Beating Broke

Is Frugal Normal?

February 25, 2009 By Shane Ede 2 Comments

Do you think that being a Frugaler is normal? It obviously is a bit abnormal in the American society. Although, with recent economic news, I think that it’s becoming more popular. But normal? I really don’t think so.

Sometimes, we look at the world through the personal finance bloggers perspective. We see all the other personal finance bloggers we know and read and we get used to thinking that those people, along with ourselves, are the norm. In essence, we are missing the forest for the trees. Being a Frugaler is far from normal.

Every day, we Frugalers, task ourselves with finding new and exciting (well, maybe not exciting) ways to spend less money. At the same time, we try and find ways to make more money. We hope that the net effect is that we not only have money to pay the bills, but that we have some to save for a rainy day and, maybe, even retirement. We daren’t say it, but some of us even think about “early” retirement. And, if you peer no farther than our little realm of the blogosphere, you would think that the whole country does nothing but count pennies and do personal accounting.

I don’t think you would find too many PF bloggers who would argue against more people becoming Frugalers. In fact, that is the purpose of a vast majority of the PF blogs that exist. On any given day, you’ll find articles on “best way(s) to save on groceries”, “way(s) to cut utility bills”, and the list goes on. We exist to talk, share, and teach this stuff.

Being a Frugaler may not be normal, but we’re working on it.

Taxes Done?

February 13, 2009 By Shane Ede Leave a Comment

Have you done your taxes? Or at least dropped them off at the accountant? For the last several years, I’ve done my own taxes online. There are several places you can go. I use TaxAct.com, but I know people who’ve used the others like Turbo Tax.

In any case, I managed to get mine all finished up last week and filed them all. Last year, I ended up short and needed to pay in so I waited until much later to file so I could hold on to my money a little longer. This year, I made a few changes to my W-4, and as a result, ended up with a small return coming my way. And there’s no reason to not file if they owe you money.

North Dakota was amazingly fast with the refund. I got it back on Wednesday. I filed on the previous Thursday. Less than 4 business days to go from my computer to the state and back to my account. And a EFT deposit takes at least a day from start to stop, so they had to have initiated the transfer on Tuesday. Less than three days process time. Very nice. Of course, I haven’t really heard much from the Feds, so not sure if I’ll be seeing that back anytime soon or not. I’m sure they’re a little more swamped than the state is, but you’d think they’d have a bit higher capacity too.

How about you? Taxes done? Did you get a refund or did Uncle Sam drain you a little drier?

Unused Credit Cards are Being Closed

January 7, 2009 By Shane Ede Leave a Comment

According to J.D. and several other places I’ve seen, Credit Card Companies are Being a lot more pro-active about closing unused Credit Card Accounts. Why would they do that? And why does it matter to you?

First, they do it because every open account costs them something. It may not be much, but they still have to process the data and maybe even send out a statement. Many have moved to not sending out statements on accounts that haven’t been used, but some still do. Most importantly, any open account is an open credit line. It’s a potential liability for the credit card company. If you go from having no balance to maxing out a 5000 card, you’ve just added $5000 in liability to the company’s bottom line. Not to mention that doing so is a likely red flag for impending financial trouble and that makes the liability a risky liability. Any way you look at it, that isn’t good for the company.

Of course, if you continue to not use the card, it really doesn’t cost them much. It’s just the potential that they are not willing to risk. It’s a sign of increasing risk aversion on the part of the credit card companies.

So, why does all this matter to you? Part of your credit score is based on your credit history. The longer you have had an open account, the better it looks on your credit report. It’s a sign of good credit management. Another part of your credit score is the ratio of available credit to credit used. So, if you have a $5000 credit line, and have only used $2500 of it, it looks better than if you had a $2500 credit line and had used $2000 of it. If you have a credit card that you aren’t using, it’s adding to that unused portion of your available credit. That’s good for your credit score. But if the credit card gets closed, you don’t have that unused credit available anymore and your ration goes down. And so does your credit score.

In both cases, the dip in your credit score is likely to be fairly small. And it is likely not a huge problem. But it is something you should be aware of if you had been planning on applying for any type of loan and have had a dormant credit card closed recently. Also, if you are holding a card that you haven’t used recently and doesn’t have a balance, and want to keep it from closing, you can make a purchase with it once every couple of months to keep it active. Just make sure to pay it off right away.