Personal Banking E-Newsletter - March 2011

10 Painless Ways to Save $1,000

Simple changes that add up to big savings

Whether it's a New Year's resolution, a credit card you're trying to pay down or simply that you want more cash in your pocket, finding a little extra money is important.

But saving shouldn't be painful. If the steps you're taking negatively affect your quality of life, you probably won't be able to maintain them for long. So don't go on a "dollar diet." Instead, find ways to save that are simple and fast and that won't feel like deprivation.

Keep in mind that savings don't have to be big. Everything counts. Start with a goal and get going. Let's say you want to go for a $1,000 gain with little or no pain. Read on for a few ideas.

Minimize your minutes.
According to The New York Times, people use data more than voice on their phones these days. If you have more minutes than you need -- especially if you have a rollover plan -- consider downsizing to a more affordable and fitting amount.

Comparison shop at a site like BillShrink to check out the lowest price for the features and usage that suit you. Just enter some information about how you use your phone and what you want, and it'll give you some options and prices from different carriers.

Savings: About $200 a year if you can cut just $17 from the monthly bill.

Bury the land line.
Do you really need another phone these days? Maybe it's time to unplug that land line for good. If your cell phone isn't enough, there's Skype, Google Voice, or magicJack. The only downside to not having a land line is that 911 dispatchers may have difficulty tracing your cell phone call, but the FCC has implemented rules that will fix this over the next two years.

Savings: Cut your $25-a-month land line and you'll be $300 a year richer.

Work your way out of the gym membership.
According to the International Health, Racquet, and Sportsclub Association, the average gym membership is about $42 a month. Instead, work out on your own. You can get some exercise videos online, or join a free site like Livestrong or SparkPeople to plan exercise activities, plus track your calories and diet. You can also look for free or cheap used exercise equipment on Craigslist or Freecycle.

Savings: If you're paying the average membership fee, dropping it will buff up your savings by $500 a year.

Cut the cable.
Data from puts the average cost of cable at $50 a month without premium channels. You can watch sports live online at ESPN3, and many of your favorite shows are either on Hulu or network websites. And for less than $10 a month, you can stream all you want from Netflix. You can also borrow movies free from your local library.

Savings: Depending on how much you cut, up to $800 a year.

Double your deductibles.
Raising what you're willing to pay out-of-pocket on your insurance policies could lower your monthly cost substantially. A quick phone call to your insurance companies -- home, health and car -- will tell you exactly how much, but expect to save 10% to 15% by raising your deductibles from, say, $500 to $1,000.

Another way to save on insurance? Check out an insurance comparison sites and see if you're getting the best possible policy for the money. If you find a policy with lower rates, call your insurance company, tell them, and see if they'll compete. If not, consider switching.

Savings: If all you do is raise your deductibles, you should be able to save an easy $200 a year.

Take a vacation from high travel costs.
Staying local during your time off is one way to save big. Plan some weekend getaways and day trips instead of extended vacations. You'll get to see and do more, more often, for less. Use the opportunity to explore, and look up things to do in your city on TripAdvisor. You may enjoy discounts as a local resident that tourists can't, too. But remember: Vacations are important to your quality of life. Don't cut them out; just do them for less.

Savings: Between travel, hotel and ticket/rental costs, easily $1,000.

Save on food.
If you have the space, try to stock up on nonperishable groceries at wholesale or when there are buy-one-get-one-free deals. You get the best prices this way and make fewer trips to the store, which saves on gas.

Another way to save is to buy groceries online. often has decent prices, and if you use their "subscribe and save" feature -- which lets you set up a recurring order at a specified frequency that you can cancel anytime -- you can save an extra 15%. It also helps to use coupons, buy generics, and shop at dollar stores.

Savings: $300 or more a year.

Save on clothes.
Clothes are something that can not only help you spend less, but you can also actually use them to make money. Go through your closets and remove everything you haven't worn in a year. Now, take them all to a local consignment shop and put them up for sale. What they don't take, drop off at a charity store and get a tax deduction.

See if you can satisfy your current clothing needs by taking the money you make from the consignment shop and spending it there.

Savings: $300 or more a year.

Save on entertainment.
Keeping yourself amused for less isn't hard. It's a simple three-part process: First, decide what you like to do. Next, think about ways to do it for less. Then, do it as often as possible.

For example, if you like to meet your friends for cocktails, find the best happy hour deal in town (and don't forget the free food!). If you like movies, get them free at the library. If you like to eat out, have an appetizer at home and split an entree -- or eat at home and go out for a nice dessert.

From picnics in the park to free plays at your local college to amateur sports -- the world is full of low-cost ways to have fun.

Savings: $300 or more a year.

Save on makeup.
Many of the items at Walgreens are just as good as their department store cousins at a fraction of the price. And shopping at discount places and/or discount websites is also more convenient.

You can get the last bit of mascara by heating it with your hair dryer or warm water. You can extend the life of your liquid foundation and concealer by using half as much and mixing it with a dab of facial lotion.

Savings: $100 a year.

These are all things you can do without damaging your quality of life. Follow through on only half of them and you'll easily have an extra grand or more by this time next year.

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Make the Most of Your Income Tax Refund

If you’re expecting an income tax refund this year, you’ll want to make sure you put that money to good use. While it can feel like you’re receiving a windfall, remember that this is just excess money that you paid the government. This doesn’t mean you can’t have a little fun, but this money can also provide a great boost to your other financial goals.

Pay Off High-Interest Debt

Credit cards generally have high interest rates and carrying a balance on these cards is costing you money. A great use for some or all of that refund is to pay down some of this debt. Paying off credit card debt will mean you’re now saving 10, 20, or even 30 percent per year in interest charges. This is a guaranteed return on your money and a wise choice for your tax refund.

Make an IRA Contribution

If credit card debt isn’t much of a concern for you, the next place to look is in retirement accounts. This can be in the way of either a traditional or Roth IRA. If you’re eligible for a traditional IRA contribution, you will actually receive an added benefit of being able to deduct that contribution from your taxable income next year. Or, if you decide to put the money into a Roth IRA, you won’t receive the tax benefit now but can withdraw it tax-free later.

Not only are there tax benefits from making IRA contributions, but you’re doing a good thing by saving more money for retirement. The sooner you can put money away, the more time it has to grow, and this can result in significant savings by the time you reach retirement.

Increase Your Emergency Fund

In addition to paying down some debt and tucking some away for retirement, you should consider making a deposit into your emergency fund. Emergency funds are vital to any financial plan and these funds will come in handy when there is an unexpected expense. Instead of using a credit card or taking a loan to pay for a broken hot water heater or another unexpected expense, you can easily tap into your emergency fund instead.

Make an Extra Mortgage Payment

If all of the above items are taken care of, you can still find another way to put this money to work by making an additional mortgage payment. When you make an additional payment, it is applied directly to the principal. This instantly gives you more equity in your home, saves money on interest over the term of the loan, and even reduces the time it takes to pay off the loan.

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Earn More or Spend Less?

Your answer says more than you think

Here’s a hypothetical personal finance question for you: Would you rather work more hours to support a lavish lifestyle, or adopt a more frugal lifestyle that requires less time trying to make money? Granted, there could be many things to consider when coming to an answer for a philosophical question like this. But if you approach it from a very basic standpoint, the answer can really tell you a lot about your outlook on life, spending habits and financial goals.

There are two primary ways to make a budget work. Either you cut your expenses to make things fit, or you have to generate more income to cover your spending. While everyone wants to make more money, not everyone can–or in some cases, even want to–put in the extra work that it may take. Depending on your situation and your personal preference, one option usually looks better than the other.

Earning More Money

A high household income doesn’t just mean a better standard of living and quality of life. In our society, it also equates to higher status and prestige. So that family that makes $250,000 a year but is up to their neck in debt still looks better than the family making $50,000 but has sufficient savings for retirement and college funds. Which position would you rather be in?

  • Advantage: Making more money means you’re more able to afford things that you need and want. Budgeting helps you maximize your income. So the higher your income is, the more you can get out of your financial plan.
  • Disadvantage: There’s not an obvious drawback to earning extra cash, but if you’re working 20-hour days to do it, you may need to re-evaluate a few things. Also, a high salary doesn’t necessarily equate to wealth. If you fall victim to lifestyle inflation, you’ll find yourself chasing more income and it never being enough.

Going beyond pure personal finance, it seems that the correlation between money and happiness on an everyday-basis plateaus when people earn an annual income of $75,000. Beyond that, your day-to-day happiness doesn’t necessarily rise but your overall satisfaction of where your life is going does. So, there’s that.

Spending Less Money

What good is making money if you can’t keep it? That’s the argument that you can make for why cutting expenses is more important than increasing your household revenue. If you’re stuck living paycheck-to-paycheck, it’s not going to do much good making those paychecks fatter if you can’t get yourself out of that mentality. High income doesn’t necessarily translate to being wealthy. You need to be able to retain some of that cash flow in a savings account or other assets.

  • Advantage: A lean, mean budget means more efficient use of your money, which translates to not having to work as hard to support your lifestyle. Making little adjustments here and there can equate to savings that builds on itself.
  • Disadvantage: Taken to the extreme, a frugal lifestyle can turn a reasonable person into a cheapskate. If you’re too focused on pinching pennies, the line between stretching a dollar and being flat out stingy can get blurred. You also don’t want to get so caught up clipping coupons that you lose your ambition for a greater calling in life.

A well-balanced financial plan involves managing both your bottom line and top line. You need to spend less than you earn in order to save, but that also means you have to earn something to begin with. Where you put that emphasis is up to you, though. So, with that said, would you rather earn more or spend less?

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Your "Grandchild" Wants Your Money, Not Your Help

“Hi, Grandma!”

“Jimmy, is that you?”

“Yeah, Grandma, it’s me. I’m in some trouble, and I don’t know who else I can ask for help …”

As a loving grandparent, you’d do anything for your grandchildren if they were in trouble, no questions asked, right? That may be your natural reaction, but asking a few questions first could save you from getting scammed.

That’s because a call like this is probably not from your grandchild. It’s from a scammer looking to con you out of thousands of dollars. And they’re preying on your kindness.

In the “grandparent scam,” a caller pretending to be your grandchild will say that he or she is in trouble, usually in a foreign country, and either in jail or a hospital. Your “grandchild” will beg you to wire money right away and to keep the request confidential. The amount of money asked for will total thousands of dollars. By now some serious red flags should be raised.

However, victims of this scam often don’t realize they’ve made a mistake until days later. By then, the money is not only long gone, but also irretrievable. People who pull this scam usually pressure people to wire money through commercial money transfer companies like Western Union and Money Gram because wiring money is the same as sending cash. The chances of recovery are slim to none.

In some cases, the fake relatives or friends may actually know the names of family members and manage a clever impersonation. In others, they trick a grandparent into giving up the grandchild’s name. Sometimes, another person gets in the act, pretending to be a police officer or bondsman to confirm the bogus story.

If you get a call from a family member asking you to wire money, don’t panic – and do resist the urge to act immediately. Don’t let emotions overtake reason. Here are some suggestions for handling a call like this:

  • Try to verify the caller’s identity by asking personal questions a stranger couldn’t answer.
  • Don’t fill in the blanks. Refrain from mentioning other family members’ names or personal information. If the caller says, “It’s your granddaughter,” respond with “Which one?” Most likely, the caller will then hang up.
  •  Remember that some impostors research the people they are posing as and can answer basic questions about them.
  • Resist the pressure to act immediately. Try to contact the grandchild at a number that you know is accurate such as a home or cell phone number before transferring money. If you don’t have your grandchild’s phone numbers, get in touch with their parent, spouse or another close family member to check out the story before you send any money, even if you’ve been asked to keep the call a secret.
  • If you can’t reach a family member and still aren’t sure what to do, call the local police on the non-emergency line. They can help you sort things out.
  • Never provide your bank or credit card account numbers to any caller – regardless of the reason.

No matter how dramatic the story sounds, don’t wire money. Don’t send a check or money order by overnight delivery or courier, either. Con artists recommend these services so they can get your money before you realize you’ve been cheated.

If you receive repeated fraudulent calls, contact your local telephone company for assistance in tracking down harassing calls. Also, file a complaint with the police immediately.

Article Source: WBA Consumer Column via. Mark Thorn

LPL: Insurance Needs for Every Stage of Life

Who needs life insurance? These days, the answer is, "Almost everyone." That includes:

Young Adults

As you might imagine, parents of minor children are at the top of the list of those who probably need life insurance. If one "breadwinner" were to pass away, life insurance payments could make it possible for the survivor to maintain the family's quality of life, send the children to college, and continue to set aside money for retirement and other long-term goals. But young adults don't necessarily need children to need life insurance. For example, newlyweds might purchase life insurance so that if one were to die, the other could use the proceeds to help repay significant debts, such as a mortgage or car loan. Generally speaking, life insurance is cheaper and more easily obtained at younger ages.

Empty Nesters and Retirees

Even if your children are grown up and financially self-reliant, life insurance may still be an important part of your financial strategy. After all, a widow or widower may still need to pay off a mortgage and other debts as well as continue to plan for a comfortable retirement. Naming grandchildren or adult children as beneficiaries of your life insurance policy may also enable those family members to accomplish important goals long after you're gone. Also, life insurance can help you accomplish a number of estate planning goals.

Business Owners

Offering life insurance as a workplace benefit can help a business owner attract and retain valuable employees. Also, naming the business as the beneficiary of a policy on a key employee can make it financially possible for the business to hire and train someone to replace that individual after his or her death. And life insurance proceeds can also make it possible for surviving partners or family members to eventually purchase a deceased owner's share of the business.

For information on the uses and benefits of life insurance at every stage of life, please contact your registered representative.

*Source: Bureau of Labor Statistics.

**Withdrawals will be taxed at ordinary income tax rates. Early withdrawals may trigger a 10% penalty tax.

***You will receive credit for the withholding when you file your next tax return.

© 2010 Standard & Poor's Financial Communications. All rights reserved.