When you think “peer pressure,” you probably think of kids: High school students pushing each other to make dumb decisions, or catty junior high cliques making fun of classmates who don’t have the “right” clothing, interests, looks, and so on. 

The good news is, most of us have matured a bit since high school.  As adults, we’re more secure in who we are and what we believe in, and, in general, we care less about what others think.  That said, we’re still influenced by our peers – and when it comes to money, we may be letting the people we know have too much influence. 

If you’ve ever felt pressured into spending money – whether it was on a new car you couldn’t actually afford or a pricy group outing that blew your budget – you’ve experienced financial peer pressure firsthand.  This kind of peer pressure can be especially difficult for folks trying to pay down credit card debt or save for the future.

So how do you put a stop to financial peer pressure?  Keep reading.

Stop Trying to Keep Up

Your neighbor buys a shiny new convertible – and all of a sudden your practical, ordinary, not-so-new sedan looks old and outdated.  Your brother-in-law has filled his Facebook timeline with photos of his newly remodeled kitchen – and you think of those photos every time you open your beige, 1980s-era refrigerator. 

Any of those scenarios sound familiar?  When people fall into the financial peer pressure trap, it’s often because they want to keep up with their friends (or neighbors, or coworkers).

This is not an especially new or rare phenomenon, but if you’re trying to pay down (or avoid) debt, stick to a budget, or build up your emergency fund, trying to keep up with your friends and neighbors is a dangerous, expensive game.  Sure, you might feel a twinge of envy every time you see your neighbors’ new car or your friend’s gourmet kitchen — but that’s not an excuse to start spending money you don’t have.

The next time you find yourself tempted to make a purchase just to keep up with someone else, remember this:  Things aren’t always what they seem.  The neighbor with the new car might be eyeballs-deep in debt.  Your brother-in-law might not have a dime set aside for retirement.  And who knows?  Maybe they felt pressured into those big purchases by their friends, neighbors, or relatives.

See what I’m getting at?  You can’t let others influence how you spend your money.  Focus on your goals, and stop trying to keep up with other people.

Honesty is the Best Policy

A good friend asks you to be in her wedding.  You’d love to do it, but you know that as a member of the bridal party, you’ll be expected to fork over a few hundred bucks for a dress, shoes, and an untold number of extras along the way to the big day.  You don’t want to hurt her feelings, though – and you’re a little embarrassed about your money situation – so you say yes.  You finance the whole thing with your credit card, and the thought of all that high-interest debt makes it difficult to enjoy the wedding-related festivities.

Have you ever said “yes” to a pricy invitation that you really couldn’t afford?  It’s hard to say “no” to friends – and this is why so many otherwise rational, responsible folks end up spending way too much money on social activities.   This is a type of financial peer pressure that I think of as “social spending.”  It’s what happens when you end up spending money you don’t really have on social events like vacations, gifts, or parties. 

When it comes to your friends, I think honestly really is the best policy.  Now, I’m not saying that every friend who invites you to a too-expensive restaurant needs to hear every detail about your struggle with credit card debt.  But you can bow out gracefully with a few simple words of explanation, like:

“Sorry, but I’m on a budget these days.”

“I’d love to, but I money’s a little tight right now.”

“Thanks, but we’re trying to save up for XX.”

“No thanks.  We’re really watching our spending – but we’d love to have you over for dinner sometime.”

In today’s economy, who isn’t trying to manage their money a little better?  A true friend will understand and appreciate your honesty.  Who knows?  You might even inspire someone to reevaluate their own spending habits.

Tips for Smart Social Spending On a budget?  You don’t have to kiss your social life goodbye.  With a little planning and creativity, you can have fun – without breaking the bank: Include social events in your monthly budget.  A good budget should help you handle all types of expenses – including things like gifts, events, and the occasional dinner with friends.  Be honest – but not preachy.  It’s one thing to tell your friends that you’re trying to get your finances in better shape.  It’s another to spend hours droning on about financial responsibility or judging your friends for overspending. Come up with free (or low-cost) alternatives.  Fun doesn’t have to cost a lot.  Instead of going to the movies, ask friends to bring a favorite DVD and have a movie marathon.  Instead of going out for dinner, invite everyone to your place for dinner, drinks, and board games. Focus on your long-term goals.  Eventually, you’ll probably be tempted to keep up with “the Joneses” or attend a social event you can’t really afford.  When that happens, the best thing to do is remember why you started budgeting in the first place.  Focus on the freedom of being 100% debt-free or the peace of mind you get from having three months’ salary set aside for emergencies – and stay the course!

]]> http://www.debtguru.com/finances/peer-pressure-finances/feed 0 http://www.debtguru.com/saving-money/five-money-smart-vacation-tips http://www.debtguru.com/saving-money/five-money-smart-vacation-tips#comments Fri, 17 May 2013 17:48:03 +0000 Mike Peterson http://www.debtguru.com/?p=3063

Summer is right around the corner – and for many folks, that means that it’s time to start planning a vacation.  But remember:  Just because you’re taking a holiday from your day-to-day life, you shouldn’t abandon your financial responsibilities.   

Want to make sure that your finances don’t get away from you during your getaway?  Here are five tips to help you preserve your credit score (and your savings, and your emergency fund) while you plan your next vacation.

1. Set a budget.  I know.  You’re going on vacation.  The last thing you want to do is think about something as mundane as your budget – but trust me on this one.  Making a budget is the only way to ensure that your trip doesn’t turn into a spending free-for-all.  Give yourself a daily spending allowance that includes meals, activities, and any extra transportation expenses (like cab fare) – and don’t forget to budget a little “fun” money for souvenirs.  Then, stick to that budget – no exceptions.

And don’t forget to budget in some extra cash for unexpected emergencies, too — that way, you don’t have to max out your credit card to deal with lost luggage, an illness, or a last-minute flight or hotel change.

2.  Do a last-minute money check.  A day before you go on vacation, it’s a good idea to review your finances one last time.  Make sure to take care of any bills that will be due while you’re gone (nothing spoils a vacation like racking up late fees because you forgot to make a payment), and make sure you know how much money you have in your checking and savings accounts.  And if you plan on using a debit or credit card, be sure to call your bank or credit card company and give them a heads-up about your trip (otherwise, a string of purchases in another state or country might trigger a fraud alert).

3.  Protect your identity.  Don’t leave your driver’s license, passport, or credit/debit cards unattended – ever.  If your hotel room has a safe, use it.  If not, carry them with you or lock them in your suitcase (and take the keys with you!).  Identity thieves only need one or two pieces of information in order to rip you off – and they only need a few seconds to swipe a stray ID off of, say, your hotel nightstand.  It’s also a good idea to have phone numbers of your bank and your credit card company handy, just in case (store the info on your phone or write the numbers down and keep them in a safe place).

4.  Be careful with your cash.  If you plan on a cash-only vacation (which I highly recommend – unless, of course, you can pay your credit card off in full when you return), make sure you’re not an easy target for opportunistic pickpockets:  split up your cash, and only take what you need for the day.  Leave the rest in your hotel safe.  Another option?  If your bank has branches in your destination city, visit the ATM and pull out what you need for the day.  Or, consider a prepaid debit card and forego cash altogether.

5.  Be even more careful with credit cards.  If you read this blog regularly, you probably already know how I feel about credit cards:  When used responsibly, they can be useful tools.  But the key word is “responsible.”  If you can pay off your credit card – in full! – the moment you come home from your big vacation, there’s no reason to leave it behind.  In fact, some credit card companies offer unique services – like discounts, emergency assistance, and fraud protection – that are useful to travelers.  Just be careful, though:  It’s pretty darn easy to overspend on vacation, and it’s especially easy if you’re paying with credit.

Imagine this:  Right now, there’s a band of tech-savvy crooks prowling the city, outfitting ATM machines (and, in some cases, gas station pumps, and retail point-of-sale readers) with sophisticated gadgets designed to steal debit card numbers, PINs, and – of course – your money.  These guys are highly organized, and they’re armed with nearly undetectable spy cameras, Bluetooth devices, and fake card readers that are virtually indistinguishable from the real thing.

It sounds like the plot of a bad TV movie.  Unfortunately, though, this is no movie. This type of ATM-based theft – called “skimming” – is very real.  And experts say it’s on the rise.

How Skimming Works

Although skimming setups can vary, there are generally two major pieces of equipment involved in ATM skimming:

1.  A phony card reader.  To steal your debit card data, tech-savvy thieves place phony card readers directly over the ATM’s card reader.  In most cases, the fake readers fit snugly over the real reader — and since they don’t interfere with your ability to swipe your card, they can be fairly hard to detect.  When you use a machine outfitted with a fake card reader, the information stored on the magnetic strip on the back of your card is captured and stored on the device.

Of course, in order to use that information, crooks need one more thing:  Your PIN number.  That’s why they need a second piece of equipment . . .

2.  A fake keypad or a hidden camera.  Fake keypads are designed to look like part of the actual machine.  Just like the fake card readers, fake keypads fit over the machine’s real keypad.  These devices are designed to record keystrokes – this is how some scammers obtain your PIN number.  Not every skimming scam involves a phony keypad, though:  Some criminals use hidden cameras instead.  These cameras are very small, and they can be hidden just about anywhere – but they’re typically placed somewhere with a good, unobstructed view of the machine’s screen and keypad.

In most cases, a crook will set up skimming gear on a busy ATM machine, wait several hours, and then come back to collect the equipment – plus the debit card information and PIN number that’s been captured.  In other cases, the skimming equipment is equipped with Bluetooth, which transmits the stolen information instantly.

How to Protect Yourself

Want to make sure you don’t fall victim to a skimming scam?  Use this ATM safety checklist before you swipe your card:

• Inspect the machine:  Does the PIN pad look crooked?  Is the card reader the same color and material as the rest of the machine?  Do you see anything suspicious, such as tape residue (skimmers often use double-sided tape to attach their own card readers or keypads), tiny holes, or strange-looking extra parts?  Are there any loose parts?  Those could be signs that the machine has been tampered with. 
• Check around the machine.  If you’re using an ATM machine located in, say, a bank lobby or in a convenience store, make sure you check the areas around the machine, too.  Fixtures like shelves or magazine racks can provide the perfect hiding place for a video camera.
• Cover the screen and/or keypad with your hand.  The whole point of hidden cameras is to record you as you key in your PIN number.  Make things difficult by simply using your hand as a shield when prompted for your PIN.
• Avoid using ATMs located in tourist areas.  Sure, skimming can happen anywhere – at your local drugstore, at your bank’s drive-up ATM, or even at your corner gas station.  But most experts say that scammers are more likely to hit up high-traffic cash machines.  The safest bet is to stick to familiar machines – get your cash before you go somewhere new.
• Be wary of “out of order” signs.  In locations with multiple ATMs, thieves will try to direct traffic to the machine outfitted with skimming equipment.  One common technique is to stick an “out of order” or “please use next machine” sign over the machine that hasn’t been tampered with – leading unwitting customers to the one with the phony card reader or the hidden camera. 
• Read your bank statements and monitor your account activity.  One of the best ways to protect yourself from scammers is to pay close attention to your banking activity.  Don’t assume that everything is okay, and don’t assume that your bank will always pick up on fraud. If you notice any suspicious charges or withdrawals, call your bank right away.

Staying on top of your finances doesn’t have to be difficult in the digital age.  There are a variety of apps people with smart phones and tablet computers can use to help with debt consolidation, reporting expenses, paying bills, and more.  If you’re ready to change the way you manage your money, consider downloading a few of these apps. 

Mint

Keeping track of all of your money can be difficult.  Making car payments on time, checking on your stocks, and making sure that your savings account is growing can take a lot of time.  If you download Mint, you’ll be able to see and manage all of your financial obligations with this great money management app.  Using the Mint app is like having your own personal accountant.  You’ll be able to easily see the balance in your checking, savings, and retirement accounts, and manage them how you see fit.  This app is great for people who need help sticking with budgets and reaching financial goals.  Once you tell the app what you want to accomplish money wise, it’ll send you updates each month on how much closer you are to your goal.  It can even give you advice on how to achieve your goals faster.

Debt Snowball Pro

Have you ever heard of the debt snowball method?  It’s essentially a debt reduction strategy where people in debt focus on paying off smaller amounts of debt first, and gradually move on to paying off larger debts.  The money that was put towards the smaller debts can now go towards paying off bigger debts, and many financial advisors swear by the method.  If you have an iPhone or iPad you can download the Debt Snowball Pro app and be able to manage your debt in the palm of your hands.  This app keeps track of all of your debt obligations, and makes a detailed payment schedule that can show you how your snowball payment methods are affecting your debt.

Expensify

Is there anything more tedious than having to put together an expense report?  Many professional accountants dread having to keep track of every receipt and purchase, and if they dislike doing them you can almost imagine how tedious it is for the average person to do it.  Keeping an expense report can help make filing your taxes easier, and it can give you insight into ways you can improve your spending habits.  If you want to have a monthly expense report you don’t have to hire an accountant, just download Expensify and get started.  Using it is easy. First you give the app access to your online bank account, scan your old receipts, and wait for the app to calculate your report.

Money Lover

Tracking your personal finances isn’t as easy as simply looking up your bank statements online.  You have to take into consideration income from your job, personal sales, investments, and winnings if you want to get the complete scope of your financial standing.  If you want an easy way to track it all, you need to download the Money Lover app.  Money Lover is like having a personal assistant and accountant rolled into one.  It won’t just keep track of all your finances, it also can remind you to make payments and keeps track of all your financial transactions.  This app even has a handy feature that lets users add customized categories for their income and expenses.

PageOnce

Is there anything more complicated and time consuming than figuring out when you have to pay your bills?  If you’re always forgetting the due dates of your bills, the Pageonce app can help you keep track of every company you need to pay.  Pageonce can help you pay your bills with the simple click of a button, and it also shows you your account balances so that you can make sure that you can afford to make your payments.  The app will also keep track of all of your purchases and deposits, and will also track your credit card transactions.

With the click of a single button, you can ensure that all of your bills are paid on time.  You don’t have to keep track of paper bills.  You don’t need stamps.  You don’t have to worry about your check getting lost in the mail.  You never have to wonder if your payment will reach its destination on time.

Sounds pretty great, right?  Well, it is.  Sort of.  Autopay options provide a quick, easy way to keep your bills paid – but they can also make things a little too easy, especially if you don’t closely monitor your billing activity.  While you never have to think about due dates and late fees, automatic payments aren’t 100% worry-free.

Not sure if autopay is right for you?  Here are a few things to consider:

The Pros

Obviously, the biggest benefit of automatic payments is convenience.  You simply opt in to a company or service provider’s autopay option, enter your debit card information once, and your bill is automatically paid on a specific day each month.

A few other benefits of auto pay include:

• It’s fast and direct.  You don’t have to mail anything, and you don’t have to wait for your check to clear.  You don’t have to worry about how long it will take your payment to get where it’s going. 
• It’s (usually) free.  When you mail your bills, you have to pay for postage.  Sure, stamps are only 46 cents – but that can add up fairly quickly, especially if you have several bills to mail out.  Most automatic payment options are free.  If you’re trying to cut costs, autopay is an easy way to save a few bucks a month.
• No late fees or missed payments.  Let’s face it:  People make mistakes.  You misplace your electric bill.  You get busy with other things and forget all about your credit card statement.  Enrolling in autopay is a great way to make sure that your bills get paid – no matter what.   And, of course, when you pay your bills on time you never have to worry about late fees or changes in your credit due to late or missed payments. 

So, there you have it:  Automatic payments are fast, super-convenient, and free.  But before you put all of your bills on autopilot, you should consider a few drawbacks.

The Cons

It’s sort of funny — the greatest thing about autopay is that it makes it easier than ever to pay your bills.  But that convenience can also create a false sense of security:

• It’s easy to miss overcharges or errors.  When you pay your bills with a check or a one-time debit or credit card transaction, you actually have to look at your bill – so you’re more likely to spot a problem, such as an electric bill that’s way too high or credit card purchases you didn’t actually make.  Because automatic payments are, well, automatic, you may not see your bill before it’s paid. 

And, once you pay that bill, it might be harder to get your money back if you overpaid due to an error.  It’s much easier to dispute a charge before you pay it.

• There’s an increased potential for overdrafts.  This is especially true for bills that fluctuate from month to month (such as phone or electric bills).  Let’s say your electric bill has been around $75 for the past three months.  The weather has been pretty nice, and you haven’t run your air conditioning very often, if at all.  And then a heat wave hits.  You’re running the A/C around the clock, and your electric bill jumps from $75 to $175.  If you’re enrolled in autopay, you might not find out about this increase until after your bill is paid – and if you don’t have the extra funds in your bank account, you’re looking at overdraft fees.

The bottom line here is, when you don’t have to read your bill before you pay it, it can be a little bit too easy to miss errors. 

The Verdict

If you’re considering autopay, I’d say proceed with caution:  Read your bills and monthly statements to make sure that you don’t overlook billing errors or fraudulent charges.  And if you plan to automate your electric bill or your cell phone bill, it’s a good idea to always have a little extra cash in the bank to cover a higher-than-normal bill.

Not 100% sure if autopay is right for you?  Try it out.  Start with a relatively small bill that stays the same from month to month.  Subscription-based services (such as Netflix) and gym memberships are good places to start. 

Another option:  If you want the convenience and savings of online payments without the extra worry about billing errors or overdrafts, stick with one-time online payments.  They’re a good middle ground between automated payments and old-school paper billing.

The official IRS deadline is nearly here (it’s April 15 – unless you’re planning to file for an extension), but it’s never too late to talk about some of the ways that income taxes can affect your life – and your credit.

For example, did you know that certain types of credit card rewards are considered taxable income?  Or that paying your taxes late can hurt your credit score?  Ever wonder why most financial experts say you shouldn’t (ever!) pay your tax bill with a credit card?

Want to learn more?  Keep reading.  Here are five things you might not know about the relationship between your income taxes and credit.

1. If you don’t pay (or pay late), your credit score will take a nosedive.  You probably already know that if you don’t pay your taxes, you’ll start accruing interest and late fees.  You’ll get letters and possibly phone calls from the IRS, reminding you of your outstanding debt.  This is just the first step, though:  If you ignore the fees and letters long enough, Uncle Sam will file a tax lien against you.  This basically means that the IRS is telling the world that you owe them money.  A lien is public information – and it will go on your credit report.  Your score will go way down, and you’ll find it more difficult to get financing for a home, obtain loans, and so on.

If you don’t have the extra cash to pay your tax bill, the best thing to do is contact the IRS directly – and immediately.  Explain your situation, and try to make some sort of arrangement, such as breaking up what you owe into an installment plan.  Don’t wait.  Don’t ignore the problem.

Until recently, one of the worst things about a tax lien was its staying power — but that’s changing, thanks to the IRS’ new “Fresh Start” program, which is our next item on the list . . .

2. You can apply for a “fresh start” – but you have to ask.  Traditionally, once you had a tax lien on your record, the only way to make it go away was to pay your debt – and then wait seven years for the lien to be wiped away.  And no, that’s not a typo:  Under the old rules, your lien remained on record for seven years after the day you paid your debt in full.  That’s a long time – especially if you’re trying to improve your credit score.  In 2011, things changed a bit:  The IRS instituted its “Fresh Start” program, which basically lets you request the lien be erased from your record as soon as you pay what you owe – no more seven-year waiting period.  Doing this can dramatically improve your credit rating.  The only catch is that you have to file a formal, written request to take advantage of the program – if you don’t ask, the old rules apply and the lien will stick around for the full seven years.

As part of the program, you can also request that the IRS formally notify certain organizations – such as credit card companies or credit reporting agencies – of your new, debt-free status.  For more details about the program, check out this page on the IRS’ website.

3. “Forgiven” debt is not “forgotten” debt.  Let’s say you’ve been struggling with $10,000 in credit card debt.  After a long, drawn-out negotiation process, you finally came to an agreement with your credit card lender:  You paid $3,000, and in exchange for that payment, the remaining $7,000 was forgiven.

The good news?  You’re no longer responsible for making payments.  You’re in the clear, and you won’t receive any more collection notices or harassing phone calls.  The bad news?  You’ll receive a 1099-C form from the credit card company, and Uncle Sam will also get a copy.  Basically, that “free” $7,000 will be added to your income for the year, and you’ll pay taxes on it, just as you would if you earned money at a job. 

That’s not the only surprising way your credit cards can affect your taxes, though.  Let’s take a look at rewards programs next.

4. Some (but not all) credit card rewards are taxable.  I won’t get into a debate about whether credit card rewards programs are worthwhile or not (you can weigh the pros and cons yourself in this post).  But if you do have a rewards card, it’s important to know how those rewards can affect your taxes. 

Here’s a quick and easy breakdown:  Traditional rewards – in other words, rewards that you earn by using your credit card – are not considered taxable income.  As long as those rewards points or airline miles are directly tied to your spending activity, you’re in the clear.  But if those rewards were freebies (for instance, if you earned, say, 50,000 free airline miles simply for opening a new credit card), you may owe.  To determine this, the IRS looks at the overall value of your “free” gift:  If it’s worth $600 or more, the IRS considers it a “taxable property windfall.”

5. Using a credit card to pay your taxes is a really, really bad idea (really!).  Typically, people use credit cards to pay the IRS for two reasons:  They want to leverage their large-ish tax bill to earn airline miles (or cash back, or rewards points), or they don’t have the cash to pay Uncle Sam outright.  Both of these reasons are bad, and if you’re considering doing this for either reason, I’d strongly recommend that you don’t do it. 

First of all, using your credit card to pay your taxes may score you a few extra air miles – but it can also have the unintended effect of making you look like a high risk to your credit card company.  And if your credit card company views you as high-risk, they might decide to lower your credit limit or raise your interest rate.  Another surprising consequence?  Tax-related credit card debt doesn’t go away – even if you file bankruptcy. 

The best option is to pay your taxes – in cash.  If you don’t have the money, get in touch with the IRS right away and work out a manageable payment plan before it’s too late.

Bottom line:  Pay your taxes – on time, and in cash (even if you have to set up an installment plan).  Leave credit cards out of it.  I can’t promise that these tips will totally take the sting out of your 2012 tax bill – but they can help ensure that you don’t end up paying more in the long run.

Wealthy investors all over the world have long known how to make compound interest their friend.  But your credit company also knows the secret.  And if you’re carrying a lot of credit card debt, then you’ve got compound interest working to drain your bank account.

So what exactly is compound interest?  And how can use it to make you wealthier, not poorer?  Read on to learn more.

Compound Interest in a Nutshell

Let’s begin by defining compound interest.  Put (very) simply, “compound interest” means “interest earning interest.”

Here’s an example:  Let’s say you have $10.  You take that $10 and put it into some sort of account that earns 10% interest every year.  So, at the end of one year, you’ve earned $1 – bringing your total investment to $11.  At the end of the next year, you’ll earn $1.10 – bringing your total investment to $12.10, and so on.  As long as you keep that money there, it’ll keep on growing.

Compound Interest and Savings

You can probably see where this is going:  The longer your money earns compound interest, the more it earns every year – and the faster your investment grows.  This is why most finance experts will tell you that it’s better to invest now – even if you don’t have a huge initial investment, if you invest what you can, it will start growing.

In other words, it’s a good idea to invest as much as you can, as early as you can, to get the most out of compound interest.   Sure, it would be great if we all had an extra thousand bucks to invest – but the truth is, most of us don’t.  If we’re lucky, we can manage to scrape together a few hundred dollars.  And that’s the really great thing about compound interest:  You can take a relatively small amount of money and turn it into a serious chunk of change.

Let’s say you invest just $500 at a 10% return.  At the end of 30 years, your original $500 would become $8,724.70 – even if you didn’t invest another dime.

That’s the really great thing about compound interest – it’s accessible.  You can make compound interest work for you, regardless of your income level.

Want to see just how much you can earn with compound interest?  Try the U.S. Securities and Exchange Commission’s Compound Interest Calculator.

Compound Interest and Credit Card Debt

Compound interest can be an incredibly effective way to make your money grow.  But compound interest can also have devastating effects on credit card debt, making it much harder to pay down a high balance.

Most credit card companies charge you compound interest – in other words, they charge you interest on your interest charges.

Here’s how it works:  Let’s say you have a balance of $2000, and your annual APR is 18%. If you pay off the card by paying equal payments over the course of one year, you’ll pay $201 in interest.

Now, you might think, if I pay $201 in interest per year, then to figure out how much interest I’d pay over ten years, I just multiple $201 by 10 right?

Wrong.

That’s because the credit card company is charging you compound interest.  So every time they charge you an interest payment, it adds to your overall credit card balance, and you pay interest on this entire balance.  (Not just your original purchase.)

The real numbers show that if you make ten years of equal payments on this same card, you will pay $2325 in interest.  That’s $315 more just due to compound interest.

Want to do the math yourself?  Check out this Debt Elimination Calculator.

This is why I’m a big believer in paying your balance off – in full – every month.  If you don’t have a credit card balance, you’ll never have to worry about paying hundreds or thousands of dollars in interest — compound or otherwise!

Start Saving – and Paying Down Debt – Today

Compound interest is a complicated subject.  I could probably write a book about the different ways that compound interest can affect you, your debt, and your finances.  The bottom line, though, is that compound interest is a powerful way to make your money grow – especially if you invest early.  The flip side to that, of course, is that compound interest can also make your debt grow.

My advice?  Pay off your credit card debt – quickly.  Then, invest your money and watch it grow.

Want to ensure a super-easy, stress-free tax season?  Whether you’re doing your own taxes online or making an appointment with your local tax-prep chain, this handy list will help you get organized.

Gather Income-Related Forms

The first thing you’ll need to do is gather the appropriate forms for all income you earned in 2012:

• If you work a traditional job (as in, you work for one employer and you earn a salary or hourly wage), your company should have provided you with a W-2 form.

• If you’re a freelancer or you do contract work, you’ll need to file a 1099-MISC form for each job in which you earned $600 or more.  If you’re filing jointly, you’ll need to make sure you have the proper forms for both you and your spouse.

• If you collected unemployment in 2012, you’ll need a 1099-G form.

And remember: “Income” also includes any interest you earned from a savings or checking account; Social Security; loans or grants for college; or a pension.  If you earned money from any of these sources in 2012, you’ll have to account for it when you file your taxes.  Also, if you’re filing jointly, you’ll need to make sure that you have all necessary forms for your spouse’s income, too.

Break Out the Receipts

You can claim all sorts of deductions on your income taxes – but in order to get a few breaks on things like child care or business expenses, you’ll have to have proof in the form of receipts.  Here are a few of the more common deductions:

• Child care
• Medical expenses
• Home office expenses (if you telecommute or work in a “virtual office”)
• Business travel expenses
• Continuing education
• Mortgage interest
• Student loan interest
• Charitable donations (you can get a credit for cash donations as well as for donations of physical items, like clothing, furniture, or vehicles)

For a comprehensive list visit the IRS’ Credits & Deductions page.

Have Last Year’s Tax Return Handy

One of the best ways to make sure that you aren’t forgetting a source of income or an important deduction is to check your return from last year.  Can’t find it?  No worries.  You can request a transcript from the IRS’ website.  You can also order by phone at 800-908-9946.

Before you order, you’ll need to have your Social Security Number, date of birth, your address, and your ZIP code.  And if you do need to order a transcript, don’t wait:  It can take 5 to 10 days to receive it after you order.

Other Items You’ll Need

Depending on your unique situation, you may need a few other odds and ends.  If you have any investments or capital gains or losses, you’ll need documentation.  Same goes for contributions to IRA accounts.

Also, make sure you have a Social Security Number for everyone in your household (you, your spouse, and your kids/dependents).

See?  That wasn’t so bad.  Income taxes may never be fun, but they don’t have to be overly complicated.  Get organized, get your taxes out of the way – and start planning how you’ll put your tax return to good use!

How do you get organized for tax time?  If you have any hot tips, I’d love to hear about them.  Leave me a comment and let me know!

That said, I also know that lots of folks out there are struggling with serious credit card debt – I’m talking hundreds (or even thousands!) of dollars in high-interest debt.

There are a few ways to pay off credit card debt.  Some folks get part-time jobs or sell their stuff on ebay.  Some folks use their talents and start side businesses – they take photos, decorate cakes, give piano lessons, and so on.  Some use their tax returns to knock big chunks off of their balances.  Others simply buckle down and create a plan (I recommend the snowball method) to tackle debt one credit card at a time.

And, unfortunately, some people turn to other methods, like payday loans or endless loops of balance transfers.  Some of these credit card quick-fixes end up being more trouble than they’re worth.

Trying to pay off your credit card debt?  Here are five strategies to avoid (or use with caution):

1.  Payday loans.  Payday loans are short-term, very high-interest (depending on the lender, you could wind up paying anywhere from 350 to 700 percent) loans that provide you with a few hundred bucks on short notice.  Of course, if you have a very high credit card balance, you probably can’t pay off your debt with a payday loan.  And, even if you could, you’ll pay sky-high interest.  Payday loans are never, ever a good idea – they should be avoided at all costs.

2.  Borrowing from family.  In theory, it sounds like a good idea:  Get a loan from Aunt Sally to pay off your credit card – and then simply make no-interest payments to her instead of your credit card company.  But what happens if you miss a payment to Aunt Sally?  Family gatherings could get awkward.  While I wouldn’t put this method in the same category as a payday loan, I’d still recommend that you try to find other ways to pay your debt before you turn to family members.

3.  Irresponsible balance transfers.  Used responsibly and carefully, balance transfers can help you secure a lower interest rate on a credit card with a high balance – which can, of course, help you pay down your debt faster.  The problem is, though, that it’s pretty easy to abuse balance transfers or use them irresponsibly (in many cases, folks start spending on the new account and rack up even more debt than they originally had).  Plus, most credit card companies charge some kind of balance transfer fee – usually a percentage of your total balance.  And finally, balance transfers usually come with a deadline:  If you don’t pay your balance off, your interest rate goes up.

Bottom line:  Be careful with balance transfers.  If you don’t think you can pay your debt off in time – or if you don’t think you can stop yourself from using your new line of credit – don’t use this method.

4.  Taking money out of retirement.  It’s tempting to dip into your 401k plan or withdraw from your IRA to pay off your credit card debt – but it’s not something I’d recommend.  After all, you’re just stealing from yourself:  The less you’ve got put away in retirement now, the less that there is to grow over the years.  What’s more, you’ll wind up paying taxes on any money you take out – the government charges you regular income tax on any premature withdrawals, plus a 10 percent penalty for early withdrawal.  Instead of taking money out of retirement, consider reducing your monthly retirement contributions until your debt is paid off.

5.  Making minimum payments.  This is basically like doing nothing.  Making the minimum payments will ensure that you pay hundreds (or maybe even thousands!) in interest – and you’ll be paying for a long time.  A very, very long time.  How long?  You can see exactly how long it will take by using the Federal Reserve’s Credit Card Repayment Calculator.  If you want to get out of debt, you need some kind of long-term repayment plan that goes beyond the minimum monthly payment.

Have any debt-related success stories?  Are there any debt repayment strategies that you think should be avoided at all costs?  I’d love to hear about them!

1. You don’t have savings and/or an emergency fund.  This is a big one.  Most financial experts say you should have enough money saved up to cover your living expenses – rent or mortgage payments; bills; gas; food; and so on – for at least three months.  If you don’t have that much, you should have at least a few hundred bucks in the bank to cover unexpected expenses, like car or home repairs.

   You may not be able to come up with three months’ worth of living expenses overnight – but you can start saving right now. Decide on an amount that you can live with, even if it’s only $15 or $20 a month, and start putting that money into a separate savings account.  And then, don’t touch it.  The money will start to add up faster than you’d expect – and the next time an emergency comes up, you’ll have the cash on hand to deal with it.

2. You carry a balance on your credit card(s).  I’ve said it before, and I’ll say it again: There’s a lot to be said for responsible credit card use.  Used wisely, a credit card can help you build up a good credit history – and good credit history is essential if you ever want to, say, buy a house or a car. But all too often, people use credit cards as an extra source of income.

   The only true way to use a credit card responsibly is to make a few purchases and then pay it off – completely – every month.  Carrying a balance (even a small one) is a sign that your finances are getting out of control.

3. You use payday loans to make ends meet.  Payday loan companies prey on folks who are in serious financial trouble.  They give out small, short-term loans – usually around a few hundred dollars – and they charge astronomical interest rates.  Payday loans – or “cash advances,” as they’re sometimes called – are bad news, and resorting to them is a sure sign that something’s amiss, financially speaking.

4. You feel the need to hide your spending or debt.  Often, people with money problems hide their less-than-responsible behavior from family and friends.  A few common red flags include: hiding credit card statements; going on secretive, solo spending sprees; or opening new lines of credit without telling your spouse.  Not only can these behaviors put extra financial strain on your family, they can also lead to relationship problems. If you’ve been secretive about your financial woes, it’s time to come clean.

5. You’ve had more than one overdraft, late charge, or past due reminder in the last 12 months.  Sure, everyone makes mistakes from time to time.  You misplace your electric bill, or you forget to make a deposit or transfer and end up bouncing a check.  These kinds of things can happen to anyone.  But if you find that you’re regularly losing money on overdraft fees or being bombarded with past due notices from bill collectors, you’re not simply making mistakes.  Chances are, you’re avoiding your bills or having to choose which ones to pay and which ones to put off – and that’s a huge red flag.

Even one of these red flags is cause for concern – and if you can relate to more than one of them, it may be time to take a serious look at your finances.  Remember, it’s never too late to turn things around.  Reach out to friends and family for advice; stop hiding your money problems; and work with your credit card companies to start paying down your debt.  If you feel overwhelmed, you may want to consider working with a reputable credit counseling service.

It’s been five years since that fateful day when you settled your outstanding balance for that gym membership.  You thought that old debt was long dead and buried.  You’ve started a new life; rebuilt your credit.  You’ve learned your lesson about irresponsible credit use.  Things are different now.

And then, one day, the phone rings.

It’s a debt collector . . . but it’s not just any debt collector.  This type of debt collector specializes in digging up old debts – debts that you thought were long dead and buried.  Debts that – despite your state’s statute of limitations, bankruptcy, or payment – have been reanimated and made to walk among us again.

They’re zombie debts – brought back from the dead by “debt buyers” looking to make some quick cash off of your financial woes.

What is Zombie Debt?

Traditionally, debt collection practices have always worked something like this:  You owe money to a creditor – such as a credit card company, a utility company, or a cell phone provider – and if you don’t make your payments, the creditor will spend a couple of years trying to get you to pay them.  Eventually, you either pay them the full amount; settle with them to pay back some percentage of what you owe; or – if things drag on long enough – they simply stop trying to collect.

In recent years, though, the debt collection business has changed:  Now, even after a debt has been settled or the statute of limitations has expired — “debt buyers” will purchase a company’s old debts and try to collect.  They buy these old debts for next to nothing – and they use a variety of disingenuous, intimidating, and sometimes downright illegal tactics to get you to pay.  Even if they only get a tiny percent of the original amount, they make a substantial profit.

In other words, they breathe new life into old debts that you thought were long gone.  Hence the name:  “Zombie debt.”

The Zombie-Debt Survival Guide

So, what should you do if you get a collections call regarding an old, (un)dead debt?  Here are a few essential rules:

• Don’t tell them anything.  A typical tactic for a debt-buying business is to get you to either: A.) Admit that the debt is yours; or B.) Agree to pay them something, even if it’s just a small amount.  The best way to handle a call like this is to ask them to communicate with you in writing.  Don’t confirm or deny that the debt is yours, and whatever you do, don’t promise that you’ll pay them anything.  Simply ask them to send you more information about it, and get off the phone quickly.

• Know your state’s statute of limitations.  Every state has a statute of limitations that determines how long a creditor (or a debt buyer) can legally pursue an unpaid debt.  A debt that has passed its statute of limitations is called a “time-barred” debt, and it is illegal for a debt buyer to try to collect on a debt that is time-barred.  The statute of limitations on a debt can vary from state to state.  Check with your state’s attorney general to find out more.

• Demand documentation.  Typically, debt buyers don’t have all of the information pertaining to your debt. They buy whatever information they can get their hands on, and it’s usually spotty at best.  They may be going after you for a debt that you’ve already paid off or settled, or they may be going after you for debt that is a result of ID theft or fraud.  They may even be going after you for debt that belongs to someone else with a similar name.  In some cases, there may not be a real debt at all – you could be dealing with a scammer hoping to scare you into opening your wallet.

Insist that the company provides you with a document that contains proof of your debt, including the amount you owe; the details of the original debt; and proof that they are legally allowed to attempt to collect that debt.

• Seek professional help.  If you’re being harassed by collectors demanding repayment for a very old debt, you may want to consider hiring an attorney that specializes in debt collection.  A good attorney can help you figure out if the debt is legitimate or not, and he or she can also determine of the collector has violated any laws, such as the debt collection rules laid out by the Fair Debt Collection Practices Act.

• Consider settling (if the debt is legit).  Many zombie debt cases are fraudulent and some might even be illegal – but in the event that your debt turns out to be legitimate (such as an unpaid, long-forgotten cell phone or electric bill), you may want to consider settling to avoid further problems.  The companies that buy and reanimate old debt don’t expect to get much – and most of them will be willing to accept anywhere from 50 to 30% of your original debt.

That said, it’s important to note that settling a debt can seriously damage your credit score – and it can create tax issues, too.  Although settling can help put an old zombie debt to rest, it’s far from being a “clean break.”  I’d suggest settling as a last resort in cases where you’ve exhausted all of your other options.

Zombie Debt is Scary – but it Can be Stopped

The good news about zombie debt is, there are ways to stop it from taking over your life.  Do your research, demand documentation, and get outside help, if necessary.  If you do these things, you can make sure that your old debt stays dead.

They have fewer choices when it comes to credit and financing, and they often end up saddled with astronomical interest rates.

If you’ve ever struggled with credit issues, you also probably already know that it sometimes feels like there’s no way to recover.  The good news, though, is that if you’re willing to put some time and effort into it, there are several things you can do to turn your credit around.  These tips also work for folks with moderate credit, too (when it comes to credit, there’s always room for improvement).

Here are five ways you can put your credit on the road to recovery:

1.  Check your credit report(s).  Everyone is entitled to one free credit report per year from www.annualcreditreport.com.  Your free annual credit report contains information from all three of the major credit reporting agencies — Experian, TransUnion, and Equifax.  Your credit report is a useful tool that can help you zero in on problems like late payments – and it can also alert you to fraudulent charges or even errors.  If your credit reports turn up anything fishy, contact the credit reporting agency right away to get things straightened out.

2.  Get current on your payments – and stay that way.  Credit problems often start small.  A missed payment here, a late payment there.  And then the late fees kick in.  Your interest rate goes up – a lot.  Pretty soon, you owe so much that you don’t even know where to start – and that’s where a lot of folks just give up.  That’s a huge mistake, though.  Contact your lender(s) and let them know that you’re serious about paying down your debt.  Work out a payment plan that you can live with – and stick to it.  If you need additional help, consider searching for a (reputable!) credit counseling service.

3.  Get out of debt ASAP.  Part of your credit score is determined by your ratio of available credit to credit used – this is why a maxed-out credit card can be so hazardous to your credit score.  If you want to repair your credit, make a plan to start paying off that debt.  Remember, if you only pay the minimum monthly payment, you’ll have trouble putting a dent in the amount you owe.  Sit down with your budget and decide how much over the minimum you can afford to pay.

If you have multiple credit cards to pay down, check out my previous post on the popular snowball method of paying down debt.

4. Resist the urge to close accounts.  Again, part of your credit score is determined by your ratio of available credit to credit used.  Closing an account reduces your available credit, which can actually hurt your credit score.

Let’s say you have two credit cards:  A department store card with a zero balance and a limit of $500.  You also have a regular credit card with a limit of $2,000 – and it’s maxed out.  In this example, you’re using $2,000 of your total $2,500 limit.  That’s not ideal, but at least you’re not using all of your available credit. Now let’s say you close that department store card. Suddenly, you’re using your entire $2,000 credit limit – which looks much worse.

5.  Consider a secured credit card.  I’ve talked before about how responsible credit use can be very good for your credit.  But what if your poor (or nonexistent) credit history makes it close to impossible to get a credit card?  A secured credit card can be a helpful way to establish timely payment history and responsible credit card use.

A secured card works like this:  You pay some sort of deposit (it could be anywhere from a few hundred dollars to a few thousand), which is held as collateral in case you are unable to pay your debt.  Then you use your secured card just like a regular credit card.  If you’re considering going this route, though, make sure that you opt for a secured card that reports to the three credit agencies.  Shop around to find a card with lower fees and an APR you can live with.

And remember to use your secured card responsibly – you should pay off your balance in full every month.  This should help you avoid paying any interest charges.  You DO NOT need to maintain a balance to build your credit – the only thing that matters is that there is activity and timely payment on your card every month.

Well, that depends.  I have mixed feelings about credit cards to begin with.  On one hand, I think credit cards can be useful tools that can help you build up your credit history.  On the other hand, though, I’ve seen how overspending and irresponsible use can lead to financial disaster.

I feel the same way about cards that offer rewards.  While I don’t feel that they are inherently better or worse than regular, run-of-the-mill cards, I do think that they should be used with caution.  If you’re thinking about applying for a rewards card, there are some important things to keep in mind.

1. Rewards aren’t free.  Your credit card company isn’t giving you airline miles or hotel points out of generosity.  No matter what kind of rewards program you’re participating in, you only earn points one way: By using your credit card.   Let’s say you are enrolled in a program that gives you one air mile for every dollar you spend on your credit card.  That sounds great – until you consider that one ticket costs around 20,000 to 50,000 (or more!) credit card miles.  That’s a pretty darn expensive plane ticket.

2. Cash-back awards programs don’t give you much cash back.  Everyone loves cash – and what’s not to like about a program that gives you a small percentage of cash back on every purchase you make?  Well, when you consider how much money you’d need to spend to earn any kind of significant award, these types of cards start to look a lot less likeable.  Let’s say you earn 1% cash back on every purchase you make.  On a $250 purchase, you get a whopping $2.50 back.  Spend $2500, and you’d get $25.  You’d be better off paying cash and not paying interest on a $2500 purchase.

Really, the only way that “cash back” programs ever pay off is if you make a ton of purchases on your credit card, which leads to my next point . . .

3. Rewards cards encourage you to spend more.  This is my biggest problem with rewards cards.  I’ve mentioned before that I’m not strictly opposed to credit cards – if they’re used responsibly.  But programs that reward you for spending don’t exactly make a compelling case for responsible use.  Enough said.

4. You’ll pay a higher interest rate on rewards cards.  Most rewards-based credit cards come with a slightly higher interest rate than their normal counterparts.  Some rewards cards also charge you an annual fee – you can end up paying anywhere from $20 to $60 or more simply for having the card!

5. Being debt-free is the best reward.  When it comes to rewards, there’s nothing more rewarding than looking at a credit card statement with a $0 balance.  If you find that you use your rewards card just to earn free stuff, you might want to seriously consider switching to a different type of card and focusing on paying down your balance.  After all, what good is a plane ticket if you can’t afford a vacation to go with it?

Rewards cards – whether they’re giving you plane tickets, gift cards, or a tiny percentage of cash back – are marketing gimmicks, plain and simple.  If you use your credit card responsibly (meaning, you pay it off in full every month, you don’t over spend, etc.), there’s no harm in signing up for one that gives you a little something back.  But just like any other credit card, sometimes the risks outweigh the rewards.

It’s a little like what happens when a snowball rolls down a hill – as it moves, it picks up speed and increases in size.  This is what happens to your payments over time when you use the snowball method.

So, how does the snowball method work?  Is it right for you?

It might be easiest to go through a quick example of how this debt repayment strategy works.  Let’s say you have three cards to pay down:

• Card A is a department store card.  You only got the card because you were making a large-ish purchase and the store was offering a discount for opening a new account.  Your balance is $195 and your interest rate is 15%.  Your minimum monthly payment is $20.

• Card B is a traditional credit card.  Your outstanding balance is $250, and your interest rate is 20%.  Your minimum monthly payment is $25.

• Card C is also a traditional credit card.  You $3,500 on it – and because of a few late payments over the years, your interest rate has climbed up to 25%.  Your monthly payment on this card is $120.

Step 1:  Choose a Card to Pay Off First

Which card should you pay off first?  The traditional snowball method dictates that you go from the card with the smallest balance to the card with the largest one.  In cases where you have two cards with about the same amount of debt, you might want to consider paying the one with the higher interest rate first.

Using the information from the above example, I would suggest starting with Card B, the traditional credit card with the $250 balance.  Because Card A and Card B have similar outstanding balances, I decided to compare interest rates instead of just looking at the amount owed.  Card B has a slightly higher balance – but it also has a higher interest rate – so we’ll start there.

Step 2:  Determine Your Payment

Now that we’ve chosen a card to start with, it’s time to decide what you will pay each month.  The minimum monthly payment for Card B is $25.  To start your debt snowball, you will want to review your budget and determine how much extra you can afford to pay in addition to the minimum.

Keep in mind that you don’t want to make your payments so high that you end up completely broke at the end of every pay period.  If you have to use your credit card to cover day-to-day expenses, you’re probably paying too much extra.

Let’s say you’ve determined that you can afford to pay an extra $30 every month toward Card B.  So, every month, your three credit card payments will look like this:

Do this every month until Card B is completely paid off.

Step 3:  Move to the Next Card

Now that Card B is paid off, we’ll move on to Card A.  This card has a slightly lower balance than Card B did, and a minimum payment of $20.  We’re going to take the money we were putting toward Card B every month and roll it over, like so:

Step 4: Keep Rolling

You can probably see where this is going.  Once Card A is paid off, we’re ready to move on to Card C.  To do this, we simply take all of the money that was going to Cards A and B and roll all of it into payments toward Card C:

As you can see, the snowball method is actually pretty simple.  What I really like about it is that by starting with the smallest debt, you see progress sooner rather than later.  Seeing a zero balance on a card with a smaller outstanding balance can help keep you on track.

So, what do you think?  Have you ever used the snowball method?  Do you think it sounds like a strategy you could stick to?  Do you have any unique strategies for debt repayment?  I’d love to hear about them.

Want to save money on day-to-day expenses?  Here are a few ways to cut costs on the things you buy all the time.

Save on Groceries:

• Leave the kids at home.  You’ll be less likely to end up at the checkout with a cart full of impulse buys and pricy packaged foods.
• Shop the perimeter.  This is where you’ll find less expensive items like fresh produce and non-prepared foods.  The aisles tend to be stocked with more expensive (and less-healthy) fare like packaged foods and frozen entrees.
• Get a card.  Most stores offer some sort of free, in-house “loyalty card” that gives you access to members-only sale prices and buy-one-get-one specials.
• Clip coupons.  You can find coupons in the newspaper, in mailers, or online.  For bigger savings, find out when your store offers double or triple coupon days.  Just remember that coupons are only useful if you’re using them for stuff you’d buy anyway – otherwise, you’re not actually saving money.

 Save on Gas:

• Fill up during the week.  Gas prices tend to be slightly higher on weekends, so you should avoid hitting the pumps on Saturday and Sunday.
• Search for lower prices.  Websites like GasPriceWatch and GasBuddy can help you find the best prices in your neck of the woods.
• Carpool.  If you commute to work, you might want to consider joining or starting a carpool.  Not only will you save money on gas, you can also save wear and tear on your car!  Or, consider public transportation.  Bus fare for the month might be significantly cheaper than filling your tank a couple times a week.

Save on Entertainment:

• Check out the library.  Instead of buying books, get a library card and borrow them instead.  Most libraries also offer DVDs and video games, too.  Just make sure you return items on time so you don’t end up paying fines!
• Rent, don’t buy.  Why spend money on DVDs or games when you can borrow them?  For around the price of a single DVD you can join Netflix and rent movies instead.  If video games are more your style, check out game rental service GameFly.
• Buy used.  Why pay full price?  There are entire stores devoted to used books, movies, and video games.

Of course, there’s no “right” time to be frugal – but some months are simply better than others when you’re looking for particular items, like furniture, electronics, and seasonal items.  Here’s a guide to the best times of the year for item-specific purchases:

January:  Dry cleaning

January is a slower month for dry cleaners, so you might be more likely to score some good discounts on larger, costlier jobs (think curtains, formalwear from the previous month’s holiday parties, bedding, etc.).  Watch for coupons in your local mailers or newspapers.

February: Furniture

New designs typically hit the stores in March and April, which means that many furniture retailers run sales in February to make room for the new inventory.  For even more savings, consider buying floor samples or items that have small flaws such as scratches, dents, or other imperfections.

June and July:  Housewares

The summer months are popular for weddings, and retailers often run sales on popular wedding gifts like dishes, flatware, linens, towels, and kitchen gadgets.  If you’re in the market for a new blender or a new set of knives, you can find a good deal at the height of wedding season.

August:  Laptops

August is a great month to purchase laptops.  Many retailers have sales on laptops in August.  These sales are typically aimed at college students who purchase laptops as a portable and affordable alternative to desktop computers.  Student or not, you can find some great deals on laptops if you wait until August.

November:  A new TV

As the holiday shopping season inches closer, most stores run crazy good deals on electronics – particularly TVs and DVD players.  And the closer it gets to December, the crazier the deals are.  If you’re in the market for a new TV in 2013, wait until after Thanksgiving – that’s when the stores roll out their Black Friday specials.

December:  Holiday items and outerwear

Hit the stores on December 26^th and you can pay next to nothing for perfectly good gift-wrapping essentials and holiday-themed cards and decorations.   December is also the time to purchase hats, gloves, scarves, and coats.  Spring fashions start appearing as early as January and February – and stores don’t want to hang onto seasonal winter wear any longer than they have to.  Look for clearance sales around the holidays.

Do you have any tips on saving money this year?  Leave me a comment and let me know!