If you’ve been plagued by an ugly kitchen since the day you moved into your new home (the ’70s called and they want their ochre tile and avocado wallpaper back) or you’re disappointed with the limited or largely unusable storage space provided (not even a lazy susan can help those deep corner cabinets), then maybe it’s time to think about a remodel.

“But wait!” you may say, “We’re in a recession!  How can I possibly consider a remodel right now?”  There are several good reasons why now is the perfect time to remodel.

1. We’re in a recession!  This is terrible news for most people, but not for those who are looking to re-design on a dime.  Businesses are hurting and as a result, you stand to take advantage of outrageously low prices.  Many stores are willing to price match or haggle just to get your business, so don’t be afraid to ask for concessions.
2. Contractors need work, too.  Not the DIY type but you don’t think you can afford a contractor?  Not true.  Construction jobs are on the DL during any recession, so the market for contractors (and laborers) is flooded.  Now is the best time to capitalize on grade A services for way less money.
3. The internet is a great resource.  It’s no surprise that you can find better prices by looking online, but ecommerce is booming right now and because many sites do not have the overhead of running a store-front, they can afford to give you the same merchandise for half the price.
4. People are selling stuff.  If you need it, you can find it online for cheaper.  From eBay to Craig’s List, people are dumping all kinds of home items that you can pick up for a fraction of the retail cost.  Used flooring, cabinets, hardware, appliances, and even piping can be picked up and put into your home, saving you a ton of money if you’re willing to do a little leg work.  And the best part is, you’re doing your part to make your new home green by selecting recycled items.
5. It pays to go green.  If you work a little green into your remodel, you stand to save a lot.  Replacing outdated appliances with energy-star compliant alternatives could equal cash back from the electric company (along with lower electric bills).  And tankless water heaters can also save you a ton of money because they only heat the water you use.  In some cases, there are even government incentives for using eco-friendly products.  So look into green options to keep saving even after your remodel is done.

The beautiful, new, workable space you’ve been dreaming of is not out of reach just because we’re in a recession.  If you shop smart, you can have it all for less and even continue to save after the fact.  But don’t forget that the best reason to remodel is a return on investment.  If you spend wisely, you stand to make all that money back (and possibly more) when it comes time to sell your house.  And in a market flooded with foreclosures, a newly remodeled space could mean the difference between a quick sale and no sale at all.

Let us know in the comments how you’ve saved money doing a remodel!

Written by Jennifer Kardish, who is a communications coordinator at Kitchen Cabinet Mart. Check out their free design tips for your kitchen and home.

Last summer, I wrote a post titled, “Stop lying, 5 ways to stop overspending.” It has been one of my most popular posts. So I’ve decided to revisit the topic and expand the list.

So here are 6 more suggestions to help stop you from overspending from some of the top financial planning bloggers on the web.

#1 Get rid of disposable money

Financial Samurai say, “The very best way to stop overspending is to “go broke” by always flushing absolutely all disposable income after expenses out of your checking account and into a different bank.  The money must be flushed out in the first several days once the money is deposited, preferably automatically.  Clearly you must figure out your expenses beforehand.  Once you do, and go broke every paycheck, you’ll be controlling your spending and saving in no time!”

#2 Challenge yourself to reduce spending in specific areas

Sit down with your spouse and list the top three categories where you overspend. Then create a list of ideas on how you can reduce spending. For example, if you find yourself dining out too often, then create a list of inexpensive or free date night activities (e.g. picnic at the park and a free museum). Over the next month, work on changing your habits in those three areas. The next month, rinse and repeat.

#3 Surround yourself with frugal-minded people

Phil at PTMoney.com suggests, “Surround yourself with frugal-minded people. It’s easy to avoid having to keep up with the Joneses if you aren’t spending your time with them. Hang out with people who inspire you to be efficient with your money, and who know you don’t need to spend a ton to have a good time. It also doesn’t hurt to have a thrifty spouse. I’m lucky in that my wife is much cheaper than I am. She motivates me to spend less. My advice to the single people out there is to look for a spouse who knows how to spend wisely.”

#4 Go to bed already and stop buying stuff

Besides getting more sleep, you’ll avoid wasting electricity watching TV and you’ll avoid falling into infomercial traps. I sometimes can’t believe what they are selling on TV, but someone is buying. I can’t count how many times I’ve never called and ordered Ronco knives. Fortunately, I always realize at the last second that the knives I have work just fine.

#5 Two words: Duct tape

Len Penzo just posted a list of 4 Ways duct tape can fix your Personal Finances. Here’s an excerpt to make you salivate, “Believe it or not for the past ten years Duck Brand duct tape has held an annual contest known as Stuck at the Prom where they give away college scholarships to high school prom couples who are judged to have created the best prom attire made entirely of duct tape.  I’m not kidding.”

#6 Put a picture in your wallet over your debit or credit card

I sold security systems the summer before I married my sweetheart. To help push everyone through the last two months of the summer, we all listed how much we wanted to earn by the end of the summer and what we wanted to do or buy with that money. The next day, our manager’s wife had printed out our names, how much we wanted to earn, and a picture of our reward. We saw those images everyday before we began knocking doors.

Try putting a picture of what you are saving for in your wallet so each time you go to spend money, you have an image staring you in the face as a reminder to put your wallet or purse away and go home.

Conclusion: Try something

Each of the suggestions above has the potential to help you stop overspending. But none of them will work unless you try something. Don’t worry about getting it all right immediately. So pick a method from above and go at it with all the energy you can muster.

Also, let others know what has or hasn’t worked for you in the comments below. Thanks!

Our Sprint contract is up in June. So my wife and I are currently considering what we should do with our cell phones. The big question is, should we upgrade to a smartphone and pay for the data plan?

Since I like to be well informed when making a decision, I checked out the iPhone app store for apps that would make my financial life better. Below is a list of 12 financial planning related apps that I think every person should consider.

Quicken

This little app lets current Quicken users manage their finances right from the iPhone.

• Rating: 2.5 / 5.0 Stars
• Cost: Free
• Click here for more info or to download

Mint.com

If you are a Mint.com user, then this app is a must have. You can update your account balances and manage your money from anywhere you have a connection. No more being tied to a laptop or desktop.

• Rating: 4.0 / 5.0 Stars
• Cost: Free
• Click here for more info or to download

Bloomberg

For up to the minute investing news, download the Bloomberg app. Use one of the most trusted names in the industry to help analyze stock trends and make investment decisions.

• Rating: 3.5 / 5.0 Stars
• Cost: Free
• Click here for more info or to download

Morningstar

If you invest in mutual funds, which I hope you do, then Morningstar is a leader in funds information and reviews. They also offer information for stocks and ETFs.

• Rating: 2.5 / 5.0 Stars
• Cost: Free
• Click here for more info or to download

Personal Assistant Premium

This app helps you manage several areas of your life including: finance, shopping, and travel. Personal Assistant (the non-Premium version) is available for free. Reportedly, despite the $7 price tag, you will still be exposed to advertisements.

• Rating: 4.5 / 5.0 Stars
• Cost: $6.99 USD
• Click here for more info or to download

BillMinder

Just so you don’t miss another payment again, BillMinder allows you to keep track of all of your bills and when they are due. A handy calendar shows what days of the month you have bills due.

• Rating: 3.0 / 5.0 Stars
• Cost: $0.99 USD
• Click here for more info or to download

Grocery Gadget

This app is your all-in-one shopping list. Grocery Gadget is the highest ranking grocery list application in the app store. Also, Rachel Ray magazine recommends it. On a side note, there are no advertisements in the paid version.

• Rating: 3.0 / 5.0 Stars
• Cost: $4.99
• Click here for more info or to download

Coupon Sherpa

This app is loaded with 100s of in-store coupons that you can access through your iPhone or iPod. So before you buy something at let’s say Best Buy for example, check to see if there’s a coupon that could save you money.

• Rating: 2.0 / 5.0 Stars
• Cost: Free
• Click here for more info or to download

Gas Buddy

The official iPhone app of GasBuddy.com, this app helps you find the best gas prices near wherever you might be. One of the new features of the current revision indicates how “fresh” the price at a given station is.

• Rating: 3.0 / 5.0 Stars
• Cost: $2.99
• Click here for more info or to download

Road Trip

Road Trip purports to be the fastest and easiest app for tracking your car’s fuel mileage, maintenance history, and expenses. With 4.5 stars, users seem to be pretty happy with the quality and functionality of this app.

• Rating: 4.5 / 5.0 Stars
• Cost: $4.99
• Click here for more info or to download

iDonatedIt

This little beauty lets you quickly and easily keep track of all your non-cash charitable contributions. So come tax time, you can make sure that you deduct as much as you can.

• Rating: 4.0 / 5.0 Stars
• Cost: $3.00 USD
• Click here for more info or to download

Skype

Skype is an inexpensive way to talk to friends and family all over the world. Calls to other Skype users are free (no matter where they are) and very cheap to landlines.

• Rating: 3.5 / 5.0 Stars
• Cost: Free
• Click here for more info or to download

What other Finance or Money Saving iPhone apps do you like or recommend?

Over at Untemplater.com, J. Money issued a challenge to not spend any money outside of the necessary (e.g. groceries and utilities) for 30 days. Well, I’m taking him up on it.

Last year, my wife and I gave up TV and movies for 30 days. The result – we sold our TV afterwards and have loved being TV-free ever since.

So I’m anxious/curious to see what habits and mindsets change for us. This experiment could be a real paradigm shifter for us.

The Dates

We will begin on March 31st at midnight and end on April 30th at midnight.

The Guidelines

1. The following expenses are acceptable: mortgage, HOA, utilities, cell phone bill, groceries (see Guideline #2), auto and home insurance, and gas.
2. We have a $500 a month grocery allowance. Some of that $500 is on non-essential expenses. So, we are changing that budget to $450 for the month of April.
3. Exceptions: A birthday gift for my father and tickets to the Man Expo (I’m just not missing that)

I will report back weekly in a post about how well we are doing and how we are overcoming temptations, which I know there will be many. Heck, I added three books to my Amazon wishlist today.

So have you ever tried living off the bare minimum? Any advice? Let me know in the comments

I have a real treat today. Seth Risenmay, the founder of MoneyDesktop.com, answered some questions from me and also graciously offered a promo code for a free 3 month trial of his product.

About MoneyDesktop

For anyone unfamiliar with MoneyDesktop, it’s an online tool to track your finances, plan for the future, and most importantly get out of debt. What’s unique about MoneyDesktop in a world of sites like Mint.com of PocketSmith.com is that the software auto-generates a plan using a variety of methods to help you get out of debt the most efficient way.

So for example, the ever-popular debt snowball is built in. Also, the less well known mortgage checking account method is also available. You the user are able to select the method that you are comfortable with, tie it into your overall budgeting and finances, and get out of debt faster.

Essentially, it’s a one stop financial wizard.

The Interview

RabbitFunds: Why did you decide to start MoneyDesktop?

Seth Risenmay: I started MD because I wanted to get America out of debt. We look at debt as THE greatest threat to the future of our country. When you think about it, our country has been able to defeat Nazism, Communism etc… and the one enemy that actually has a shot at bringing down our country is debt.

RF: Where did you come up with the idea for the feature set included in MoneyDesktop?

Seth: We had a database of 39,000 customers that gave us feedback on our product. We asked all of them this question; “What does this product need to be to give you the best chance of success?” From this market research we learned that America needed a product that did not then exist and so we set out to build it. It took 4 years and about $5 million to build but we feel confident that MD is the greatest debt and personal financial management tool in existence.

RF: What is different about MoneyDesktop as compared to Mint or PocketSmith?

Seth: The greatest difference between MoneyDesktop and any of our competitors is that it is first and foremost a debt tool. Other PFM’s are typically tools that help you track where your money went, but if that is all you do that would be like driving your car down the road backwards, you’ve only seen where you’ve been, not where you’re going. Some products and companies help you project the future and your debt payoff but since they don’t track where your money is going the projections are inaccurate. MoneyDesktop is the only company that looks to the past by tracking your spending, to help you project an accurate future for debt elimination, with real time in the present instructions in the form of text messages and emails. We also have systems to help people make decisions with financial intelligence, which no one else has. We also help people increase their discretionary income to help them get out of debt even faster. We do this by actually increasing their cash flow while lowering their bills and payments. All of this is unheard of to most PFM’s. I would say that we are one of, if not the only DPFM (debt and personal financial management).

RF: Are there any plans to make the service free like Mint?

Seth: We have thought a lot about offering our services for free like Mint. The problem is that we have found that if a person is not paying for a service they do not value it enough to actually implement it into their life and become successful. We wanted people to actually commit to their financial wellness. However, we also understand that there are a lot of people who desperately need MoneyDesktop who may need our services for free. Because of this, we have created a promotion called 3 for Free. If a user of MoneyDesktop is willing to help us in our mission to get America out of debt then we feel they have shown the commitment necessary to succeed and deserve to receive our services for free. If they refer 3 other people to MoneyDesktop our system will automatically track that and when 3 others have signed up the referrer will receive MoneyDesktop free for life!

As mentioned above, Seth was kind enough to offer a free 3 month trial to any RabbitFunds readers with a special reduced price of $14.95 afterwards. Just use the promo code “Rabbit” when you sign-up.

RF: What do you hope that users will achieve by using your site?

Seth: Total financial wellness. We want our users to become debt free, achieve financial freedom, gain financial intelligence, and become wise stewards of their money and wealth. And hopefully by using the 3 for Free feature they can help start a community of people committed to getting out of debt which will help strengthen our country and in a lot of preserve what we know as America for generations to come.

RF: How has using the software helped your own family?

Seth: I know where every penny goes, I know when every debt will be eliminated and I have piece of mind knowing that I am being a wise steward of the things I’ve been blessed with. It has helped me eliminate all of my debt with a little left on my home still to go.

RF: What upgrades or changes can users expect to see in the coming 6-12 months?

Seth: With tax season upon us we are adding features that will allow a person to easily organize their finances for tax season with their CPA. We are also adding added benefits of ID protection and Credit Monitoring. Other companies like LifeLock will charge you upwards of $10 per month for each of those services, we are close to having those services provided to our subscribers at no additional fee as an added benefit of using MoneyDesktop. We are also redoing the set up wizard for a more simple and effective setup to get people using it more efficiently.

For More Info

Thank you Seth for your time. If you have any questions or would like to see more then visit MoneyDesktop.com or follow them on Twitter at @MoneyDesktop.

Harris Interactive polled 2,576 Americans between January 18 and 25, 2010. Over the last six months, we have decreased our morning coffee purchases and increased brown bagging lunches, but still won’t give up our cell phones.

Here’s a brief highlight of some of the findings directly from the study:

• Almost half (45%) say they are brown bagging lunch instead of purchasing it, with 8% having considered doing so; 34% say this is not applicable to them;
• Two in five (39%) are going to the hairdresser/barber/stylist less often and 8% have considered doing so;
• One-third of Americans (34%) have switched to refillable water bottles instead of purchasing bottles of water while 10% have considered doing so;
• The media is also taking a hit as 33% of U.S. adults have cancelled one of more magazine subscriptions, one in five (19%) have cancelled a newspaper subscription and 22% have cancelled or cut back on cable television service with an additional one in five (20%) having considered doing so; and,
• One in five Americans say they have cut down on dry cleaning (22%) and stopped purchasing coffee in the morning (21%).

What was amusing though, was that 52% said that they had not or would not consider cancelling their cell phone plan, while 15% have already done so.

Could you give up your cell phone?

I have to be honest, I’ve considered cancelling my plan at the end of the contract this summer. The challenge then though is that we don’t have a home phone and everyone I know has my current number. So I don’t think we’ll be cancelling.

Of course, a two year contract makes it difficult to cancel your contract without paying an exorbitant termination fee. I’m personally very interested in seeing the outcome of the FCC’s inquiries into Verizon and their new $350 termination fee.

Specific results

Harris asked respondents, “Have you done or considered doing any of the following over the past six months in order to save money?” Here’s how America responded.

They also dissected the responses by age group. Apparently, older or mature individuals have made fewer cuts.

So what are you doing to cut back? Are you returning to any of your old habits? Let us know in the comments.

I’ve encountered what is a most amazing phenomenon – people do not like to “buy” free stuff. I personally look for every discount that I can when making a purchase.

Yet, I have noticed a good number of individuals who when faced with the opportunity to receive something for free or at a discount, they chose to pay for it instead.

After observing this phenomenon on a number of occasions, I decided to compile a brief list of common reasons why people like to pay more than is necessary.

Reason #1 – Fear

We all know the saying, “If it’s free, then it’s too good to be true.” Unfortunately, that is sometimes a lie.

Example: Wirefly.com offers cell phones for free with a new two year agreement with any of the major US carriers. The phone is the same. The plan is the same. In fact, the agreement is with the carrier and not Wirefly. I have shown this site to many people. And yet, they always end up going to the carrier and paying for the same phone that they could have had for free because it’s scary.

I have purchased several phones form Wirefly without a single problem. In fact, we will be “buying” some new phones in the next few months and all we have to do is agree to a two year extension on our contract. I’m not leaving Sprint in the next two years, so why not?

Reason #2 – Pride

It’s one of the seven deadly sins.

And it will kill your finances if you are not careful. I have a friend who as a matter of pride will not use coupons, take advantage of discounts, or buy anything that is not full price. He is afraid that the vendor will think he is incapable of paying the full price.

My grandmother believed it was a matter of social status. She wanted to be able to tell others just how much she overpaid for the item.

Fortunately for both of these individuals, they have the financial means to always pay full price. But why not save some money to spend on something else (or leave in savings)?

Reason #3 – Laziness

Some people are just plain lazy.

The next time you are about to check-out online, try searching for the name of the retailer with the phrase “promo code.” You will be amazed how many discounts you can find online.

For example, I purchased a bunch of domains last year from GoDaddy.com. Instead of paying full price for each domain, I saved myself about $30 with the promo code I found online.

Or the next time you are in a retail store front, just ask for a discount. Sometimes they will say yes and sometimes they will say no. But at least try asking, you might find yourself surprised.

Reason #4 – Strings Attached

In all fairness, there are times that Free comes at a price. Even though the item may be free, some other obligation places a contingency on the item or service. While thinking about this reason, I became curious about what phrases Googlers use when searching for free stuff. Here’s a screen grab of what Google suggests if you type in “free stuff online.”

As you can see, most people searching for something free know that something is usually attached to the offer. Though life is full of trade-offs. You have to decide if the trade-off is worth it.

Reason #5 – Convenience

There are times that paying is just worth it.  For example, I can wash my car. I’ve worked as a lot boy at a car dealership and have washed a lot of cars. But my time is worth more these days. I’m happy to pay the guys at the car wash down the street to wash and dry my car in 10 minutes.

Conclusion

Many of us are trying to be frugal, but for some reason, do not take advantage of free goods. If you really want to spend less money, then take a little time to research and take advantage of authentically free goods and services.

It’s the very last thing you might want to think about during the holidays: tax planning. But don’t let the holidays distract you from improving your tax situation and saving money!

This series is supported by efile.com. Learn more about how efile.com can help you save on taxes here.

Tax Planning: Why Bother?

Even though you may not file your tax return until April, between now and the end of the year is the time to make sure you qualify for as many 2009 tax breaks as possible.

Tax Planning: What Is It?

Tax planning is a creative process that involves making use of each of the tools in your tax savings toolkit. Your tools take two basic forms: deductions and credits. But what is the difference? Here is a brief rundown:

Tax Deductions

Deductions (and exemptions) reduce your taxable income. The amount of the deduction is subtracted from your tax liability (the amount of taxes you owe). So the actual dollar value of a deduction depends on your tax rate. For example, if you fall in the 25% tax bracket, a $1,000 deduction would be worth $250.

Tax Credits

Credits are much more valuable than deductions. They reduce the amount of tax you owe dollar for dollar. Credits come in two flavors: refundable and non-refundable. Most credits are non-refundable, which means they can reduce your tax debt to zero, but not beyond. But if your tax liability is already $0, a refundable credit will be paid to you as a part of your tax refund. Use direct deposit for the quickest way to receive your refund.

How Do I Start Planning?

IMPORTANT: Keep 3 years worth of tax-related documents (tax forms, receipts, cancelled checks, paycheck stubs, bank statements, credit card bills, medical bills, mileage logs, etc.) for reference and in case of an audit. You can scan the hard copies for easier storage.

Here are a few tips about credits and deductions to get you started:

1. Do you have taxes withheld from your paycheck?

Unless you are self-employed, your employer probably withholds taxes from your paycheck. But have you adjusted your withholding throughout the year? If you are withholding more money than you will owe on April 15, you are merely making an interest-free loan to the government. Why not get your hard-earned money now instead of waiting for a refund?

It is also important to make sure you are having enough money withheld. This is especially true if you are in certain situations (such as married, filing jointly with a working spouse) where you may have to pay back a portion of the Making Work Pay Credit you have already received.

Speaking of paychecks, be sure to see if you qualify for the Earned Income Tax Credit, which is refundable. Don’t be like one of the thousands of taxpayers who qualified in 2008 but did not claim the credit.

2. Did you buy a home during 2009? Still planning to buy one soon?

Good news: the $8,000 tax credit for first-time buyers has been extended into 2010, and a new $6,500 credit for previous homeowners has been added. Both are refundable.

3. Did you lose your job or change jobs?

Unemployment compensation is generally taxable income, but $2,400 of it is tax-free in 2009. You can also deduct the costs associated with finding a new job as well as the expenses of moving to be closer to your new workplace.

4. Are you planning for your retirement?

Retirement planning is also tax planning! Contribute to a qualified plan now and save on taxes. The Saver’s Credit might be worth $1,000 to you. Also, you may want to consider converting your traditional IRA into a Roth IRA.

5. Do you have children you support?

There are several tax breaks to help you: exemptions for dependents, the Adoption Credit, the Child Tax Credit, and the Child and Dependent Care Credit.

6. Do you go to school or support a student?

Depending on your situation, you can choose between deducting $4,000 for tuition and fees, claiming the $2,500 American Opportunity Credit (formerly the Hope Credit), or claiming the $2,000 Lifetime Learning Credit.

7. Do you make charitable contributions?

Donations of cash and property are commonly used for deductions, but by donating appreciated stock you will also avoid paying tax on the appreciation. I personally love this method. You basically receive more bang for your buck.

8. Did you spend money on medical expenses?

You can deduct the amount you spent over 7.5% of your income.

9. Did you buy a car this year?

If you did, great! If you are planning on buying a car next year though, you might want to consider purchasing it before the end of this year. You can deduct the amount of sales tax you pay on up to $49,500 of the price of a new car in 2009. If your new car is a hybrid, you can also claim the Alternative Motor Vehicle Credit.

Take a little time to learn more about these and many other ways to save money on your taxes. Efile.com can help make tax planning simple!

I like marketing. I market my website. I market myself to potential employers. I marketed myself to my wife and she fortunately bought. I believe marketing helps us gain knowledge of products, services, and opportunities that we might not have otherwise known about.

I believe marketers spend everyday trying to open our heads and rewire us to buy their stuff. I’m not cynical and I don’t think they are evil or bad people. However, as consumers we need to understand that they want our money and that it is Us vs. Them. My six reasons.

1) Discount pricing is a marketing ploy

I spent some time working at a major, national retailer. I’m not interested in pointing fingers, so let’s just call it Brand X. While working at Brand X, I was involved in many pricing conversations and observed the pricing process. We all know that stores use discount pricing as a means to incentivize you to buy now. I didn’t understand how deep that really runs though. For example, if a shirt or sweater costs the company $10 and they know from historical reports that consumers typically will only buy it at a price of $20, then they price it at $40. That way, they can discount it at 50% (oh my gosh! oh my gosh! oh my gosh!) and it will sell at the expected price of $20. Meaning, they don’t even expect you to pay $40! If you do buy it at $40, then you just lost. If you purchase at $20, not because you need the item but because you can’t pass up that great price, then you just lost.

2) They make us ask permission to buy from them

I’m borrowing this reason from Dave Ramsey and don’t take the credit myself. Banks, car dealerships, etc need us to buy from them in order for them to make money. And yet, we find ourselves asking them, and almost pleading at times, to take our business. They tell us that we’ve been “approved” so that we feel part of the club. “Honey, great news! The bank approved of us.” They put on a great dog and pony show to make us anxious that we might not get the “deal.” Stop and realize what is really being sold. Often, what’s being sold is enslaving amounts of debt. Liabilities, like cars, that masquerade as assets don’t make you happy. Money in the bank and peace of mind make you happy. Walk away next time someone tries to get you to say, “Please, can I have your stuff? Please, can I buy some debt?”

3) Research, research, research

Marketers spend a considerable amount of time learning their trade and then studying consumers’ behavior. Any good professional would. They track and analyze your buying and browsing behaviors, study psychology, and attempt to gain an intimate understanding of you. This is a double-edged sword. For example, Zappos.com is very customer centric. They are almost obsessively customer centric. They use an intimate knowledge of customers to better meet customers’ needs. But at the same time, these marketing departments use this knowledge to optimize the entire buying process to get you to buy. So what am I saying? Simply that marketers are constantly gaining new information about us and using that information to create extremely enticing advertisements. Just to put this effort into perspective, advertisers are expected to spend $242 BILLION on ads in 2009 alone. They have to recoup that investment and they expect to have us, the consumers, foot the bill. Don’t buy just because of the shiny ad.

4) They use fancy or technical names that confuse the issue

As the title suggests, a rowing machine is now a “1205 Precision Rower,” which sounds much cooler. Another example is the 12b-1 fee charged by some mutual fund companies. Rule 12b-1 was adopted by the Securities and Exchange Commission (SEC) in 1980 and allows fund companies to pay for sales and marketing activities by charging you a fee. This is in addition to the normal or stated expense ratio. It bothers me that fund companies charge consumers a marketing fee but don’t call it that. I understand that the name is derived from the SEC rule, but it is misleading to novice investors who are just starting out. Just call it a marketing fee so we can decide if we want to pay it.

5) “Where’s the pain?”

Another double-edged sword. A good marketer asks and answers the question, “Where’s the pain?” If a marketer can understand the problem a consumer faces, then he or she can develop a campaign or product that addresses that problem. Target pharmacy bottles are an excellent example of a marketer adding value to a product. Several years ago, Target redesigned its pharmacy bottle to make it easier to open, identify the prescription, and know to which family member the prescription belongs using color coded cap rings. The added convenience is worthwhile. On the other end of the spectrum, think about all of those late night infomercials. They offer solutions to common problems via their products. But stop and think to yourself, “Yes the Magic Bullet makes life a little easier for me, but my blender works just fine. So I don’t really need it even though it is newer, nicer, faster, etc.” In other words, they may be offering something that solves a problem, but you just may not really need the problem solved (at least not at the expense of your retirement). So next time you go to buy a product that you really don’t need, decide to put the money into your retirement account instead.

6) Illegitimate or illegal marketing schemes

I don’t want to dwell much on this topic since my purpose with this post is to address legitimate marketing efforts. However, there are a lot of marketers of ill repute out there attempting to bypass the law and cause you to lose your money. If you suspect that an offer is too good or just doesn’t seem right, please avoid it. Also, you can check sites such as Scam.com, ScamBusters.org, Snopes.com, or the Better Business Bureau to see if others have reported the offer as a scam.

Conclusion

Let me reiterate an important point – I have nothing against marketers. I know a lot of them. They have families, homes, dogs, and probably some consumer debt themselves. But buyer beware. Every institution, firm, corporation, etc must maintain a healthy revenue stream and that revenue has to come from someone. See it as a game. You are allotted X number of dollars each month to support yourself and your lifestyle. Marketers setup storefronts where you can choose to spend your dollars. At the end of the game, the person or store with the most dollars wins. The more you keep to yourself, the greater your odds are of winning.

Let me know in the comments if you agree or disagree.

My wife and I recently made some changes to our budget and how we handle cash versus credit. The result is a stricter, more disciplined cash management system. As a result, we are having to rethink how we approach certain budgeted areas such as groceries.

As is probably the case with many of you, groceries are one of the largest bills we have. It’s amazing how many resources are consumed in sustaining the life of very tiny people.

I think we’ve all read articles talking about how we should make a shopping list before going to the store. That way, you avoid impulse purchasing or making several trips during the week. We almost always make a list. And yet, we still have what I’m going to call “unintentional food storage.” You know what I’m talking about. There is that can of tuna or box of pasta in your pantry that has been in there for ages. We never consume the food since it usually requires more ingredients which we don’t have on hand to make a meal.

Let me give you an example using that can of tuna. The reason my family usually doesn’t eat the tuna is because we often don’t have bread. My wife doesn’t like me eating a lot of breads (something about a low carb diet that I’m supposed to be on). But we have the tuna, some mix-ins like celery, nuts, and apples for flavor, and Vegenaise (I don’t like Mayo and don’t get me started on Miracle Whip). So all we need is bread and we’d have a sandwich. But go figure, we bought roast beef, provolone, and bread tonight so that we can make sandwiches. Now granted, I prefer roast beef over tuna. But, we could have saved money, or at least postponed the purchase until the next paycheck, had we just bought bread.

The point that I’m trying to make is that when planning a trip to the grocery store, dive into your unintentional food storage and see what you can use. One thing that you might try is eating through your freezer or pantry before making any large trips to the store. Make a list of only ingredients that are needed to finish off the half-meals already in your pantry. We recently tried this tip and found that we were able to spend much less money while we paid off some bills.

If you are trying to lead a frugal life, then you probably cut coupons. I know that my wife and I are always on the lookout for good coupons ourselves. In fact, each year we are mailed a calendar that has coupons bordering each calendar month. The coupons are for places like Nicolitalia (our favorite pizza place), Sensuous Sandwiches (our favorite sub place), Coldstone Creamery, massage parlors, etc. We look forward to it arriving each Fall.

There is a problem though with coupons that easily leads to spending more money – coupons are a marketing tool or sales gimmick! Meaning, stores don’t send out coupons because they love us. They send coupons because they know that we are more likely to spend money. For example, I love Kohl’s. We receive a 20% off coupon about once a month. As soon as it arrives, I start thinking, “Oh, we could go buy some new towels for the kitchen. Or I want some new socks or let’s just browse and see what we come across.” That response is exactly what the marketing department at Kohl’s wants. I know people in Kohl’s marketing department and I really like them. But don’t be fooled – they want your money.

Marketers not only are aware of this phenomenon but spend time researching how coupons affect your buying habits and then share that information with each other. Don’t believe me? Here’s a research report just published on MediaPost, which is a news portal for marketing and media professionals.

Receiving a discount is NOT saving money. You save money by putting money in the bank. However, corporations have spent millions and millions of dollars over decades teaching us that buying something on sale is the same thing as “saving money.” Spent money is never money saved. So let’s be clear that coupons help you spend less but don’t cause you to save money. Each time that my grandmother told my grandfather that she had just saved him “tons of money” by purchasing $100s in clothes on sale, he always responded, “I’d like to see that savings account one day.”

Now, you might completely disagree with me right now. But here’s the point that I’m driving at – coupons are great when you intend to make the purchase anyways. If you cut and collect coupons to use on purchases that you would not have otherwise made, then the marketing departments have won and you have spent money, not saved money.

Let me give you an example. Within 48 hours of receiving our coupon calendar, we decided to use a coupon for a 12″ one topping pizza at Nicolitalia for only $3.99. My wife grabbed a table while I ordered. I know how much she loves the cookies ‘n cream cannolis. So I of course ordered two. The total came to about $10. Now $10 isn’t exactly breaking the bank, but we are on a budget and we had food at home that would have cost less. Had we not received that coupon in the mail, then we wouldn’t have made the purchase.

All I’m saying is, beware when cutting coupons. Don’t forget that the reason you received it in the mail or your inbox is because some marketer knows that you now feel enticed to spend money in order to “save money.” So don’t stop collecting coupons, just judiciously cut the ones for your regularly scheduled purchases that you were going to make anyways.

Do you agree/disagree? Let me know in the comments.

I decided to write this post in the form of a letter to Dave Ramsey:

Hey Dave,

My company decided to offer your Financial Peace University course to any employees interested. Always hoping to learn more and better my financial situation, I signed up. In your latest lesson, you spoke about dumping debt and specifically advised people to sell stuff.

Well Dave, I’ve started to sell my stuff. For example, my wife and I aren’t big TV watchers. In fact, the only TV show we regularly watch is Fox’s Dollhouse and we almost always watch it on Hulu.com. So we sold the TV…the TV Dave. I’m not sure what all the ramifications are yet of that decision, but I’m hoping that my family will be better off with less digital garbage coming in. One thing you didn’t talk about though was getting a good deal for all the stuff I’m out selling. In my haste and desire to cleanse my home and earn some extra cash, I completely undersold the TV. A nice, young college student and his roommates are now enjoying my TV at a hefty discount. I loved getting the subsequent five phone calls that day asking about the TV. Each person willing to pay more than what I sold it for. So you might want to tell your viewers/readers that they should get excited about selling stuff, but don’t get stupid about it. Do you know anyone that wants a nice, solid wood TV stand from IKEA?

While we are on the subject Dave, I’m not sure where the selling stops. For example, I preempted my wife this week by telling her that “the golf clubs stay!” So what if I’ve only used them once in the last two years. Doesn’t that just make me an average golfer? Actually, I would golf more if my wife weren’t so bad at it that she refuses to go. The one time I used them last year was when she went to her brother’s wedding out East. I went golfing twice that week – it was a good week. So my point is, you told me to sell, sell, sell. But do you offer any guidelines? I would sell anything that I owe money on to pay it off, but that’s only my car and my house – and the house stays.

So Dave, that leaves my car. I’ve only had my car for six months, and I love my car. I drive a 2008 Hyundai Santa Fe. I haven’t driven an SUV for years and I’m not sure that I’m ready to make the mini-van commitment. My kids don’t play soccer yet, so what does driving a mini-van say about me? Of course, I sure wouldn’t mind a reduced car payment. It’s not that I can’t afford it, but I sure could do other things with that money. So I did a little research online and I’m pretty sure I can get more than what I owe on my car. But the problem now is finding a cheaper car that is big enough for my family and double stroller. I found a 2005 Town & Country for sale but it has 98k miles on it. Come on Dave, 98000 miles! And that’s the best deal I’ve found so far in a price range that makes selling my car and getting another one worth it. So do you have any advice to go along with your simplified statement of “sell the car”?

What I’m saying Dave is that we are trying. We are filling Craigslist with more stuff for people to buy (which doesn’t that encourage this problem for other people?). However, I would appreciate it if you could answer three questions: (1) Am I being a good guy and helping someone out if I undersell my stuff, or should I get every penny for it that I can since I’m using it to pay off my debt? (2) Do you have any guidelines on what I should and should not sell? At what point have I sold my life? Notice I didn’t say “lifestyle.” (3) You said in your video not to get a clunker, but you were adamant about selling the car. So where’s the happy medium? I can find a cheap commuter car no problem, but a quality, cheap family vehicle is harder to find.

Dave, I like you. And I like your course, even if I don’t agree with everything. I also think we could all do with a little less stuff in our lives and homes and on our credit accounts. I’ll let you know how it all turns out once the selling spree ends.

Regards,

Adam “I’m keeping the clubs” Williams

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If you’ve taken Dave’s courses or have read his books, what are your experiences with selling stuff? Any good answers for my questions? Let us know in the comments.