a 7.2% average return when a model from another country is on the cover.

In more downright silly but amusing hair-color-meets-finance news, The Huffington Post reported a few months ago that experts at Lycos analyzed the hair color of wives of the world's top 100 billionaires to determine if there is a predominant hair color wealthy men go for. Turns out 62% of the world's billionaires were married to brunettes, while 22% of billionaires were married to blondes. Meanwhile 16% were married to women with black hair (um, I thought any shade of dark hair was considered brunette? Interesting...).

Lastly, the Daily Mail ran a story last month titled "Blondes have more fun, but for money and love, turn to the dark side" (so funny, I couldn't make this stuff up!). The story alleges that "Researchers carried out a study of 3,000 women and found, on average, that brunettes will earn £4,250 more a year than blondes," along with some other random facts. To read it, click here.

Obviously these statistics aren't the most valid, especially considering that brunettes outnumber blondes by a large number internationally, but it's still amusing to see just how people can string together the most obscure facts to answer the most abstract questions. And it's hilarious to read the results. In fact, maybe next time CNBC will tackle the "Does money buy happiness" conundrum!

Tuesday, September 2, 2008

Pamper yourself with a free spa kit

I've got some sobering news: Labor Day was yesterday.

So what does that mean, besides people who think they're fashion savvy claiming you're not allowed to wear white? (By the way, that's an old wife's tale. It's 2008 girls, we're allowed to wear whatever color we want, whenever we want regardless of some esoteric government holiday!) Well, yesterday's holiday means that there aren't anymore three day weekends from here on out. Okay, just until late November, but I hope you all enjoyed your Monday off because Fall is right around the corner, and with it comes stressful five-day work weeks with no reprieve and cold weather that makes even the sunniest girl's complexion downright dull.

But don't fret, my darlings! How does treating yourself to a luxurious bubble bath, complete with conditioning treatments, different kinds of bath salts and those cute little non-slip ducky appliques for your bubble bath session sound? What if I told you it was free?
(Bath & Body Works warm vanilla sugar body cream included, of course.)

After a long, excruciating day at the office, imagine coming home and kicking off your stilettos, and conjuring up bubbles while putting some Anita Baker on low ... no, this isn't a scene from
Waiting to Exhale. Though I'm often mocked for my love of Anita, I think she's a fabulous singer. In fact, have you heard "Giving you the Best That I Got?" I highly suggest giving it a second try if you cast it off at first listen. But I digress.

Abby over at I Pick Up Pennies is holding a weekly giveaway for a divine basket of free bath goodies, worth over $30! These bath accoutrements include:
  • Lavender Luvies relaxing bath salts (lavender, chamomile, vanilla bean)
  • Lavender bubble bath
  • Bed, Bath & Beyond non-slip duck appliques
  • Lavender colored bath pouf
  • Bath & Body Works Warm Vanilla Sugar body cream
  • Citrus Grapefruit shower gel
  • Redken "All Soft" shampoo & conditioner packets (1 each)
  • Redken Clear Moisture Instant Polishing Prep (1 fl oz)
  • Redken Gold Glimmer Shine Treatment (0.5 fl oz)
  • Redken for Men Go Clean (1.7 fl oz)
To enter, visit her site for more details and be sure to let her know you heard about the giveaway here. With that, I'm off to practice some Anita Baker for my next karaoke outing -- hopefully it'll turn out better than my karaoke performance of the B-52's "Roam" last weekend! (Let's just say I'm not quitting my day job to pursue my vocal talents.)

Monday, September 1, 2008

Don't fall for rebate bait

About a month ago, I became eligible for a new cell phone through Verizon's "new phone every two years" plan. I was elated, since I was using a cell phone circa 2005 that desperately needed updating. (Albeit not as desperately as Love's phone, which could double as a movie prop in a late 80s film set on Wall Street. Okay, it's not that bad, but it's definitely not modern.)

So, Love and I strolled into the nearest Verizon store. My only requirement for a new phone (besides cost) was that it had to be pink. Unfortunately, they only had two semi-pink phones -- one was actually more purple than pink (boo) -- and neither fit the bill for me. After complaining to the salesman that they should really reexamine their dearth of pink cell phones, I scouted my way through the charted waters of Verizon's cell phones and was pleasantly ... disappointed. Why? Well besides lack of color and aesthetic, there were only a handful of phones that were truly "free" under my "new every two" deal. I pressed forward, though, bright-eyed and bushy-tailed as the salesman eventually laughed, threw his hands up in the air, and told us, before walking away, to let him know when I had made a decision. Yes, even the salesman gave up on me. I can be that indecisive when it comes to these sorts of things.

To make a long story short, I ended up with a phone I've learned to love (although it lacks any pinkish hue), but wasn't the promised "free" that Verizon said I had earned, thanks to a rebate that had to be filled out and sent in. I'm sure many of you would consider rebates a marvelous thing, but when I learned there was a rebate involved in the crux of the deal, I had to let out an exasperated sigh.

Why? For starters, that means:
  • I had to pay $50 (before mail-in rebate) at the checkout just to get said "free" phone. Last time I checked, $50 in any way, shape, or form is not "free."
  • Then, I had to come home and remember at some point in that next week to clip out all annoying UPC barcodes, etc. from the cell phone box to send in an envelope replete with my receipt to Verizon.
  • Oh and before I mailed it out, I would have to make copies of everything in case Verizon tried to pull a fast one and say they didn't receive my envelope of goodies. Making copies would entail me having to drive to the nearest Kinko's to access a Xerox machine because unfortunately I don't own a copier in my apartment (what's next, demanding I have an office supply closet, employee break room and corporate account with Staples for paperclips and Post-Its?).
  • Then, once I mailed out my rebate, I would have to remember for the next six to eight weeks that I should be receiving a check in the mail any day -- and that if I don't get sent one, I would have to take appropriate action (a whole other set of bullet points unto itself).
Within the uber busy landscape of my life, these kind of tasks end up costing me more than if Verizon just gave me the free phone and called it a day ... after all, I did earn it through my "new every two" plan. Geez.

So why do they (or any other company, for that matter) wave a seemingly sweet rebate deal infront of you while charging upfront for the so-called "deal" you should receive in-store, for efficiency's sake? I honestly believe that it's because they are banking on the fact that you will either:
  • forget to mail in your rebate within the specified deadline,
  • be too lazy to do it when push comes to shove,
  • or mistakenly include the wrong bar code, receipt, etc. and be denied the rebate in the end.
Hey, it's a plausible suspicion. Consider the fact that companies offer $6 billion worth of rebates annually to woo shoppers into enticing deals. It gets better. About 40% of mail-in rebates end up not being redeemed by customers, or are filed incorrectly and ultimately denied, says Peter Kastner, vice president and research director at consulting firm Aberdeen Group, in an interview with SmartMoney Magazine. "The manufacturers know that and they build their pricing models around the fact that they can offer rebates, but only a fraction of consumers will respond."

Sneaky, sneaky, huh? I know many of you live and breathe by rebate deals, but I think that rebates are more used as a tool by companies to take advantage of consumers rather than as a reward for patronage. Believe me, no business or company cares about little ole you more than they care about their quarterly earnings. They are banking on the fact that you will probably forget to jump through the plethora of hoops they've set up.

In a separate interview with PC World, Kastner reports that about 60% of computer buyers, for example, who could redeem computer-related rebates don't even try. "That's money the store and/or the manufacturer keeps," says Kastner, who states that of the 40% who give it a shot, half experience problems or don't get a check at all.

So, some companies -- including Office Max, Dell and BestBuy -- have waved adieu to rebates
entirely. SmartMoney says that "all three companies say [this] was enacted in the customers' best interests" but it "has one unpleasant side effect: It will ultimately lead to higher product prices."

Hey, I'd rather take slightly higher product prices than being swindled out of money that I'm entitled to,

"We get a huge number of complaints about mail-in rebates," James Hood, editor of ConsumerAffairs.com, tells SmartMoney. "People buy products based on the promise that they'd get a rebate of X dollars. And when they don't, they justifiably feel they've been robbed."

Wanna know just how robbed you can feel? According to the Federal Trade Commission's website, charges were settled against CompUSA back in March of 2005 when the computer retailer failed to pay thousands of rebates between September 2001 and July 2006. "T
he FTC alleged that CompUSA falsely advertised that rebate checks would be received within six to eight weeks, whereas consumers reported delays of one to six months, and thousands complained about never receiving the rebates at all. CompUSA settled the FTC charges by agreeing to pay all past due rebates retroactively," the website states.

Since that little rebate debacle, Rhode Island and Connecticut created statewide laws in 2006 that require stores to give shoppers any rebates upfront, while the businesses bear the burden of completing the paperwork.

If you feel you've been "baited" with a rebate that has yet to arrive in your mailbox, the FTC says that companies are required to send rebates within the time frame promised. If no time is specificed, then within 30 days.
If the rebate never arrives or arrives late, file a complaint with the FTC, the state Attorney General or the local Better Business Bureau.

Bottom line: Don't get lured or duped in the rebate realm. Chances are that rebate deal will be more of a headache than a savior along your path to savings enlightenment. Tread lightly, grasshopper!

Want to see how your favorite retailer measures up? All retailers are, of course, not created alike, so do your homework and check out this rebate report card.
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