Financial Planning

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Budgeting

How can I keep my budget on track in a tight economy? (posted March 25, 2011)

Thankfully there are a lot of little money-saving steps you can take that can add up in a big way. Of course you can start cooking at home or brewing your own gourmet coffee instead of hitting the drive-thru. Examine your auto or home insurance to make sure you’re getting the best deal. Update your W-4 so only the necessary deductions are taken from your monthly paycheck. Or, you can be more careful about turning off lights when you leave a room. Beyond these simple tips, let’s examine some additional ways to save a dime or two.

When using coupons, only buy the things you regularly purchase or something new you were going to try anyway. Also, use your coupon when items are on sale and frequent stores that double coupons or let you partner a store coupon with a manufacturer’s coupon (hint: Target). All of these strategies will give your coupons more saving power. Visit local coupon blogs like MoneySavingQueen.com or CouponCloset.net to learn how to maximize your coupon use.
Think used instead of new. Freecycle and Craigslist are great online resources for gently-used, free or cheap items like furniture, clothing and children’s items. Not only is it a great way to get the things you need, but it keeps useful items out of landfills, so it’s good for your budget and the environment. Just play it safe when making pick-up arrangements. If possible, meet at a well-lit public place, like your local police station. It’s safer than inviting strangers to your home.
Explore consignment stores, thrift stores, flea markets and garage sales to find gently-used, sometimes new items. Plus, if you enjoy the thrill of the hunt, thrifting can be cheap entertainment.
If you prefer other forms of entertainment, visit Travelok.com to find free family-oriented festivals and events or check out Groupon, Wimgo Deals or Living Social for wonderful discounts on great local services and entertainment like dining, spa treatments and event tickets.
Consider borrowing books and movies from your local library to bring a steady flow of new-to-you items into your home. If your local library offers movie nights, take advantage for some family-friendly fun.

You don’t have to make huge sacrifices to stay on budget. Just take a creative look at your spending and find simple ways to cut back just a little and get a better deal.

How can I manage my money better without following the typical budget? (posted Jan. 28, 2011)

A well-developed budget helps many people manage their money, but some find it difficult to maintain their monthly spending plan. If that’s you, there’s good news! It’s possible to save and manage your money without following the typical spreadsheet budget. Here’s how.

Go on a spending diet. This can help jumpstart your ability to save money without following a budget. Review your finances to find your money pits and vacuums. Then brainstorm ways to reduce or possibly even eliminate these problems. Of course this doesn’t work on your fixed expenses, just the ones that fluctuate from month to month.

Go with free first. Before purchasing an item or service, see if it’s available for free. Books, music and movies can be borrowed from the library or from friends. Many health insurance companies offer free gym memberships. Even cable television shows can be viewed online. Look for no-cost options before shelling out money.

Focus on one category at a time. Instead of reducing your across-the-board spending by a certain percentage, focus on cutting back in one particular category. Whether it’s eating out, groceries or entertainment, look for ways to scale back. Once you’ve mastered one category, move on to the next.

Pay with cash. It’s a proven fact; most of us spend more when using debit or credit cards versus paying with cash. Consider implementing the classic envelope system. Grab some envelopes and write the name of each category in your spending plan on a separate envelope. Then, place the monthly amount of cash you plan to spend on that category inside. Forget your checks and plastic cards, use these envelopes instead. Once the cash in each envelope is gone, there's no more spending until next month! This tactic forces you spend only the amount you've allotted for groceries, gas, entertainment, clothes, etc. One word of caution-be sure you have a safe place to store your envelopes if you implement this plan. If your cash gets lost or stolen, there's no replacing your money.

Let your bank help. We all know that we can’t spend what we don’t see. For this budget-free method, you'll need three bank accounts: two checking and one savings. First, decide how much of every paycheck you want to put toward savings and have that automatically sent to your savings account.

Via direct deposit, send the rest of your paycheck to checking account No. 1. From this account, you'll pay all monthly fixed expenses, like rent, car payments and utilities.

With the money left over after paying your fixed expenses, divide by four and set up a weekly automatic transfer of that amount to checking account No. 2. Use this account for all variable expenses like groceries, entertainment, clothes and eating out. Refrain from transferring more money over or using credit cards. With this method, you save each month and have an accurate account of your spending money from week to week.

It seems like every month we have our ducks in a row … then something comes up, like a birthday party, a baby shower or a wedding. Almost every weekend something comes up and at the end of the month our bank account is famished. How do we go about setting a budget or sticking to what we already have? (posted Aug. 29, 2008)

Sounds like you’ve got a case of the gift-giving blues, a common problem in many households this time of the year. When setting up your monthly budget be sure to include a “gift-giving” category, setting aside funds for these types of expenses. No parties this month? Roll the funds to next month’s budget or add them to your savings account for next time! It’s also a good idea to build a “miscellaneous” category into your budget to handle other unexpected costs.

Try these tips to get the most bang for your gift-shopping buck and keep your budget on track.

Shop at discount stores. Stores such as Ross, T.J. Maxx, and Marshalls (among other popular discount chains) are good places to buy brand name items for a lot less. People don’t have to know you didn’t spend a fortune on a gift.

Plan ahead. Typically, wedding invitations are sent out at least a month in advance. This allows a little bit of wiggle room to plan for the upcoming gift purchase. Baby showers are normally set later in the pregnancy, so start your baby gift fund once you receive news from the mother-to-be. In addition, put those lovely once-a-year birthday celebrations on your calendar and set a reminder one month in advance so you have time to save some extra cash. Preparing yourself for these little expenses (that really add up!) is a solid start.

Build a buffer. When balancing your checking account, don’t let yourself reach $0. Instead, designate another amount – $50 or $100 – as your break-even point. This creates a buffer for emergencies and helps keep you from going into the abyss. So, when that surprise birthday party comes up the weekend before payday or that crazy couple you love (but don’t quite understand) runs away to Vegas to get married, you won’t have to turn the cushions over on your couch or vacuum out your car for spare change!

Be creative. Give something homemade or offer your help with special projects. Help the mother-to-be create the baby’s scrapbook templates. Try helping the lovebirds by serving cake or handling the guest book at the wedding. Your time and assistance are worth much more than a lavish gift.

I’ve heard a lot lately about creating a spending plan, but do I really need one? (posted Nov. 27, 2006)

You bet you do. Spending your money without a plan is like traveling cross-country with no map. Without charting your course in advance, you may reach your final destination, but the journey could be filled with unnecessary twists and turns, dead-ends and road blocks.

Thinking of a budget as a road map to financial happiness - instead of a restrictive, binding “spending diet” - helps us see the big picture. One of the main reasons budgets fail is a negative attitude. Stop your stinkin’ thinkin’ and view your spending plan as a way to reach your financial dreams and goals! Budgets aren’t one-size-fits-all; the structure depends on your spending priorities and saving goals. This means you have control of your money, not the other way around … and that’s the very definition of financial freedom.

Tracking your day-to-day spending is an important part of budgeting. Check out tips to help you stay on top of your spending under the "Spending" section and use those tips to build a workable budget that reflects your true needs and priorities, leaving room to reduce debt and save for the future. Let’s get started!

Make it easy by selecting a “canned” budget worksheet as a model; solid options can be found at Bankrate.com, practicalmoneyskills.com, or goodpayer.com. Using the categories you created when you started tracking your spending, add or delete categories in the worksheet to personalize your spending plan. Be sure to include expenses that don’t occur on a monthly basis, like property taxes and insurance, and add a category for paying yourself FIRST. Saving should be part of your monthly budget, not something you do if money is left over.

Use current pay stubs to calculate your average monthly net income. Add other forms of household income, including interest income, bonuses, child support, etc. Once your average monthly income is determined, assign an amount to each expense category. Try to be as realistic as possible; monitoring your spending will help you determine how much to include in each category. (Don’t forget to keep track of cash transactions and reflect them in the appropriate section!)

Subtract your total monthly expenses from your total monthly income. Have money left over? Dump the extra dough in your savings account or use it to reduce debt. Expenses exceed your income? Review your spending and decide where you can cut back. Then do it.

Stick to your new budget for a couple of months, then evaluate and adjust as needed. Remember, this is a fluid plan – as priorities shift and goals change, your budget should follow.

It’s your life, it’s your money and the budget is your tool. Make it work for you!

What is the easiest method to track your spending, especially outside the home? (posted Oct. 27, 2006)

If only our wallets could talk! If they could, we’d truly know where our money goes and how it’s spent. Unfortunately (or fortunately?), that’s not the case. Tracking day-to-day spending takes diligence, but it’s a critical stepping stone to financial happiness and a building block for other important processes, like creating a budget. Keeping track of purchases allows us to curb wasteful spending and direct our money to true needs and priorities.

While the methods below aren’t one-size-fits-all, they are tried and true tips to help plug the leaks. Find the one that fits your lifestyle and stick with it!

Retain receipts. Drop your receipts in a jar or box nightly (after balancing your checkbook, of course) for a month. At the end of the month, tally those slips and list them in assigned categories; you’ll see some obvious spending patterns emerge.

Put pen to paper. Carry a little notebook and write down everything you spend, down to the penny. This captures even the smallest expenses, such as trips to the vending machine and travel tolls, which can add up quickly.

Go green. Take a cue from past generations and use cash whenever possible. While it’s easy to go overboard with debit or credit cards, we have an emotional attachment to dollars. Create envelopes for your expense categories (i.e. groceries, movies, gas, clothing, eating out) and put a pre-set amount of cash in each envelope. When the envelope is empty, you’re done spending. Period. This system not only helps you monitor outflow, but also helps you stick to the plan!

Save with software. Technically inclined? Computer programs like Quicken and Microsoft Money can help you balance accounts and track expenses electronically. You’ll still need to keep bills and receipts, but these programs compute category spending for you and offer graphs and charts to illustrate where your money goes, among other helpful features. Most programs are relatively inexpensive and user-friendly, too.

Regardless of which tracking method you choose, the key is staying the course long enough to identify spending trends and shift your financial focus to more important goals, like debt reduction or savings.

Consumer Issues

What steps can I take to avoid identity theft?(posted Feb. 24, 2011)

This is a great question because identity theft can affect anyone, at any time. It’s important to be proactive to protect yourself from becoming a victim.
Identity theft takes place when someone uses personal information, such as your Social Security number (SSN) or credit card number, without your permission to commit fraud or other crimes. Here are some "Do’s" and "Don’t" to help you protect yourself from identity theft.

Don’t Do

Keep your Social Security card in your wallet or purse, and don’t have your SSN printed on your checks.

Keep documents containing personal information in a fireproof lockbox.

Throw away mail or documents containing personal information. This includes junk mail!

Invest in a cross-cut paper shredder to destroy mail and other documents containing personal information.

Give out your SSN or other personal information in email or over the phone if you didn’t initiate the inquiry.

Monitor your credit report. You can order a free credit report each year at AnnualCreditReport.com. Monitor your kids’ credit as well. For requirements to check activity on your child’s credit report, contact Equifax (800.525.6285), Experian (888.397.3742) and TransUnion (800.680.7289).

Leave a paper trail. Switch to paperless billing or use online bill pay whenever possible.

Opt out of receiving pre-approved credit offers in the mail. Call 888.567.8688 or visit OptOutPrescreen.com. You will be required to provide your SSN.

Use your pet’s name (spouse’s name, birthday, etc.) as a password. Use both characters and numbers. Then use the Microsoft.com password checker to check the strength of your password.

Make sure Web addresses start with "https://" rather than "http://" when you are shopping or banking online. The "s" indicates that the site is secure.

Put personal information on social networking sites. Make sure your kids understand why it’s important to keep certain things private online.

If you’d like more information about preventing identity theft or if you’d like to know what steps to take if you become a victim, visit FTC.gov.

Between school, church and community activities, my family is constantly on the go. What are some fast, economical options for feeding my family without resorting to the drive thru?(posted Oct. 28, 2011)

This is a great question and one that I’m sure many can relate to. If you feel like your to-do list is never ending and you rely on fast food restaurants more than you’d like, one of the following tips may be just what you need.

Consider once-a-month-cooking. Set aside one weekend for cooking and enjoy your efforts for an entire month by harnessing the power of your freezer. All it takes is a little research and some meal planning for your kitchen life to become much easier. Save money by making meals with similar ingredients so you can buy in bulk and parcel out what you need. Google ‘once a month cooking’, ‘freezer cooking’ or ‘make ahead meals’ for great tips and recipes.
Embrace your slow cooker. It’s the perfect low-energy, low-effort cooking solution for busy families who want to come home to a hot meal. Casseroles, stews, chilis, veggies and even desserts can be prepared in a slow cooker with minimal effort and easy clean-up.
Build a “go-to” list. Gather your family and brainstorm a list of easy, satisfying meal options that require few ingredients and little prep time. Once you’ve got your “go-to” list nailed down, try to keep the ingredients on hand. Consider making double batches; one for your current meal and one to freeze for later.

For more sanity-saving kitchen ideas, check out these online resources:
EatAtHomeCooks.com is full of quick, easy recipes and over a year’s worth of free menus and complete grocery lists to take the hassle out of your meal planning and shopping.
OnceAMonthCook.com is dedicated to providing recipes, tips and guidelines for those who want to explore the benefits of once-a-month cooking.
MealsMatter.org has customized meal planning tools, recipe ideas and expert tips for busy families.

Should I buy furniture outright or "rent to own"? (posted Sept. 30, 2011)

Rent-to-own companies offer products like appliances, furniture and electronics. You can either rent the product for a short period of time and return it, or agree to rent the product until you pay enough to own the item.
If you only need an item for a short period of time, rent-to-own might be a viable option. However, if you want to keep the item, buying from a rent-to-own company will usually cost two to five times as much as purchasing the item from a department or appliance store.
Regardless of where you buy a product, it’s important to comparison shop to find the best deal for your money. If the item you’re interested in is something you want but don’t need right away, consider putting the amount you’d have paid a rental company into a savings account. Once you’ve saved enough money, you can make your purchase outright – saving both interest payments and the possibility of making late payments and having the item repossessed.
After comparing your options, if you choose to go through a rent-to-own retailer make sure you ask the right questions.

What is the total cost over the length of the contract?
Who’s responsible if the item breaks or gets damaged?
Will the item I get be new or used?
What happens if my payment is late?
What happens if I miss a payment?
Are there penalties if I cancel the agreement?

Good luck to you and happy shopping!

I want to refinance my car. Is it best to refinance it with the same bank who gave me the loan or my main bank that I use for all my personal things? (posted Sept. 30, 2011)

It’s probably best to start with your regular bank because financial institutions usually avoid refinancing their own loans. Banks and credit unions often run refinancing promotions but they’re geared toward gaining new loan business, not restructuring the loans they already own. However, don’t count your current lender out. If you’re a good customer, it might be worthwhile to ask if they’d be willing to make an allowance in order to keep your business. Even if your current lender is willing to negotiate new loan terms, it’s worthwhile to rate shop to ensure you’re getting the best deal.
In order to truly comparison shop and know who’s offering the best rates, you’ll need to gather all the information on your current loan – pay-off amount, interest rate, number of remaining payments and whether there’s a penalty for paying off your loan early. If there is a pre-payment penalty, you’ll need to determine if the potentially lower interest rate will offset the fee you’ll have to pay.
Once you’ve gathered all the facts, visit with different lenders to get quotes and see if they can beat your current deal. Ask about loan qualifications, interest rates and fees associated with a new loan.
Even though refinancing offers the potential for lower interest rates, more favorable loan terms and lower monthly payments, if refinancing is going to lengthen the life of your loan it may not be worth it in the end. Only consider this as an option if you’re dangerously close to missing payments or defaulting on your loan.

Is buying 100% gas vs. gas-ethanol mix worth it? (posted June 24, 2011)

This is a huge, and sometimes heated, debate among drivers and unfortunately the answer isn’t as simple as yes or no. We did a little digging and here are some things to consider when comparing your fuel options.

What’s the difference for my pocket book?

With gas prices higher than we’d like, the typically lower price of ethanol-blended fuel may be just what your budget needs. However, there’s more than just price to consider before making a decision. Keep reading for other factors that may impact your drive.

Is ethanol good for my car?

The most common ethanol blend, E10 - which is 90% gasoline and 10% ethanol - is currently blended into over half of America’s gasoline and is approved by every major automaker in the world.

Ethanol-enriched fuel performs much like regular unleaded gasoline and actually surpasses it in key performance categories.

Ethanol-enriched fuel absorbs moisture in a fuel system, helping prevent fuel lines from freezing in the winter. It’s also a solvent and will keep injectors and other components clean.

Certain vehicles called Flex Fuel Vehicles (FFV) are designed to run on E85 – a higher percentage of ethanol. If your vehicle isn’t a FFV you should use nothing higher than a 10% ethanol blend. For more information on which fuel is best for you vehicle, check your owner’s manual or ask your mechanic.

Can I use ethanol-blended gas in older vehicles?

All cars built after 1986 can use E10 blends. If you drive an older car and want to use an ethanol blend, an adjustment to a lower air-to-fuel ratio may be necessary. Talk to your manufacturer or mechanic for more details.

Will ethanol blended gas plug fuel filters?

Ethanol won’t plug filters, but it does act as a solvent which will loosen accumulated residue in the engine. It’s the loosened residue that may clog your fuel filter. If your vehicle’s performance seems to suffer after filling up with an ethanol blend, your fuel filter may need to be replaced.

Can I use ethanol-blended gas in small engines like lawn mowers and weed eaters?

Most newer small engines are compatible with ethanol-blended fuel. This type of fuel can also be used in some older small engines, but be sure to consult your owner’s manual before filling up and check your fuel filter on a regular basis.

Will using an ethanol blend affect my gas mileage?

Many factors, such as weather, road conditions and tire inflation, can affect fuel economy. Studies have shown that using E10 fuel doesn’t significantly lower gas mileage; in fact, some drivers report slightly better gas mileage.

If you drive a FFV that’s compatible with E85, fuel mileage may be reduced by as much as 10-20%. Many drivers find that this is a fair trade-off because E85 gas is usually significantly cheaper, so it makes up for lost gas mileage.

Is ethanol really better for the environment?

Ethanol is a much cleaner burning fuel than 100% gasoline, offering a significant reduction in carbon monoxide and hydrocarbon tailpipe emissions. Research shows that every state that’s switched to ethanol-blended fuel has experienced improved air quality.

Ultimately, since there are no clean cut answers to the question, it most likely comes down to personal preference and how your particular vehicle performs. Consider doing an experiment to see which type of fuel works best with your vehicle. After your next fill-up monitor your car’s performance and fuel mileage, then when you fill up again, choose the other type of fuel, tracking the same performance factors. Compare the results and decide which fuel is best for your vehicle and driving patterns.

How can I save when dining out in the Oklahoma City area? (posted April 25, 2011)

We’ve all heard it before. Cooking at home and brown bag lunches are friendlier on the pocket book, but let’s face it - sometimes you just want to eat out. The good news is we have some great tips so you don’t have to break the bank to dine out.

The weekly coupon insert in the Sunday paper often includes coupons for restaurants like Sonic, IHOP or Olive Garden, so start clipping and start saving.

Subscribe to your favorite restaurants’ mailing lists and chances are they’ll send you coupons for a free entree or dessert on your birthday.

If your dining party includes little ones, check out MyKidsEatFree.com to find local restaurants offering discounted kiddie cuisine.

Websites like Wimgo, Living Social and Groupon are excellent sources for discount dining deals; just make sure to read the fine print and take advantage of the deal before it expires.

Ordering from the kid’s menu is a classic money saving tip. The portions are usually enough to be filling and the prices won’t empty your wallet. If a kid’s meal isn’t an option, go for an appetizer instead – equally filling, often equally cheap.

Check out KeepItLocalOK.com to purchase a discount card for $10. Not only will you receive great discounts from restaurants and retailers throughout the metro area, you’re also supporting your favorite locally-owned businesses. The card is good for an entire year, which gives you a lot of opportunities to save.

Give your opinion, get something free. Many fast food restaurants offer free menu items for completing phone or online satisfaction surveys. Survey information is usually located on the back of your receipt so give your two cents and earn some tasty treats.

Halloween is one of my family’s favorite holidays! This year I promised my wife that we’d scale back and keep the cost to a minimum. Do you have any suggestions? (posted Sept. 24, 2010)

Pumpkins, ghosts, and goblins, oh my! Halloween is the third most expensive holiday of the year. However, you don’t have to spend a fortune to enjoy this holiday. Consider these tips to help you stay within your budget.

Develop a plan. Like any event, it’s easy to go overboard on candy, costumes and decorations. Sit down and make a list of all the items you’ll need for the big day – and stick to it. Developing a realistic plan now will help you avoid that Halloween hangover later.

Be creative. One way to save a lot of money is to skip the expensive décor and make your own decorations. This is also a great way to create memorable annual traditions with your children.

Split the cost. If you’re planning a large party, ask friends and family to help out. Encourage them to bring a fun Halloween snack or scary movie. If just passing out candy is your plan this year, buy in bulk and split the bag (and cost) with a friend.

Think ahead. To save money on next year’s festivities, check out local stores on November 1. You can snag great clearance-priced items the day after Halloween and cut your costs for next year’s celebration.

My wife and I live in an older house. Over the years we’ve been working on updating random odds and ends, but we haven’t done much to the kitchen for the fear of spending a fortune. Do you have any cost saving ideas we can use now while we save money to do what we really want? (posted July 30, 2010)

A total kitchen remodel can be extremely expensive. While you’re waiting to save that last dime, break out your toolbox and try a few of these options.

Dress up old appliances. Buying new appliances right now doesn’t make sense if you’re planning a total kitchen overhaul in the future. What could do the trick for now? Try a fresh coat of white, black or silver appliance paint on your refrigerator and dishwasher. This will give your old appliances a fresh new look.

Estimated cost: $20 to $30 (to cover the fridge)

Replace drawer pulls and knobs. This is one of the fastest, simplest and most inexpensive ways to makeover the look of an outdated kitchen. Take a trip to your local home improvement store to find the latest looks in cabinet hardware. If your budget allows, get more bang for your buck by choosing the style you’d want to use in your larger remodeling project.

Estimated cost: $50 to $100

Update your backsplash. This quick solution is like updating your kitchen’s ‘jewelry’. If the thought of grouting new tile scares you, consider other alternatives, such as peel-n-stick tiles. Once you’re ready to fully remodel your kitchen, these tiles can be removed, repurposed or reused with new adhesive.

Estimated cost: $500 to $600

Make your own countertops. A chipped laminate or dingy tile countertop can really make your kitchen look dated (and dilapidated). If you’re not ready to go for new laminate, granite or composite counters, consider using a polished, colored concrete. Concrete has all the burn and scuff resistance and visual appeal of granite and often costs less.

Estimated cost: $750 to $1,000

My family and I would like to take a vacation at some point this summer. We have most of the money already saved, but we’re struggling to come up with the last few bucks. Do you have any tips on ways we can save a little extra money throughout the year to make vacation planning easier next summer? (posted May 28, 2010)

Taking a vacation today has become incredibly expensive. Any spare bucks you can save between now and then will help out a lot. Here’s some ways to help you set aside that little bit extra.

Save your change. Whatever you have left in your pockets at the end of the day, put in a jar. You'd be amazed how quickly that change will add up. Oh and don’t forget to check under those couch cushions. Yep, those crusty nickels and dimes count, as well!

Round up. When recording your written checks or debit transactions in your check register, round up the amount to the next dollar and keep the change. For example, if a trim from your hair stylist costs $22.50, write the check for $22.50, but in your register record the amount as $23.00. At the end of each month, check your register against the bank statement and make necessary adjustments. Depending on your spending patterns, you should have a nice pot of dollars to transfer to the vacation fund.

Pack lunches. Do your kids eat cafeteria food every day? Send them in with sack lunches. When they start to complain (and they will) remind them that this is a contribution to the family vacation fund. Consider packing your own lunch, too. Figure out how much you've saved each month and write a check to your vacation fund.

Have a yard sale. Clean out those closets! You'd be surprised what you have that someone else might be willing to buy. Look through your garage or basement. There has to be some gadget or appliance you no longer have a use for.

Don't buy anything new for six months. Now I'm not talking about basic necessities here; you’ll probably need bread, juice and toilet paper! I’m talking about a new car, re-carpeting the house, or a new wardrobe. Unless you desperately need to make a major purchase, try to hold-off until after the vacation. Decide which is more important to your family.

Plan before you grocery shop. Sit down with the weekly flyers and plan your meals based on what’s on sale. If you do this with coupons, even better! Find a sale and try to match a coupon. By the time you finish, you’ll have a cheaper eating week. Also, by planning ahead, you’ll cut down on that drive-through habit – maybe from $10-$15 at the burger joint to $4-5 at home.

There are plenty of ways to save money and cut costs when the pay-off involves a fun family getaway. Just don’t wait to get started. Make plans to start saving for that wonderful vacation next summer before this summer is over.

Help! How do I avoid overspending this holiday season? (posted Nov. 20, 2009)

Have you made your list and checked it twice? ‘Tis the season to shop ‘til we drop in preparation for our friends and family this holiday season. Is your wallet prepared? While it’s easy to go overboard and overspend, it’s important to realize the significance of making a shopping budget and sticking to it. Follow these tips to make sure the holidays don’t zap your cash.

Make a list. Put the names of all the people you’ll be shopping for on paper. Next to their name, write in the amount you’re willing to spend. Then, make a list of potential gifts that fit within that budget.

Leave the cards at home. Instead of paying with plastic, use cash; it’s harder to overspend when you can physically see how low your funds are getting. Turn to the envelope system to stay on budget for each person. Write their names on envelopes and place the amount of money you plan to spend on them in each envelope. Once the money is gone, you’re finished shopping for them. If you’re nervous about carrying around large amounts of cash, consider buying pre-paid Visa gift cards to help you stay on track.

Turn to technology. If you have a Web-based phone, like an iPhone, consider downloading the My Christmas Gift List application. This application allows you to track the gifts you purchased, what you need to buy and how much you have left to spend for each person. In addition, it generates a helpful shopping list to assist you in getting in and out of the mall faster.

Don’t make it even. One of the easiest ways to fall victim to overspending is thinking that gifts need to be made even, meaning everyone should have the same amount of presents to open. This isn’t always realistic.

With today’s low interest rates, we’ve been thinking about refinancing our home mortgage. What should we consider before making our decision? (posted June 26, 2009)

To “refi” or not to “refi,” that’s the new question! Interest rates may be at an all time low for qualified buyers, but it doesn't make sense to refinance if it’s not a great deal for YOU. Consider these factors before jumping to refinance.

Do you have enough equity? It’s realistic to refinance if you’ve built up at least 10% equity in your home. It’s also possible to refinance if your equity is less than 5%, but you might get stuck paying cash up front to make up for the difference in equity.

Have you reviewed your credit? When refinancing your home, lenders use the same criteria to evaluate your creditworthiness as they do for a first mortgage. So, make sure your credit score is in tip-top shape. Otherwise, you may not get a low rate or even qualify to refinance.

Have you checked the rates you could qualify for? If they’re not more than 1% lower than the rate on your current loan, refinancing may not be worthwhile.

What are your future plans? If you’re thinking of selling in the next three to five years, the amount you save on refinancing your mortgage may not cover the closing fees. The goal is to save money over the long term.

As spring approaches, I'm trying to think of new family activities, but money is tight. I'm worried that cutting back may mean sacrificing our fun. Any ideas? (posted Feb. 27, 2009

Indeed, money’s tight for many families right now. Here’s the good news – there really are inexpensive activities your family can enjoy. To stretch that entertainment dollar, consider these tips.

Do your research. Newspapers and local websites are a good source of information about free or low-cost events in your area. Check out Wimgo.com to learn about festivals, museums, film showings, sports events, and other budget-friendly activities in your community.

Hit the library. Check out library-sponsored book readings, clubs, film screenings and lectures. While you’re there, borrow a book or magazine instead of buying one.

Go team! Attend a local high school sporting event; they’re usually much cheaper than college or professional games, but generate a lot of the same excitement and fan frenzy. Admission rarely costs more than $5 and concession stand fare is typically less expensive (and sales often support school programs, a nice benefit).

Dig for discounts. Many theaters, museums, galleries, zoos and parks offer discounts or free admission on certain days of the week or month. Don’t forget to check online event calendars; tickets for special events or activities may be free with admission!

Head outdoors. Mother Nature is an excellent source of free or cheap entertainment. Go hiking, fishing or camping for some fun and fresh air. Plan a picnic or try bird-watching in your local park or wilderness preserve.

My wallet was stolen and I cancelled my credit cards. Is there something else I should do to make sure no one steals my identity? (posted Nov. 21, 2008)

First, condolences to you … losing a wallet can leave you feeling anxious and exposed. Cancelling your credit cards was a good first step to protect your identity, but there are other steps required to keep identity thieves at bay.

Pick up the phone ASAP. You’ve already notified your credit card companies, but don’t forget to contact your bank to cancel your debit card and checks. Also, alert the three major consumer reporting agencies—Experian, Equifax and TransUnion—and ask them to place a fraud alert on your name and Social Security number. If your driver’s license was stolen, contact the Motor Vehicles Bureau to place a stolen card warning in your file.

File a police report. Contact the local police and file a crime report. Be sure to request a copy of the report for your records.

Monitor your accounts. Review your bank and credit card statements for fraudulent charges. Visit AnnualCreditReport.com to request a copy of your credit report. Look closely for accounts opened without your knowledge and other suspicious activity.

Don’t focus exclusively on finances. If you carry usernames, passwords, membership cards, extra car keys or other important items in your wallet, be sure to take special precautions to safeguard your private information in those areas, too.

The key to preventing identity theft is immediate action. Be diligent in your quest to protect your good name. In the future, consider making copies of everything in your wallet, especially both sides of your credit and debit cards and your driver’s license. Never carry your Social Security card in your wallet; keep it safe in a fireproof lock box.

For more information about identity theft prevention, visit the Federal Trade Commission’s website, FTC.gov.

It seems like every month we have our ducks in a row … then something comes up, like a birthday party, a baby shower or a wedding. Almost every weekend something comes up and at the end of the month our bank account is famished. How do we go about setting a budget or sticking to what we already have? (posted Aug. 29, 2008)

Sounds like you’ve got a case of the gift-giving blues, a common problem in many households this time of the year. When setting up your monthly budget be sure to include a “gift-giving” category, setting aside funds for these types of expenses. No parties this month? Roll the funds to next month’s budget or add them to your savings account for next time! It’s also a good idea to build a “miscellaneous” category into your budget to handle other unexpected costs.

Try these tips to get the most bang for your gift-shopping buck and keep your budget on track.

Shop at discount stores. Stores such as Ross, T.J. Maxx, and Marshalls (among other popular discount chains) are good places to buy brand name items for a lot less. People don’t have to know you didn’t spend a fortune on a gift.

Plan ahead. Typically, wedding invitations are sent out at least a month in advance. This allows a little bit of wiggle room to plan for the upcoming gift purchase. Baby showers are normally set later in the pregnancy, so start your baby gift fund once you receive news from the mother-to-be. In addition, put those lovely once-a-year birthday celebrations on your calendar and set a reminder one month in advance so you have time to save some extra cash. Preparing yourself for these little expenses (that really add up!) is a solid start.

Build a buffer. When balancing your checking account, don’t let yourself reach $0. Instead, designate another amount – $50 or $100 – as your break-even point. This creates a buffer for emergencies and helps keep you from going into the abyss. So, when that surprise birthday party comes up the weekend before payday or that crazy couple you love (but don’t quite understand) runs away to Vegas to get married, you won’t have to turn the cushions over on your couch or vacuum out your car for spare change!

Be creative. Give something homemade or offer your help with special projects. Help the mother-to-be create the baby’s scrapbook templates. Try helping the lovebirds by serving cake or handling the guest book at the wedding. Your time and assistance are worth much more than a lavish gift.

Everything seems to be getting more expensive lately. Is there any way to stay ahead of rising prices? (posted May 30, 2008)

Every trip to the grocery store or gas station these days seems to carry a fair amount of sticker shock. Inflation - a rise in general pricing, which means your dollar buys less and less over time - is at the heart of this problem. The past ten years have been a period of low inflation by historical standards, with prices rising only an average of 2.75% per year. The honeymoon may be over; prices are already about 4% higher than this time last year.

Last month, we talked about how to save money on gas. The high cost of gas causes the cost of other things to rise, as well, since the fuel required to transport goods to stores is more expensive. Maybe you’ve noticed the resulting increase in grocery prices, too.

With a little shopping savvy, you can find some relief at checkout the next time you go to the grocery store. Try these tips to ease the pain.

Make (and stick to) a list. Each week, decide what you want to eat for every meal, make a grocery list based on your meal plan, and stick to your list. You’ll end up wasting less food, and you’ll avoid impulse buying. This is by far the most significant way to lower your grocery bill.

Forget the brand. Store-brand groceries are often just as good as the big-name brands, and in some cases, they’re made by the same company! Usually, buying generic products will save you even more than buying name-brand items with coupons.

Flex your neck muscles. Grocers like to put the most expensive items right at eye level, hoping you won’t look up or down to find the better deals. A quick scan of the full aisle can reveal significant savings.

Consider alternatives. Be flexible in your meal planning so you can take advantage of sales. For example, if chicken is unexpectedly on sale, could you substitute it for beef in one (or more) of your meals this week? Also, throw a few less expensive meals in the mix each week, such as spaghetti or soup. You don’t have to eat like you’re in college again, but cheaper meals two or three times per week could slash your food budget and offer an easy alternative after a long workday.

Why is the cost of gas so high? (posted April 25, 2008)

With prices at the pump soaring, everyone’s pocketbook is feeling the pinch. There are several factors that affect the price of gas. We’ll look at where your money goes when you fill up and provide some tips to help you avoid sticker shock when the pump finally clicks off.

So, why is gas so expensive? Luckily, you don’t need to retake high school economics to understand two simple principles that guide the cost of fuel: supply and demand. As Americans, we consume a lot of gas–178 million gallons daily, to be exact. The more we drive and fly, the more our country’s demand for gas increases, which raises prices.

Supply has an equal effect on price. Oil, the main ingredient of gas, is a limited resource. It must be found, extracted, refined, transported and sold ... that’s a lot of work! Throw in a hurricane or war and oil supplies can drop, raising prices.

So, what does your $3-4 per gallon pay for anyway? The biggest part, about 66%, is the cost of crude oil. Refining, distribution and marketing make up 19%. Uncle Sam takes 12% through taxes. Finally, your local gas station gets about 3%, allowing them to cover their expenses and turn a small profit.

Now that you know why it takes so much money to keep your gas tank full, here are some tips to help make sure your pockets aren’t on “E”.

Drive less. The best way to lower your gas bill is to drive less. When running errands, try to combine multiple trips into one. Going only a few blocks? Walk or ride your bike for a gas-free, emission-free and healthy trip! Want to split gas cost? Carpool with a friend or coworker.

Take it easy. Speeding may or may not get you an expensive ticket, but it does waste gas. Driving 70 instead of 60 is like spending an extra $.54 per gallon at today’s prices. You’re not Mario Andretti; accelerate slowly and coast to lights.

Shop around. Gas prices vary in every area, so make sure you aren’t overpaying. Check out GasBuddy.com to find low prices in your area. Remember, don’t waste your savings by driving too far to save a few cents per gallon! Going to gas stations across town can eat up your savings, so find the best price that’s close to home.

Take a wrench to it. To keep your car from becoming a gas hog, proper care is the key. Check your tire pressure often and make sure it's up to par with the manufacturer’s recommendation. Got a clogged air filter? It could be choking your engine; replace it with a new one. Refer to your owner’s manual to keep your car in tip-top shape.

I’m planning to sell my home this summer, but I’m worried about the state of the housing market. How can I make my house more appealing –without spending a fortune - so I can sell it quickly and make a healthy profit? (posted July 27, 2007)

You’re right; it’s no longer a seller’s market out there, but don’t throw in the towel just yet! There are plenty of ways to build your home’s value and make it stand out in the neighborhood. Here are some tips to make sure your home is in tip-top shape when buyers come callin’.

Focus on the front. Potential buyers will form a first impression of your home from this vantage point. Be sure your trim is painted and the porch is clean and clutter-free. You may also want to paint your front door and spring for new door hardware.

Work hard in the yard. Trim bushes and shrubs, take care of plants and keep your lawn clipped and edged. Have a small yard? Use curving pathways and flower beds instead of straight lines. Curves trick the eye and make an area look bigger.

Open a can. Painting is one of the least expensive ways to change the look of a home. Experts recommend using a neutral color palette because it allows buyers to better visualize their furniture and décor in your home. Just because you like hot pink walls and turquoise trim doesn’t mean buyers will, and that might just be enough reason for them to walk away.

Get cookin’ in the kitchen. The kitchen is one of the most important rooms (if not the most important room) in any home, but an overhaul can cost thousands. Breathe new life into an old kitchen by painting cabinets, adding new hardware and replacing the backsplash.

Say “yes” to clean and “no” to clutter. Wipe down baseboards, windowsills, faucets, switch plates and anything else that collects dust or grime. Pack up knickknacks, collectibles and extra furniture. While you’re at it, go ahead and pack up one third of the stuff in each room; more space means more profit!

Say goodbye to 1970. Remove outdated wallpaper, shag carpet and anything avocado green. If people refer to your home as “retro,” you need to make some changes before putting it on the market.

Shine a little light on the subject. Get rid of old light fixtures and use a consistent style throughout the house. Consider using accent lighting over photos, wall décor or pictures.

Summer is always an expensive gift-giving time for me and my family. It seems like invitations to weddings, baby showers, graduations and birthday parties never end from May to August! Can you suggest some tips to help ease the pain of purchasing for others? (posted June 29, 2007)

Oh, the cost of being popular! Shelling out your hard-earned cash to celebrate special occasions with family and friends can sometimes overshadow the joy of the occasion itself, can’t it?

You don’t have to be a Scrooge; meaningful, inexpensive gift options can be yours with a little planning. Here are some tips to help you support your loved ones’ happiness and still have some money left over to fund your own!

Learn to say no. Of course you can’t turn down a wedding or party invitation from your brother or best friend, but a former co-worker whom you rarely speak to may merit a pass. Sending a celebratory note or card—rather than a gift—will usually suffice.

Take advantage of the off-season. Always be on the lookout for thoughtful birthday, graduation, wedding and baby gifts. Spread the cost throughout the year by purchasing these items on sale and stashing them away for a later day, so you don’t have to part with a BIG lump sum of cash during the gift-giving season.

Be creative. Some of the most special gifts are from the heart. Are you crafty? Make some scrapbook templates for your favorite graduate. Love kids? Offer the mom-to-be an afternoon of free babysitting. Have a green thumb? Help the birthday girl or boy plant flowers. Give a unique (and cheap!) present by sharing your natural talents.

Do you have any good tips for dealing with the high cost of fuel? With skyrocketing gas prices, my budget is really feeling the pinch. (posted May 25, 2007)

First, we salute you for evaluating the impact on your budget! Spending plans only work if we adjust them when needed. The price at the pump is painful, isn’t it? Don't smack the messenger, but you may have to cut your spending in other areas (and limit your driving!) to accommodate the higher cost. Carpooling when you can will save money, but we recognize that it’s not always possible or efficient.

Since a gallon of gas is now priced higher than the average latte, we did a bit of research to help you get the most out of each tank-full. Here’s what we found:

Easy does it. Your daily drive isn’t the Daytona 500. Instead of flooring it from a traffic light, accelerate slowly to avoid wasting gas and straining your vehicle.

Slow down. We often feel late-late-late like the rabbit in Alice in Wonderland, but speeding is a very expensive way to drive (even if you don’t get a ticket!). Driving 65 mph instead of 75 mph can improve your car’s fuel economy by up to 10 percent! Slow down and save money.

Clean out your trunk. Remove golf clubs, boxes of books, and other heavy items from your vehicle. Driving around with an extra 100 pounds of junk in your car can significantly reduce its fuel economy.

Check your tires. Keep your tires properly inflated; this will help improve or sustain your gas mileage and protect your tires from wear and tear.

I’ve been told that playing casino games and purchasing lottery tickets is a great way to earn extra cash, sometimes equivalent to a second income. Is this true? What’s your opinion? (posted Sept. 29, 2006)

Hold the phone! Please remember that casino night and a handful of lottery tickets are options for entertainment, not sources of income. Betting your hard-earned dollars in hopes of earning more is risky business that rarely yields success. Your odds for winning the lottery are about 1 in 12 million … you actually have a significantly better chance of being struck by lightning!

While there’s nothing wrong with calling on Lady Luck every now and then - and supporting Oklahoma education through the lottery - sacrificing your financial goals and obligations isn’t playing responsibly. Remember, few people get rich the easy way, but many people go broke trying.

Afraid you may be in trouble? Learn more about gambling behaviors and resources by visiting the Oklahoma Department of Mental Health and Substance Abuse Services website.

Credit and Debt Management

What are some fun ways to teach my middle school students the "good, bad, and ugly" of credit cards?(posted Jan. 27, 2012)

Cheers for infusing a little fun into your lessons! Often, financial education isn’t that exciting, especially for younger students. Luckily there are some great resources available to make personal finance instruction a little more enjoyable. And here’s the best part - these resources are free!

The Federal Reserve Bank of Kansas City offers a credit lesson for students ages 12-15 called "Professor Finance & Fed Boy Meet the Catastrophe Clan." This role play activity introduces students to the world of credit in a funny format while emphasizing the importance of wise financial decision-making. Access the lesson plan by visiting the Fed’s website or download the PDF.

Wells Fargo Bank offers a free financial curriculum for educators called Hands on Banking® . These engaging lessons are fun and align with national and state educational standards for economics, financial literacy, mathematics, and English/language arts, making it easy to integrate them within classroom activities. To learn more, visit handsonbanking.org.

Financial Entertainment, developed by The Doorway to Dreams Fund, offers an innovative way to teach money management through playing online games. The game Celebrity Calamity gives the player a peek into the world of credit by making them the financial manager of three up-and-coming celebrities. To win, keep the celebrities on the right path financially even though they love to spend beyond their means. To learn more and explore other available games, visit financialentertainment.org.

The FINRA Investor Education Foundation offers an interactive tutorial called Avoiding Deceptive Credit Practices, which explains the dangers of doing business with companies that offer a quick fix for debt or credit concerns like payday loans, title loans and credit repair scams. This and other financial games and tutorials can be found at saveandinvest.org.

To explore more games and tools that make financial education fun, search OKMM’s online resource clearinghouse at oklahomamoneymatters.org or visit the National Jump$tart Coalition Clearinghouse.

What are ways to improve a bad credit score?(posted Nov. 28, 2011)

Improving your credit score is a great goal, especially since a poor credit score can stand in the way of lower interest rates, your dream job or the perfect apartment. Take the following steps to help put your best financial foot forward.

Request copies of your credit reports by visiting AnnualCreditReport.com. Each year, you’re entitled to one free credit report from each of the three major credit reporting agencies – TransUnion, Experian and Equifax. By comparing each report side-by-side, you can get a full picture of your credit history.
Review your information closely and make a list of inaccurate items. Make copies of any documents that support your claim and follow the directions on the report(s) for filing a dispute. Keep copies of everything you send to the credit reporting agency and be sure to follow-up if you don’t hear back in a reasonable amount of time.
After errors have been addressed, focus on paying off debt. One of the easiest steps you can take to repair a poor credit score is to start making all payments on time, and in full. Minimum payments may be easier to make, but you’ll pay more in interest charges in the long run.
Avoid maxing out your lines of credit. A good rule of thumb is to use no more than 33% of your available credit line.
Limit access to new lines of credit. It’s not worth it to sign up for new credit cards just for the 10% discount at the register. Any time you authorize someone to run a credit check, it dings your credit score.

Cleaning up your credit is a process that takes time and determination, but stick with it and it will pay off in the end.
If your debt situation has grown to a point that you feel is beyond your ability to handle alone, contact a reputable credit counseling service that’s affiliated with the National Foundation for Credit Counseling (NFCC.org). If you’re in the Oklahoma City metro area, contact Consumer Credit Counseling Service of Central Oklahoma at 800.364.2227 (toll free) or visit their website at cccsok.org.

I was recently told that applying for a department store card wouldn't affect my credit score. That's different from what I've always been told, so who's right? (posted Aug. 26, 2011)

Your credit score is the number used to determine how likely you are to repay your debts. Many factors come into play when calculating your overall credit score, with credit inquiries accounting for 10% of the equation. While 10% doesn’t seem like much, inquiries are an important factor to keep in mind, especially if you have few credit accounts or a short credit history.

All credit inquiries fall into one of the following categories. While you’ll see both types listed on your credit report, only one impacts your credit score.

Soft inquiries are those you didn’t initiate. Reviews for pre-approved credit or insurance offers or checks by potential employers fall into this category. These types of inquiries don’t appear to creditors when they review your report and they don’t affect your credit score.

Hard inquiries are placed on your report any time you apply for new credit like a car loan or credit card. These inquiries are reviewed by potential creditors and have an impact on your credit score. Inquiries remain on your credit report for two years, but only those made within the last year count toward the calculation of your credit score.

Too many hard inquiries can negatively impact your credit score; however, not all credit inquiries are treated the same. Lenders typically make allowances for instances of rate-shopping, where it’s good for consumers to comparison shop for the best deals. For example, when shopping for a car or home loan, multiple inquiries are either ignored or counted as one inquiry as long as they fall within a certain window of time, usually 15-45 days.

If you’re in the market for a new line of credit, be a wise consumer. Follow these guidelines to limit the impact to your credit score.

Research credit products to find the one that best fits your need.

When you’re ready to purchase a big-ticket item, like a car or home, rate-shop within a 30-day window of time.

Apply for credit only when you really need it.

Don’t apply for multiple credit cards in a short amount of time.

Don’t apply for credit just to save a percentage at the register.

To learn more about your credit score and how it affects your financial life, visit the Education tab at MyFICO.com.

What's the difference between good debt and bad debt? (posted July 29, 2011)

Going into debt for items that are disposable or lose value is considered bad debt. For example, if you regularly eat out and charge it to your credit card, charge clothes that you want but don’t need, or buy a new vehicle every two years that loses value as soon as it’s driven off the lot, you’re racking up bad debt. Bad debt happens when we use credit to buy things that create unhealthy financial situations. Clothes, toys and vacations are fun, but they don’t build wealth or earn value over time.

Good debt, on the other hand, gains value, helps builds wealth and adds to our personal well-being. For example, careful borrowing of student loans to help pay for school is a good investment, because a degree provides more job stability and earning potential. The mortgage on your home is another example of good debt. Not only is the equity in your home an asset, but the interest you pay on the loan is tax deductible.

While it’s always a better practice to remain as debt-free as possible, few people can buy a home, car or other big ticket item without using some form of credit. So, before you charge it, ask yourself these questions to decide if using credit is a good risk.

Do I need this item?

Will the value of the item increase or decrease?

How long would it take me to save for this purchase instead of charging it?

Am I willing and able to pay the bill when it’s due?

Is there a cheaper alternative that I’d be just as happy with?

If you decide it’s necessary to charge a purchase, keep these tips in mind for keeping debt under control:

When possible, make a significant down-payment. The more you pay in advance, the less you’ll have to borrow and pay back, with interest.

Pay all your bills in-full and on time. Not only will you save on interest charges, making on-time payments is a great way to maintain a good credit score.

If you can’t pay the full amount, make your own repayment plan. Always pay more than the minimum monthly payment due.

Borrow or charge only what you can afford to repay.

Shop around for the lowest interest rate to get the best deal possible.

If your debt situation has become more than you can comfortably handle, talk to a professional, nonprofit credit counselor at Consumer Credit Counseling Service of Central Oklahoma, 800.364.2227.

How do I check my credit report? (posted May 27, 2011)

Savvy consumers should have an idea of what their credit looks like because whether we like it or not, it’s often how our character is judged. Not only do lenders -- like banks and car dealerships -- check your credit, but so do employers, insurers and landlords.

Each year, you’re entitled to one free credit report from each of the three major credit reporting agencies – TransUnion, Experian and Equifax. Each report will be slightly different because different creditors may report to one agency and not the others. If you’ve never requested your report before, consider pulling all three reports at once so you can see your entire credit record at a glance or if you prefer, spread your requests throughout the year.

Making the Request:

Visit AnnualCreditReport.com, the only federally-authorized source of free credit reports. When going through this site, you won’t be charged to see your credit report. However, if you’re interested, you can view your credit score for a nominal fee.

Once at the site, you’ll choose your state of residence from a drop-down menu. Then you’ll enter your personal indentifying information: name, birth date, Social Security number and address.

Next choose which of the three credit reporting companies you’d like to request your report from. If you’ve previously requested a free report from an agency in the last year, you’ll be prompted to choose a different agency or proceed with your current selection for a fee.

Once you’ve made your choice, you’ll be taken to that credit reporting agency’s website. You’ll be asked security questions based on information found in your report; this is a privacy measure to ensure that you’re the one requesting your information.

It’s a good idea to print a copy of your report for your records. Each agency is different; some will allow you to create a log-in and return to view your report for up to a month while others will only allow online viewing one time.

Things to look for:

Make sure that your personal information is correct. Check that the employers and addresses listed are ones that should be associated with you.

Look for anything that might indicate identity theft -- accounts that you didn’t open or credit inquiries that you didn’t authorize. If you find an account that doesn’t belong to you, place a fraud alert on your report through the credit reporting agency, contact the creditor to close the account, file a local police report and log a complaint with the Federal Trade Commission.

Ensure that your accounts are correctly reported. Sometimes dates will be entered incorrectly or on-time payments are reported as late. If you find inaccurate negative information, file a dispute with the credit reporting agency. They’ll investigate the claim and if warranted they’ll correct the error. It may take several attempts to get corrections made, so stick to it until it’s fixed.

Don’t panic if you find mistakes because it’s pretty common for errors to occur. Whether clerical or malicious, there are steps you can take to correct the issue. Each credit report contains your rights and responsibilities as a borrower, including that agency’s step-by-step instructions on how to file a dispute.

To read more about building and maintaining credit, visit OKMM’s Financial Planning page.

I've heard about the debt snowball method for eliminating my debt. I'd really like to give it a try; can you provide step-by-step instructions? (posted Feb. 25, 2011)

The debt snowball is a highly effective way to quickly pay off debt and gain momentum toward a healthy financial lifestyle.

Before we explain how to create your own snowball, there are three important things you should know.

The success of the debt snowball is contingent upon finding extra money to put toward your debt. In our example, we’ll use $200. Where do you find extra money in your budget? Cut cable television, limit eating out, earn extra income…do what you can to aggressively attack your debt. If you can’t afford $200, start with $50 or $100. To make the snowball work you must find a way to pay extra on your debt.

Don’t worry about interest rates. It makes sense logically to go after the debt with the highest interest rate first because you’d save more money in interest. However, changing behavior often isn’t a logical decision; it’s more of an emotional one. Using the debt snowball, you’ll pay off your lowest-balance debt first, helping you feel a sense of relief and accomplishment almost immediately. Although we aren’t focusing on interest rates, if you feel like your interest rates are too high, call your creditors to see if they’d consider lowering them.

It’s important that you make your minimum payment on every debt you owe. The extra money you set aside to help blast your debt (see number 1) will be added to the minimum payment on the debt listed first. Pay this new amount on this debt only, but continue to pay your minimum on all other accounts.

Okay, let’s get started.

The first thing you’re going to do is pull out all your statements and files to locate every account which has a balance. Don’t worry about your mortgage, yet. Focus on credit cards, medical bills, car payments or student loans.

Make a list which includes the creditor’s name, account balance and minimum payment due for all debts. Organize your debt from smallest to largest. Your list may look something like this.

Creditor

Account Balance

Minimum Payment Due

Target

$450

$25

Chase

$1,200

$100

Bank (auto loan)

$9,500

$375

Now, using the extra money you identified—$200, in this example—increase the minimum payment on your lowest debt. Remember, continue to make the minimum payment on all other debt! Here’s what that looks like.

Creditor Account Balance Minimum Payment Due New Minimum Payment

Target

$450

$25

$25 + $200 = $225

Chase

$1,200

$100

---------

Bank (auto loan)

$9,500

$375

---------

So, the first month of your debt snowball you’ll pay Target $225, Chase $100 and your bank $375. After only two months, the Target card will be paid off! How exciting! What do you do next?

With your first debt eliminated, you’ll take the monthly amount you paid on it and add it to the minimum payment of your next lowest debt.

Creditor Account Balance Minimum Payment Due New Minimum Payment

Chase

$1,200

$100

$100 + $225 = $325

Bank (auto loan)

$9,500

$375

---------

So, now you’re paying $325 to Chase. Why $325? Well, your minimum payment is $100 and since the Target account is paid off, you’re going to take the monthly amount you were paying them ($225) and add it to your minimum payment for Chase. Continue to make your minimum payment of $375 to your bank for your auto loan.

As you can see, by paying $325 each month, the Chase account will be eliminated in just a few months, assuming you’ve stopped charging expenses to the account. Once that debt is paid, take the monthly amount paid and add it to your next debt—the auto loan.

Creditor Account Balance Minimum Payment Due New Minimum Payment

Bank (auto loan)

$9,500

$375

$375 + $325 = $700

Now your new car payment is $700, so you’re paying almost double what you previously were! Do you see how you’re able to snowball your payments and eliminate your debt all by finding an extra $200?

I’m a careful credit card user, and I’ve heard creditors have to follow new rules. What changes have been made to the credit card laws? (posted Aug. 27, 2010)

Credit card law has indeed changed over the past year. As a credit card user, you’ve probably noticed pretty dramatic changes in credit terms, interest rates, and fees, as well as the look of your monthly statement. Those changes are a result of the Credit Card Accountability, Responsibility and Disclosure Act. Below are some of the new protections that’ll impact your plastic.

Credit companies must give you 45 days’ notice before raising interest rates, changing fees or making other significant changes to your account.

Credit card issuers can no longer raise your rates because you missed a payment to another creditor.

You now have a full 21 days to make a payment after a bill is delivered. If your due date falls on a weekend or holiday, you have until the next business day to make an on-time payment.

Rate increases can no longer be applied to existing balances. If rates change, the new rate(s) only apply to new charges.

Promotional interest rates must last at least 60 days.

A penalty rate increase can only be charged if your account is 60 days past due. After six months in good standing, your interest rate must be restored to the previous rate.

Credit companies can no longer charge you for inactivity, such as fees for not using your card within a certain length of time.

To learn more about new credit card rules and how they’ll benefit you, visit federalreserve.gov/creditcard. The CARD Act has certainly improved consumer protections, but your best personal credit protection is always smart credit management.

My husband thinks it's smarter to buy a new fridge on credit because it will last longer. I would rather buy an inexpensive second-hand fridge for now and upgrade later. What do you think? (posted March 26, 2010)

As much as we might like them to, appliances don't last forever. Without a doubt, there comes a point in every household when you have to pitch the old fridge and get a new one.

When you have to replace your refrigerator, how do you know if it’s better to buy new or used? You consider the pros and cons, and each option offers positive and negative aspects.

Buy Used! Used refrigerators seem like a good choice because they have the lowest upfront cost. Since many homeowners replace appliances when updating a kitchen, there are quality used fridges out there. However, it can be very hard to tell if a used refrigerator is going to pay-off or give you unexpected headaches. Potentially, you could end up spending more on repairs in upcoming years than you did to buy the refrigerator.

If you do purchase a used refrigerator, avoid buying one that has a pre-existing problem. Don't be fooled by the need for “a simple repair”; if there’s a problem now, you can probably count on more problems later. Bottom line, buying a used refrigerator is a risky move, but if you get lucky, it could be the best decision from an economic perspective.

Buy New! This would likely be the most expensive option for you, and that’s certainly a consideration. Nothing is worth spending more than you can afford to pay. If you can handle the cost, however, there are advantages to spending a bit more for better quality. For example, although buying a new refrigerator will require the highest initial investment, ideally it’ll be years before you have to face major repairs. If for some reason there is a defect in the model, your warranty should cover the cost of those repairs and any necessary maintenance. Additionally, there’s a wide range of new refrigerators that are more energy efficient than ever before, which could yield significant savings in utility bills.

Another benefit of buying a new refrigerator is the flexibility to choose a style and model that best meets your family’s needs and fits your home décor. Most people own a fridge for a long time – up to 20 years or more – so it’s important for the functionality to fit your lifestyle.

If I maxed-out my credit card, made a payment late, or went through a debt settlement, what effect would this have on my credit score? (posted Dec. 18, 2009)

For a three-digit number, your credit score packs a big punch. Figuring out how each action would impact your score is difficult. The exact formula of the FICO and other scoring models remains quite complicated, but FICO recently released more information about the effect certain actions may have on your score.

The chart below shows the impact of five common credit mistakes on the score of someone with a current score of 680 or 780. As you can see, the size of the hit depends on your credit score before the mishap occurs.

Credit Score Effects

Effect on a 680 score

Effect on a 780 score

Maxed-out card -10 to -30 -25 to -45

30-day late payment -60 to -80 -90 to -110

Debt Settlement -45 to -65 -105 to -125

Foreclosure -85 to -105 -140 to -160

Bankruptcy -130 to -150 -220 to -240

Source: FICO

Remember, your score considers both positive and negative information in your credit report. While late payments, maxed-out cards, and other actions will lower your score, establishing (or re-establishing) a good track record will help you raise it.

On my way to work, I see several signs advertising the services of credit repair agencies. Is it best to use one of these agencies or can I repair my credit by myself? (posted Aug. 31, 2007)

“Credit problems? No problem!”

“We can erase your bad credit in 10 days — 100% guaranteed!”

These days, it seems everyone has seen these signs or heard the commercials advertising the services of credit repair companies. While some of these companies are legitimate, many make promises they just can’t keep. Forget the hype - there’s no quick and easy way to erase bad credit.

While repairing your credit isn’t fast or pretty, the truth is, most folks don’t need outside help to turn things around. You can take the same approach the professionals do to clean up your credit, without shelling out your hard-earned cash. Bankrate.com, a popular money management website, recommends consumers take this five step approach for do-it-yourself credit repair.

Place a credit report order. Find out what each of the top three major consumer reporting agencies—Equifax, TransUnion and Experian—are saying about you. Ordering all three in tandem allows you to review your full credit history. Since creditors don’t have to report to all three agencies, each credit report may differ. The Annual Credit Report Service (877-322-8228, AnnualCreditReport.com) will provide one free copy of your credit report from each agency per year as required by the Fair Credit Reporting Act. Equifax, Experian and TransUnion will provide additional copies of your credit report and your credit score for a small fee. Instructions for ordering your report and addressing any errors are available on the website.

Inspect your reports. Odds are you’ll have at least one error on your report; most people do. consumer reporting agencies generate a report based on information provided by your creditors. They don’t verify the information…that’s your job! Review your information closely and make a list of items you need to dispute and why. If the negative information on your report is accurate, only time will help you change that. Late payments remain on your report for 7 years and bankruptcies remain for 10. If you want more information, Bankrate.com has more details about reading and understanding your credit report.

Tell ‘em about it. Once you’ve identified any errors on your report, it’s now time to dispute them. Your consumer reporting agency should provide you with a dispute form, or you can write a letter. Clearly state the error you’re disputing; you may consider attaching a copy of your credit report with the error highlighted. Be sure to keep copies for your files and document the date you sent the information and/or spoke with someone on the phone. The consumer reporting agency has 30 days from the time they receive the letter to investigate your dispute. Keep in mind that you may have to work with your creditor to fix the mistake. If any changes are made to your credit file as a result of your dispute, the consumer reporting agency will send you a free, updated copy of your credit report.

Knock out debt. Now that your credit history has been cleaned up, it’s time to take a look at your current debt. If you’re having trouble making your payments, be sure to communicate with your creditor or lender. You may be eligible for reduced monthly payments, or you may be able to change due dates to spread out the timing of your monthly bills. It’s also time to look closely at your spending habits. Are you living a lifestyle you can’t really afford? What needs to change? For tips on paying off debt already accrued, visit the OKMM financial planning page. Paying off debt takes time and dedication; you can do it!

Be positive. You’ve cleaned up your past credit history and taken aim at your current debt. Now it’s time to focus on building a solid credit future!

The bottom line is this: legitimate credit repair companies do exist, but they can’t work magic. In most cases, you can achieve the same result with a do-it-yourself job. If you still want to use the services of a credit repair agency, avoid for-profit companies that make you pay before services are provided. Consider nonprofit credit counseling services, such as Consumer Credit Counseling Service (DebtHelpNow.com) or the National Foundation for Credit Counseling (NFCC.org), and always visit the Better Business Bureau to investigate company complaints before you enter into a business relationship.

Which is more important, saving or paying off credit card debt? (posted July 27, 2007)

To answer this question, let’s turn to our good friend, mathematics (please don’t stop reading!). If you’re earning 2% interest on your savings and paying 18% interest on your credit card debt, you’ve got a 16% problem.

If the interest you’re paying on credit card debt is higher than what you’ll earn in a savings account, pay off your debt first. That said, don’t completely neglect your savings! While several factors affect how your money grows, one of the most important elements is time. Simply put, the earlier you start saving, the more you’ll earn through the magic of compound interest. Also, a cushion in your account will keep you from relying on credit cards or payday loans in a crisis.

Here’s the bottom line: it just doesn’t make sense to pay more interest than you can earn. Use the bulk of your extra money to pay off those pesky credit cards, but make sure you contribute something to savings each month, even if it’s only $50. Once the debt is paid, shift those monthly payments to savings. Since you’re already living without the extra money, you won’t miss it!

Is it really a big deal if I sign up for a store credit card to take advantage of their 10% off special? (posted March 30, 2007)

It’s tempting to save an additional percentage off your purchase, isn’t it? Unfortunately, that small initial savings isn’t worth it in the long run; each time you open a new credit account, your credit score may be affected.

There are two types of "hits" to your credit: a soft hit and a hard hit. A soft hit occurs when a utility or telephone company checks your credit before opening a service account. This type of hit doesn't affect your credit score. A hard hit occurs when a credit card or mortgage company reviews your credit in order to provide you a direct credit line. This type of hit can, and often does, affect your credit score in a negative way.

The bottom line is this: if you don't need more credit, don't apply for it. Too much “extra” credit can create a temptation to overspend. Just step away from the credit card!

Since it’s so important to know your FICO score, is it safe to give your personal info to one of those credit companies via the Internet to get your score? Are they really free? (posted Jan. 26, 2007)

Unfortunately, it’s not your FICO score that’s currently offered free of charge. The government requires the three largest consumer reporting agencies (Experian, TransUnion and Equifax) to provide American consumers with a free copy of their credit report - not their credit score - yearly.

Don’t trust every credit-related site; be careful and selective. Recommended websites like myFICO Credit Scores and AnnualCreditReport.com are popular and secure options for obtaining your credit score. You’ll be prompted to enter your Social Security number and other personal information, but these sites guard your privacy through various security protocols.

I’m paying 22% interest on the credit card I got in college and would like a lower rate. What are my options? (posted Dec. 29, 2006)

OUCH! There are a couple of ways to lower that astronomical interest rate, which will save you hundreds or more in finance charges. First, pick up the phone and call your current card company to request a lower rate. If you have a solid payment history, chances are they will honor your request and knock off as many points as possible.

Not sure what to say? Follow this sample script to get the ball rolling:

Hi, my name is Lacy. I'm a good customer, and other credit card companies are offering lower APRs. Unless you can lower the interest rate on my card, I'll have to close my account and switch companies. What can you do for me?

If you can’t make headway with the account representative, ask to speak to a manager or call back later to work with someone else. If you’ve exhausted all avenues with your current creditor, pay off and close your account; cut up the card; and seek companies that offer lower rates. Bankrate’s credit card search engine is a good place to start. Remember to read the fine print; often, lower rates are introductory rates, which means the rate is only good for a short period of time before increasing, sometimes substantially.

If your quest for a lower interest rate is successful, a word of caution - a lower rate is not an open invitation to spend more! A better interest rate is important, but it isn’t a substitute for better decision making. Charge responsibly.

I’ve noticed that there are a lot of radio and television commercials advertising various credit and debt counseling services. Are all of these businesses legitimate? How do I tell? (posted Oct. 27, 2006)

It is confusing, isn’t it? We salute you for recognizing that this is an issue, and for seeking help to regain control of your debt! As a good rule of thumb, look for organizations with the following characteristics (adapted from a related article in The Oklahoman):

Tax-exempt status. Visit IRS.gov/eo and click on “Search for Charities” to find out if an organization is tax-exempt.

Accreditation. The most common agency is the Council on Accreditation, which requires operation under strict quality guidelines.

Membership in a national industry organization. The National Foundation for Credit Counseling has been the gold standard since the 1960s.

Better Business Bureau approval. Visit BBB.org to see if complaints have been filed against the company.

Affiliation with the United Way. They’ve been deemed charitable and most likely are active in the community.

A local office. This allows consumers to develop personal relationships with financial experts through face-to-face interaction and customized counseling.

You can learn more by contacting a non-profit provider, such as Consumer Credit Counseling Service or the National Foundation for Consumer Credit. Bottom line, a trustworthy credit counseling service will be more concerned with helping you get out of debt than in selling you something. You should never feel pressured into a repayment plan or to make a purchase of any kind.

Over the years, I have collected many different credit cards. Some of them are store cards (Lowe’s, Target, etc.) and some are Visa and MasterCard accounts. I only have a balance on one card right now. I would like to close some of these accounts, especially store accounts, but I’ve heard that closing accounts can hurt your credit score. But, I’ve also heard that mortgage companies use your total available credit to compute your ability to pay. So, what are the guidelines and pitfalls in closing credit card accounts? (posted Sept. 29, 2006)

This is an excellent question. The answer, like many personal finance solutions, depends on your circumstances. In general, closing credit accounts can lower your credit score, because the score is partially based on your ratio of debt to available credit. Closing accounts reduces the amount of open credit you have access to, but haven’t used; this effectively increases your proportion of credit debt. Let’s say you have two credit cards, each with a $1,000 limit, and carry a $300 balance on one of the cards. As such, your debt to available credit ratio is $300/$2,000 (15%). However, if you close the account with no balance, your ratio would increase to $300/$1,000 (30%), doubling your debt proportion. Make sense?

When evaluating your creditworthiness, mortgage lenders consider your total available credit in addition to your credit score and other factors. In the eyes of a mortgage company, access to a large amount of available credit can be a liability, because you could get in over your head after the mortgage is approved. Since new debt may jeopardize your ability to make that mortgage payment, you could be labeled a high-risk borrower.

Now that you know the scoop, which is the right move for you? In this case, the answer depends on your short-term plans related to housing. If you know you’ll be in the market for a new home in the next few years, close your newer accounts, but leave the seasoned accounts alone (closing older accounts makes your credit history appear “young,” which can also hurt your score). Conversely, if you plan to stay in your current home for the foreseeable future and you’re trying to improve or repair your credit score, limit new credit debt; make monthly payments on time and pay more than the minimum amount required to reduce your debt as quickly as possible; and keep accounts open as you pay them off.

Often I find myself overwhelmed when it comes to dealing with my debt. The big picture is often frustrating and leaves me unsure of what to do. Can you give me some tips to help me keep it all in perspective? (posted Aug. 25, 2006)

First and foremost, don’t panic. Facing your debt can be overwhelming, but it’s absolutely possible to dig yourself out – even if the hole is deep. I commend you for recognizing that this is an issue you must address!

Step 1: Be honest with yourself. Assuming you’re referring to credit card debt, take control by figuring out how you landed in this position. Are you using credit to support a lifestyle you can’t really afford? If so, evaluating how and why you spend will help you manage your spending in the future (so you don’t find yourself in this position again). A realistic monthly budget will allow you to set healthy parameters.

Step 2: Know where you stand. Do you know how much you owe, and to whom? Pull statements and call creditors to find out exactly what you’re dealing with. Once you have the facts, create an at-a-glance debt chart that shows the total amount owed, interest rate, minimum monthly payment, and monthly payment due date for each account. If you have a card with a high interest rate, ask your creditor for a rate reduction or transfer your balance to a low-rate card (pay attention to the fine print … some cards only offer a low rate for the first few months). Compare credit card interest rates online at BankRate.com or CardRatings.com.

Step 3: Cease Fire. You can’t pay off your debt if you keep adding to it. Leave your credit cards at home - lock them up, freeze them, whatever works – so they aren’t readily accessible. (Don’t close all your credit accounts, as this can actually hurt your credit score.)

Step 4: Activate your pay-off plan. Select one account and pay as much as you can each month, doubling your payment if possible. Continue to pay the minimum payment on your other accounts. Once the first account is paid off, add that payment to your payment on another account until it’s paid off (keep increasing your payments whenever you can). Continue this process until all accounts have a zero balance. To make more headway, apply all “windfall” funds - birthday money, inheritance, tax refunds - toward your debt.

If you’ve examined your situation and feel that you may need professional help to reclaim your financial power, take the next step and learn more about dealing with excessive credit debt.

Focusing on one account at a time will help you keep “the big picture” in perspective. You’ve already admitted that you need to make a change; that’s the hardest part. You can do this!

When paying toward debt, what should I attempt to pay off first? The smallest debt or the higher interest rate? (posted Aug. 25, 2006)

There are several schools of thought on this topic. Some experts recommend paying off the card with the highest interest rate first, because that approach will ultimately save you the most money (in interest). While that logic is sound, I disagree. Let me explain.

When you get down to it, the most important factor in debt reduction is commitment, because it takes discipline to change your spending habits … and it takes time, since you can’t pay off thousands of dollars in debt overnight. A sense of accomplishment will help you stay the course, so I recommend starting with the card that carries the smallest balance. Let that success boost your dedication to becoming debt free!

Financial Services

I’ve noticed that there are a lot of radio and television commercials advertising various credit and debt counseling services. Are all of these businesses legitimate? How do I tell? (posted Oct. 27, 2006)

It is confusing, isn’t it? We salute you for recognizing that this is an issue, and for seeking help to regain control of your debt! As a good rule of thumb, look for organizations with the following characteristics (adapted from a related article in The Oklahoman):

Tax-exempt status. Visit IRS.gov/eo and click on “Search for Charities” to find out if an organization is tax-exempt.

Accreditation. The most common agency is the Council on Accreditation, which requires operation under strict quality guidelines.

Membership in a national industry organization. The National Foundation for Credit Counseling has been the gold standard since the 1960s.

Better Business Bureau approval. Visit BBB.org to see if complaints have been filed against the company.

Affiliation with the United Way. They’ve been deemed charitable and most likely are active in the community.

A local office. This allows consumers to develop personal relationships with financial experts through face-to-face interaction and customized counseling.

You can learn more by contacting a non-profit provider, such as Consumer Credit Counseling Service or the National Foundation for Consumer Credit. Bottom line, a trustworthy credit counseling service will be more concerned with helping you get out of debt than in selling you something. You should never feel pressured into a repayment plan or to make a purchase of any kind.

Can you explain more about financial planners - what they do, what their rates may be, and how to find a reputable planner (one that won't simply try to sell you more life insurance)? (posted Feb. 23, 2007)

Simply put, financial planners help you manage your resources and achieve your financial goals, like retirement, education and debt management. Professional planners (and price tags!) aren’t one-size-fits-all; services and costs depend on your situation and special needs.

There’s more to choosing a financial planner than opening the yellow pages and saying “eenie, meenie, minie, moe!” You’re trusting someone with information that’s deeply personal - your finances - so you’ll want to be prepared. First, research your own situation and determine your priorities. Planning to retire in 10-15 years? You’ll want a planner to make sure you’re on target to reach your savings goal, and that your money will last. Got little ones you want to send to college? A planner can help you set up a mix of investments that’ll grow as fast as your kids do. Just starting your career? A planner can offer objective advice to help you set long-term savings goals and build a solid foundation for a lifetime of financial success. The Financial Planning Association’s website, FPAnet.org, offers more information about rates, certification and the specific needs financial planners can help you address.

Now that you know your primary financial focus, it’s time to start shopping for a planner! Ask friends and coworkers for referrals. For more options, visit PlannerSearch.org to find local certified financial planners who specialize in your area of need. When you have a few good leads, pick up the phone and ask about credentials, expertise, rates and other information you may want to know before setting an appointment.

Like our bodies and our vehicles, our financial lives need a check-up every now and then. Financial planners can give you guidance, but remember this – ultimately, you are the decision maker. Don’t feel pressured into anything you’re not fully comfortable with, and never hesitate to ask for more information or more time to make a thoughtful choice. It’s your money, and it’s your life. Make the most of both!

On my way to work, I see several signs advertising the services of credit repair agencies. Is it best to use one of these agencies or can I repair my credit by myself? (posted Aug. 31, 2007)

“Credit problems? No problem!”

“We can erase your bad credit in 10 days — 100% guaranteed!”

These days, it seems everyone has seen these signs or heard the commercials advertising the services of credit repair companies. While some of these companies are legitimate, many make promises they just can’t keep. Forget the hype - there’s no quick and easy way to erase bad credit.

While repairing your credit isn’t fast or pretty, the truth is, most folks don’t need outside help to turn things around. You can take the same approach the professionals do to clean up your credit, without shelling out your hard-earned cash. Bankrate.com, a popular money management website, recommends consumers take this five step approach for do-it-yourself credit repair.

Place a credit report order. Find out what each of the top three major consumer reporting agencies—Equifax, TransUnion and Experian—are saying about you. Ordering all three in tandem allows you to review your full credit history. Since creditors don’t have to report to all three agencies, each credit report may differ. The Annual Credit Report Service (877-322-8228, AnnualCreditReport.com) will provide one free copy of your credit report from each agency per year as required by the Fair Credit Reporting Act. Equifax, Experian and TransUnion will provide additional copies of your credit report and your credit score for a small fee. Instructions for ordering your report and addressing any errors are available on the website.

Inspect your reports. Odds are you’ll have at least one error on your report; most people do. consumer reporting agencies generate a report based on information provided by your creditors. They don’t verify the information…that’s your job! Review your information closely and make a list of items you need to dispute and why. If the negative information on your report is accurate, only time will help you change that. Late payments remain on your report for 7 years and bankruptcies remain for 10. If you want more information, Bankrate.com has more details about reading and understanding your credit report.

Tell ‘em about it. Once you’ve identified any errors on your report, it’s now time to dispute them. Your consumer reporting agency should provide you with a dispute form, or you can write a letter. Clearly state the error you’re disputing; you may consider attaching a copy of your credit report with the error highlighted. Be sure to keep copies for your files and document the date you sent the information and/or spoke with someone on the phone. The consumer reporting agency has 30 days from the time they receive the letter to investigate your dispute. Keep in mind that you may have to work with your creditor to fix the mistake. If any changes are made to your credit file as a result of your dispute, the consumer reporting agency will send you a free, updated copy of your credit report.

Knock out debt. Now that your credit history has been cleaned up, it’s time to take a look at your current debt. If you’re having trouble making your payments, be sure to communicate with your creditor or lender. You may be eligible for reduced monthly payments, or you may be able to change due dates to spread out the timing of your monthly bills. It’s also time to look closely at your spending habits. Are you living a lifestyle you can’t really afford? What needs to change? For tips on paying off debt already accrued, visit the OKMM financial planning page. Paying off debt takes time and dedication; you can do it!

Be positive. You’ve cleaned up your past credit history and taken aim at your current debt. Now it’s time to focus on building a solid credit future!

The bottom line is this: legitimate credit repair companies do exist, but they can’t work magic. In most cases, you can achieve the same result with a do-it-yourself job. If you still want to use the services of a credit repair agency, avoid for-profit companies that make you pay before services are provided. Consider nonprofit credit counseling services, such as Consumer Credit Counseling Service (DebtHelpNow.com) or the National Foundation for Credit Counseling (NFCC.org), and always visit the Better Business Bureau to investigate company complaints before you enter into a business relationship.

General Money Management

I know that when talking about ways to save money, one of the first things most people suggest is to cook at home and avoid eating out. But honestly, I’m not a big fan of cooking, so my family eats out a lot. Do you have any tips on ways we can still save money when dining out? (posted Oct. 29, 2010)

I think many people enjoy eating out, I know I do! Living within a budget doesn’t mean you have to spend every night cooking at home. Here are some tips to help you eat out more affordably.

Look for coupons and special deals. Check your local newspaper for up-to-date coupons. There are tons of coupons available for dine-in restaurants and fast food joints. Also be on the lookout for specials that allow kids to eat free or cheap.

Eat earlier. Many restaurants have ‘happy hour’ specials where entrees, appetizers and/or drinks are much more affordable.

Skip the soda. By ordering water rather than your favorite carbonated beverage, you can actually save a lot; a family of 4 that orders water instead of soft drinks could save up to $10 per meal!

Consider fast food. In the past, fast food hasn’t always been the healthiest choice, but many restaurants now offer more nutritious fare. Fast food places can be considerably cheaper than dine-in restaurants, and by spending less on the meal, you may be able to enjoy a movie afterward or eat out again another night.

Skip the extras. Although appetizers and desserts are sometimes the best part of dining out, these extras will also cost you extra money. Instead, consider ordering an appetizer as your meal. You could also consider eating at home and going out for dessert.

My son is being deployed overseas. I'm worried about maintaining his day-to-day bills while he's gone. At the same time, we both would like to make sure he upholds his debt obligations and that he keep his credit afloat. Do you have any suggestions? (Jan. 29, 2010)

Dealing with an overseas deployment can make paying bills on time difficult. However, there are some steps that can help automate his payments and make it easier for him to maintain his credit history.

Step 1: Check out available banking options. He'll want to choose one that allows online bill-pay (preferably for no fee), uses a wide variety of ATMs and has online account access. Many banks offer personalized alerts that send an email or text when balances reach a certain level and for many transactions, including deposits received and checks cleared.

Step 2: Enroll with the bank. Spend some time helping him set up the system for each bill. He'll likely find that some payments can be automated, so that the transit time to the payee is quicker, while other bills will have to be paid by check. That's where a third party - maybe you - could come into play.

Step 3: Discuss the plan of action. He should consider sitting down with you (or whomever will be handling his finances while he's gone) to talk about bills that will be paid automatically and those that cannot be paid online. He'll need to be as specific as possible, including contact information for vendors, payment amounts and due dates. He may also want to add you as a custodian for some accounts in the event he needs you to contact a vendor on his behalf.

While all of these steps require some up-front work, ultimately, they'll help him stay on track during his deployment. That will save both of you time in the long run and provide financial peace of mind.

I don’t make a lot of money compared to my friends. They constantly want to go out to eat or participate in expensive activities. I’m afraid that I’m digging myself into a financial hole. What should I do? (posted Dec. 19, 2008)

Enjoying time with friends can be expensive and frustrating, especially if they spend more money on entertainment. Trying to live a luxurious lifestyle on a smaller income can lead to overspending and unhappiness (among other negative consequences). There is good news, though; you can find middle ground without sacrificing your friendship! Here are some tips to stay on course when you’re tempted to overspend with friends.

Tell them about it. Are your friends aware that you can’t keep up without hindering your financial goals? Be honest about your limitations and explain that you’ll need to cut back on expenses. Ask if your group can limit costly outings to once a month or every other month.

Invite your friends outdoors. You don’t have to be a hermit to save money. Suggest a few low-cost options, like hiking, county fairs, picnics, ice skating or outdoor concerts.

Do your homework. Look for events and restaurants that will fit your budget, but also be new and interesting to your pals. Watch for coupons and discounts for additional savings.

Pick and choose. Instead of participating in every activity, choose to join in for the part that’s most meaningful for you. For example, if your friends are headed to dinner and a movie and you want to hang out but spend less, consider meeting them afterward for coffee or dessert. Healthy finances are a priority, so you may have to show up late or leave early sometimes to keep your budget on track.

Who knows, maybe your actions will motivate your friends to take a closer look at their own spending habits!

I’ve heard a lot about disaster-proofing your financial documents. What’s the easiest way to accomplish this task and why is it beneficial? (posted June 27, 2008)

Quick, grab all your important documents—Social Security card, birth certificate, insurance, marriage license, credit card statements, wills, property titles … would you be able to gather these items in only a few minutes? If the answer is no, you could benefit from disaster-proofing your pertinent papers. This is a crucial and often overlooked part of the financial planning process.

Follow these tips to ensure your documents are safe from the storm, making it easier for you to get back on your feet if disaster strikes.

Collect important financial and personal papers, and put original documents in plastic covers.

Identify a single location, like a fire-proof box or safe-deposit box, to store these crucial papers. Fire-proof lockboxes can be purchased from a variety of stores and they’re relatively inexpensive. Make at least two copies of the key: one for your home and one for another person, like a trusted friend or family member.

Create certified copies of government-issued documents and store them with trusted family or friends.

Stash some cash with your bank statements in case you can’t access your account. Depending on the level of damage, computer networks and electricity may be down, so having cash on hand is beneficial.

In addition to the steps above, consider completing an emergency financial first aid kit for your family. You can download this comprehensive worksheet and checklist from the Federal Emergency Management Agency (FEMA), Operation Hope and Citizens Corps at OperationHope.org/effak/.

Taking the time to prepare for an emergency may seem like a daunting task, but if disaster ever strikes, you and your family will have all the paperwork you need to ease the process of getting your life back in order.

Now that Christmas is over I should be relieved, but I know I spent too much money (cash and credit) on gifts and entertainment. I don’t want to go through this again in 2008! What can I do? (posted Dec. 28, 2007)

The holiday season should be a time to relax and reconnect with people we care about, but we usually exhaust and overextend ourselves looking for the perfect gift (and fretting about paying for it!). According to the American Bankers Association, it takes shoppers an average of four months to pay off holiday bills. Why spend one-third of the New Year paying off last year’s goodies?

You can avoid overspending during the holiday season next year – and the inevitable regret that follows – by taking a few simple steps during 2008:

avoid the stress of paying for gifts all at once by purchasing gifts throughout the year or by setting a monthly savings goal. Decide what you’re really willing and able to spend, and build a gift budget within that framework. Plan to spend $300 on holiday gifts next time? Aim to save $25 each month starting Jan. 1 and your Christmas nest egg will be ready by December.

evaluate (and edit) your gift list carefully. If you send gifts to distant relatives you rarely see or exchange gifts with friends just because you’ve always done so, now’s the time to consider a change. Maybe they’d like to tighten their holiday budgets, too, but feel obligated to continue the tradition with you! Break the gifting cycle where it’s unnecessary and feels like a burden.

choose a “cash-only” policy. Shoppers tend to spend more when they pay with credit cards, and less when they use cash.

get creative. Give something homemade or offer your help with a special project. Draw names or chip-in for group gifts to reduce costs.

remember that a greeting card or phone call can be as meaningful as a gift. Connecting with others is what the holidays are really about!

If you found yourself relying on credit cards to make it through the holiday season, don’t beat yourself up! Focus on paying off the debt and planning ahead for next year.

My wife’s company rewards their employees with bonuses around Christmas time. In the past, we’ve used this money to pay for gifts or to take the family on a holiday vacation, but we’d like to use the money more wisely this year. Any advice?
(posted Nov. 30, 2007)

Financial freedom is one of the best gifts you can give yourself and your family! Only you know what your current needs and savings priorities are, so there’s no one-size-fits-all answer. However, we can recommend a few places to stash that extra cash that will keep you jolly all year!

Scrap debt. Put your bonus to work as a “debt warrior,” slashing credit card debt and loans with no mercy. Pick your favorite enemy: debt with the highest interest rate or the highest balance. Either way, you’ll be one step closer to winning the war against debt. For inspiration, check out the “debt snowball" approach described on the Consumer Credit page.

Start (or boost) your emergency account. Experts recommend holding three to six months of living expenses in an easy to access savings account. If that amount is intimidating, aim to save at least $1,000 to start. This will cover most minor emergencies, so you don’t have to fall back on credit cards or payday loans when the unexpected happens.

Finance your future. Who doesn’t dream of life after work? No matter how you envision retirement, it’s important to think about how you’ll fund it. Bank your bonuses in a retirement account, like a Roth IRA, and watch your money grow!

Jumpstart your child’s college fund. Higher education is truly the gift that keeps on giving—not to mention, no batteries are required! Contributions to Oklahoma’s 529 College Savings Plan grow tax-free, are state tax deductible up to a certain level, and may be payroll deducted by employers. Visit OK4Saving.org for more information.

I’m engaged to be married this fall. My fiancé and I were raised with different views regarding money. What can we do to make sure we’re on the same page financially before we tie the knot? (posted March 30, 2007)

The majority of Americans spend hundreds of hours planning a wedding—what colors to use, who to invite, what kind of cake to serve—but seldom plan for their marriage. So, kudos to you for thinking about your financial future as Mr. and Mrs.!

As part of your prenuptial planning, consider the following tips to help ensure marital—and financial—bliss.

Discuss your goals and values. The majority of financial plans are based on long-term goals, so it’s important to discuss your values and priorities. Work together to develop a family financial plan that reflects those objectives, and put it into practice before you say “I do.”

Review each other’s credit histories. You can’t begin to build your credit future until you understand your credit past. Create a plan of action to eliminate debt you’ve both incurred. Visit AnnualCreditReport.com to order a free copy of your credit report from the three major consumer reporting agencies.

Develop spending guidelines. Limit how much money you can spend without first consulting your partner, especially if you have a joint checking account. Set aside money as each spouse’s weekly or monthly “allowance” – money you can spend freely without compromising your goals.

Be honest and communicate. Make finances a part of normal conversation, and when it’s hard to stick to the plan, focus on the positive choices you’re making instead of thinking about what you might be giving up. If you talk about money openly and honestly, you’ll avoid one of the biggest sources of marital stress.

Investing

I have a CD that is getting close to maturity. How do I know if I should renew it or cash it in? (posted July 31, 2009)

I applaud you for being proactive! It's important to keep track of when CDs are maturing, so you can explore other options and decide whether you want to reinvest in another CD or cash it in and move your money to another investment vehicle.

For those who many not know, a CD (Certificate of Deposit) is a promissory note issued by a bank. It bears a set maturity date, earns a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC. The term of a CD generally ranges from one month to five years.

Back to your question. Whether the market environment is up or down when a CD matures, it's always a good idea to review all options before making a choice.

Renew?
Most banks will continually renew CDs for you at maturity if you don’t give them alternate instructions. Often, they’ll offer to “renew” and put your money into a new CD with the same term as the previous one. However, the interest rate may be different if CD rates have changed since your initial purchase. Make sure you know the bank’s policy and current rates, and that you give proper instructions if you don’t want the money rolled into a new CD automatically.

Shop around?
Before you choose to renew a CD at your current bank, see what else is out there. Rates are competitive, and the bank knows that you have a variety of choices. Check your newspaper, mail, and other promotional information published by local institutions to compare CD rates and, if the grass is greener, move your money to another institution.

Cash it in?
Are you happy with the return, or are you looking for more income from your investments? CDs offer steady interest earnings and low risk, but they don’t usually offer high returns in comparison with many other types of investments. So, depending on your risk tolerance and savings goals, you might consider cashing a mature CD and investing the money elsewhere.

Here’s the thing - only you can know which option is best for you! Investment decisions must be made in the context of your full financial picture. How do CD’s factor in your family’s overall financial equation? What’s your tolerance for investment risk? What are the tax implications of each choice? How soon will you need to access your money

If you don’t know the answers to these questions, consider meeting with a certified financial planner. A financial planner can help you make the most informed decisions possible based on your specific financial circumstances and goals. To find a local certified financial planner, ask friends for referrals and/or visit PlannerSearch.org.

Are there any rules of thumb for investing in stocks? (posted Oct. 31, 2008)

Investing of any kind can be confusing and feel overwhelming, even in a strong, stable financial market. Here are a few tips to keep in mind when investing in stocks.

Read up. Before investing, educate yourself about the stock market and companies you’d like to invest in. Do some research online and stay informed about current events.

Go for the long-haul. Stocks are a long-term investment, so don’t panic when the market’s down. If you’re investing for future growth, you’ll have plenty of time to rebound from the lows and ride the highs.

Know your risk level. As with any investment, owning stock involves risk. Before investing, decide how much risk you can handle; a risk tolerance quiz like the one at MSN Money can help you figure it out. Typically, the closer you are to retirement, the more conservative you’ll want to be. Conversely, the younger you are, the more risk you can take on because you’ll have more time to recover from a down market.

Diversify. You’ve heard the saying, “never put all your eggs in one basket.” The same is true with investing. It’s important to diversify your portfolio, which means investing in a variety of industries and products at various risk levels.

Time it right. The key to making a profit is to buy low and sell high. A professional advisor can help you determine when it’s time to cash in or cut your losses.

Remember, it’s your money, so make the most of it! For more information about investing, visit CNN Money’s website or consider taking a local investing course or joining an investment club.

What’s the difference between a traditional IRA and a Roth IRA? Which is a better investment option?

An IRA, or Individual Retirement Account, is a plan that allows you to contribute a portion of your earned income each year. Currently, the maximum regular contribution per year is $5,000 for an individual and $10,000 for a married couple filing jointly. These limits apply to total annual IRA contributions; in other words, an individual can't contribute $5,000 to a Roth IRA and $5,000 to a traditional IRA in the same year.

While these accounts are similar, the fundamental differences involve the “T” word … taxation. Contributions to a traditional IRA are taken from pre-tax income, and may be tax deductible in the year they're contributed. Funds in a traditional IRA grow tax-deferred; the money is taxed as ordinary income when you take it out at retirement (if you follow the rules). Eligibility to contribute to a traditional IRA depends on your age, and you’ll pay a penalty for withdrawals prior to age 59 1/2, though there are some exceptions to this rule. You have to begin taking funds from a traditional IRA by April of the year after you reach age 70 1/2, even if you don't need to access the money yet. If you need the tax break now or think you'll be in a lower tax bracket at retirement, a traditional IRA may be the right choice for you.

Contributions to a Roth IRA are taken from post-tax dollars - in other words, you've already paid taxes on the earnings - so unlike a traditional IRA, qualified withdrawals from a Roth IRA are tax free (if you follow the rules). You don't have to begin taking funds from a Roth IRA until you're ready, and there’s no age limit to contributions; eligibility depends on income level. If you expect to be in a higher tax bracket when you reach retirement age, a Roth IRA may be a sound investment.

There's a wealth of free information about IRAs available online. You can start by visiting CNN's Money website, the Motley Fool website or AARP Money Tips site.

Only you can decide what’s right for your budget now and at retirement. A financial advisor can help you explore the implications of these and other options, so you can make informed decisions. No matter which route you take, you’re taking charge of your financial future, and that's something to celebrate!

Who do you think would accumulate more by age 65?

Contributor A: a person who started saving $1,000 a year at age 21, saved for eight years and then completely stopped.

Contributor B: a person who saved $1,000 a year starting at age 29, and continued saving that amount until age 65. (posted Dec. 21, 2007)

That’s a great question! Generally, the earlier you begin saving and the more money you contribute, the more your money will grow. Using a savings calculator found at MSN Money, we were able to answer your question. Let’s get to it!

Based on the numbers given and assuming an 8 percent interest rate compounded monthly, Contributor B would end up with more money in the bank by age 65 ($200,541) compared to Contributor A ($189,735). However, Contributor A made a much lower total investment ($8,000) when compared to Contributor B ($36,000).

Our advice? Start saving early—and often—and continue to contribute to your retirement plan as long as you can to maximize your retirement savings. To get the most out of your retirement nest egg, consult a licensed financial planner to develop strategies that make sense for you based on your goals.

Kids and Money

My teenage son landed his first summer job. While I’m extremely proud of him for earning a paycheck, he blew his entire first paycheck in just a couple of days. How do I teach him to manage his paycheck wisely? (posted June 25, 2010)

Summer jobs give teens a new-found freedom and money to spend. Teaching them about money management can be difficult, especially when it’s cash they’ve earned. However, it’s extremely important to help teach your child some solid financial strategies.

Talk about tax. It’s important to explain the difference between gross vs. net income before your teen makes big plans to spend his wages. Try sitting down with him to go over that first pay stub, explaining how and why taxes are taken out.

Take it to the bank. If he doesn’t already have one, help your son open a savings account and a checking account. Be sure to teach him how to write and record checks and how to balance statements.

Share your saving secrets. Saving is an important lesson, so emphasize the value. Help him develop a budget and suggest putting savings first, setting it aside from the rest of his income. He may not be inspired to stash cash for retirement, but he may be swayed to the saving habit with a short term goal, like buying a plasma TV for his room.

Don’t micromanage. While it can be tempting to swoop in and save the day, allow him to learn his lesson. Let kids have space to make spending decisions, even if they’ll end up with buyer’s remorse. There’s nothing like wasting your own hard earned cash to make you more careful with your money the next time.

How do I save money to prepare for having kids? (posted Sept. 26, 2008)

Raising a family can be one of the most gratifying (and expensive!) experiences in your life. However, kids don’t have to turn your finances upside down. With a little planning and goal setting, you can maintain financial security as your family grows.

Prepare for purchases. Sit down and think about how a baby will affect your everyday living expenses. Do you have room in your budget to accommodate child-related expenses or are you already living close to (or above) your means? Sketch out a new budget that includes expenses like diapers and daycare, and compare it to your current monthly budget. Do your current income and expenses leave room for baby-related items? Are there areas in your budget you could trim now to comfortably support a family life later?

Set specific saving goals. Having a clearly defined goal helps you stay on course to reach your target and motivates you to save. Aim to save at least 10 percent of each paycheck to build a financial cushion. Some families may want to stash away a specific amount—let’s say $2,000—before having children. Break down this larger goal into smaller monthly achievements. For example, if you hope to conceive in one year, you’ll need to put back around $160 each month (or about $40 per week) to reach your pre-baby savings goal.

Keep that thrifty attitude. Throughout your pregnancy and after the baby arrives, continue to look for additional ways to cut costs. Consider borrowing maternity clothes from a friend, and shop garage sales and consignment stores for baby clothes and nursery items.

There’s no magic formula. As it so often does, successful financial planning lies in adjusting your spending to reflect your priorities. Learn more about budgeting for baby at PracticalMoneySkills.com/baby.

How much allowance should I pay my kids? Should it be tied to chores or not? What should I expect my kids to pay for out of their allowance money (birthday presents for friends, family, Christmas gifts, fun stuff for themselves, etc.)? (posted July 25, 2008)

To give or not to give, that’s the question! Providing an allowance is a decision parents struggle with and there are various opinions on the matter. One approach that works well for many families is starting with a weekly base allowance - about $1 per year of the child’s age - to cover chores the child is responsible for as a contributing member of the family, as well as a list of chores that can be completed for extra cash.

A list for an eight-year-old might look like this:

Weekly Allowance: $8

Everyday chores:

Make the bed

Put dirty clothes in the hamper

Set the table

Feed the dog

Chores for extra money:

Unload dishwasher, 25¢ per occurrence

Fold laundry, 50¢ per load

Dust furniture, 25¢ per occurrence

Vacuum carpet, 25¢ per room

Be specific about each task so your child knows when the job is complete. You may want to display the list of daily and additional chores in your child’s bedroom to serve as a visual reminder. Help your kids develop a weekly chart to keep track of chores they complete. Designate one day of the week as payday, and help your children add up the extra allowance they earned by doing additional chores. Encourage them to set aside a percentage of each week’s earnings for savings and charitable giving.

Now to the fun part…spending! Slowly start to shift spending decisions to your child. Don’t buy toys or clothes on demand; encourage your kids to save their weekly allowance to purchase what they want. It’s easy for them to spend your money, but it’s hard to part with their own! In addition to paying for toys and fun activities, have your child contribute to gifts for friends and family. This practice helps kids understand that sometimes we skip buying what we want so we can do special things for others.

However you decide to handle allowance in your home, try your best to be consistent and be willing to talk openly and honestly about how you earn and spend money. Your influence and example are their greatest teachers!

My wife is pregnant with our first child, and we’ve already spent loads of money on clothes, blankets, books, etc. I’m worried that once the baby is born, we’ll be broke! Do you have any tips or suggestions to help us save money while getting ready for our little bundle of joy? (posted Oct. 26, 2007)

First of all, congratulations! There’s no doubt that babies bring great joy to their families, but many times they’re accompanied by empty wallets (and plenty of sleepless nights).

It’s estimated that new moms and dads spend $6,200 on their baby during the first year, buying everything from clothes to car seats to cribs to diapers. Fortunately, with a little planning - and a few helpful tips - you can ease the financial burden … but you’re on your own for those 3 a.m. wake-up calls!

Nix the new. Let’s be honest—baby stuff is so stinkin’ cute! Small clothes, tiny socks, itty bitty hats… it’s easy to get carried away when buying for a baby, and small items can add up fast. You may want to consider consignment shops, garage sales or online sites (eBay.com, CraigsList.com, Freecycle.org) for a variety of gently used and wallet-friendly items.

Forget fancy furniture. A crib that meets national safety standards is a must. But, do you really need the matching changing table, bookshelf, armoire and hutch? Sure, they’ll all look fabulous in baby’s room, but are they functional or necessary? Join a mom’s group or talk to friends about what you’ll actually need (and use) in a nursery.

Resist the urge to upgrade. Just because you’re having a baby doesn’t mean you immediately need the bigger home next to the elementary school and park (equipped with swings and monkey bars, of course). And, unless you drive a clown car, you probably have enough room to safely transport your precious cargo.

Discuss daycare. If both parents plan to work outside the home after the baby is born, investigate the perks of using an employer-sponsored flexible spending account to pay daycare expenses. Generally, you can pay for up to $5,000 in childcare expenses a year using these accounts, which set aside money from your paycheck pre-tax.

Considering making the transition from working professional to stay-at-home parent? Test the waters by banking your paycheck during pregnancy to see if you can pay your bills, meet your savings goals, and still have a little fun on one income. Even if you find that you’ll both need to keep working, you’ll build a nice nest egg to start a college fund for baby!

You don’t have to break the bank to bring up baby. For more baby budgeting tips, visit PracticalMoneySkills.com/baby.

My children are 6 and 8 and I really want them to learn about money before they get any older. What can I do? (posted April 27, 2007)

What a great question! Obviously, you realize that teaching children to respect money early in life shapes their future spending and saving priorities, which could spare them the stress - and other consequences - of financial mismanagement.

Children are very receptive to money management lessons; the key is to make it relevant by talking about money as it applies to daily life. Below is a list of everyday occurrences that can serve as teaching moments.

Grocery shopping. Many parents dread shopping with their children because they never know what will end up in the basket! Make shopping a learning experience by involving your children in the process before you leave for the store. List the items you need and ask your children to help you clip and sort coupons. At the store, engage your children by asking them to compare prices based on product size, function and brand; discuss how these differences relate to the item’s value. This approach teaches kids the importance of comparison shopping.

Commercials. Instead of changing the channel or muting the television, ask your children to identify the advertised products as either a “want” or a “need.” Discuss the difference. Children may think they need a cell phone or iPod, but food, shelter and clothing are needs that must be met before wants are considered.

Household chores. Make a list of duties your children can do to earn an allowance. Then, slowly begin shifting some spending decisions to them. By making their own decisions with earned resources, they’ll quickly learn the value of a dollar and how to spend it wisely. Talk to them about ways people earn income and how a college degree increases lifetime earning potential.

Family decision-making. We make choices constantly. While some decisions are simple (what to have for dinner, what to do on Friday night) and some are much more complicated (where to vacation, when to buy a new car), every choice we make has financial implications. Discuss the decision-making process as a family and encourage kids to share their perspectives. Through your actions, teach your children to spend, share and save. Make sure they know it’s okay to spend hard-earned money, but it’s also important for families to save for the future and to help others through charitable giving and volunteer service.

Want more ideas for teaching your children about money, no matter their age? Visit the Oklahoma Council on Economic Education’s website, EconIsOK.org, to download a free publication entitled, “How to Raise a Financially Fit Child.”

Saving

My family and I would like to take a vacation at some point this summer. We have most of the money already saved, but we’re struggling to come up with the last few bucks. Do you have any tips on ways we can save a little extra money throughout the year to make vacation planning easier next summer? (posted May 28, 2010)

Taking a vacation today has become incredibly expensive. Any spare bucks you can save between now and then will help out a lot. Here’s some ways to help you set aside that little bit extra.

Save your change. Whatever you have left in your pockets at the end of the day, put in a jar. You'd be amazed how quickly that change will add up. Oh and don’t forget to check under those couch cushions. Yep, those crusty nickels and dimes count, as well!

Round up. When recording your written checks or debit transactions in your check register, round up the amount to the next dollar and keep the change. For example, if a trim from your hair stylist costs $22.50, write the check for $22.50, but in your register record the amount as $23.00. At the end of each month, check your register against the bank statement and make necessary adjustments. Depending on your spending patterns, you should have a nice pot of dollars to transfer to the vacation fund.

Pack lunches. Do your kids eat cafeteria food every day? Send them in with sack lunches. When they start to complain (and they will) remind them that this is a contribution to the family vacation fund. Consider packing your own lunch, too. Figure out how much you've saved each month and write a check to your vacation fund.

Have a yard sale. Clean out those closets! You'd be surprised what you have that someone else might be willing to buy. Look through your garage or basement. There has to be some gadget or appliance you no longer have a use for.

Don't buy anything new for six months. Now I'm not talking about basic necessities here; you’ll probably need bread, juice and toilet paper! I’m talking about a new car, re-carpeting the house, or a new wardrobe. Unless you desperately need to make a major purchase, try to hold-off until after the vacation. Decide which is more important to your family.

Plan before you grocery shop. Sit down with the weekly flyers and plan your meals based on what’s on sale. If you do this with coupons, even better! Find a sale and try to match a coupon. By the time you finish, you’ll have a cheaper eating week. Also, by planning ahead, you’ll cut down on that drive-through habit – maybe from $10-$15 at the burger joint to $4-5 at home.

There are plenty of ways to save money and cut costs when the pay-off involves a fun family getaway. Just don’t wait to get started. Make plans to start saving for that wonderful vacation next summer before this summer is over.

I would like to be able to retire someday, but I just can’t seem to save money on a regular basis. How can I ever afford to retire if my monthly spending eats up almost all of my paycheck (or more)? Help! (posted March 28, 2008)

First of all, you’re not alone in this dilemma. In 2006, the average savings rate in the U.S. was -1%, meaning millions of people were not only failing to add to their savings, but dipping into existing savings to cover expenses! Kudos to you for thinking in advance about retirement and wanting to make small changes today that will largely impact your future. Here are some tips to help you stash cash for a happy retirement.

First, take a look at your lifestyle. Are you living close to (or above) your means? It’s time to have an honest conversation with yourself; is your spending now sacrificing your security later? There’s nothing wrong with wanting a bigger house or clothes that would make Nicole Kidman jealous, but learning to live within your means is the most important financial lesson for anyone at any income level. Ask yourself this question - can I live with a little less now to have a better life later? Of course you can!

Once you’ve decided security in retirement is a higher priority than keeping up with the Joneses, trim the fat in your cash flow. We all have priorities in life, and our spending reflects them. To make sure your spending supports your priorities, turn to the B-word… budget! Some people view budgets as restrictive, but they’re actually tools to help you get what you want.

Be sure your monthly budget includes regular savings. Aim to save 10% of each paycheck, but don’t stress out if that’s unobtainable right now. Put in what you can and increase the amount at every opportunity. The key is making regular savings a habit. Want to know a savings secret? Set up automatic deposit or automatic transfer to your savings account. You can’t spend what you don’t see!

Put windfalls, like birthday money or the upcoming tax rebate, to work for you in a savings or investment account. You’ll be so glad you did. Shiny cars lose value, electronics become obsolete and clothes go out of style, but an investment in a 401 (k) or IRA will be worth much more in the long run.

Transform yourself into a bargain shopper. Saving just $10 per week on something you normally buy (e.g. groceries, fancy coffee) nets over $500 per year! Call your car insurance company to see if you qualify for discounts or a lower rate. If you’ve been a responsible credit card user, ask to have your interest rate lowered. Search eBay, consignment stores or thrift shops to find steals on household items and clothing. Make saving a game and enlist the help of your whole family.

In the end, the biggest factor in your saving success is you! It takes work to make saving a priority, but a sound financial future is well worth the effort.

My kids are 12 and 14, and I haven’t really made college savings a priority. How do I start saving money for college at this stage? (posted Sept. 28, 2007)

This is the million dollar question for a lot of parents! Ideally, college savings would begin at birth; however, we recognize that’s not a reality for everyone. If you’re part of the group that’s getting a late start, don’t panic—but don’t keep waiting, either. Start saving now! Here’s a plan of action to help you build a college savings nest egg.

First, figure out how much money your child will need; it’s hard to hit a savings goal if you don’t know what it is. Check out OkCollegeStart.org for information about the average cost to attend one of Oklahoma’s many public colleges or universities. While there, encourage your child to create an online account, which allows students to bookmark favorite colleges and build a personal portfolio of grades and applications.

Now that you have a savings goal, there are several ways to build a college fund; shop around to find the plan that’s right for you (check out SavingForCollege.com to get the ball rolling). Two common methods are described below.

Contributions to Oklahoma’s 529 College Savings Plan grow tax-free, are state tax deductible up to a certain level, and may be payroll deducted by employers. Additionally, 529 plans have no income requirements or annual contribution limit, and if a beneficiary decides not to attend a post-secondary institution, contributed funds can be transferred to another eligible beneficiary. Visit Ok4Saving.org for more information.

A Coverdell Education Savings Account (ESA) is another option to consider. An ESA is a trust or custodial account created to fund elementary, secondary and college education expenses. Annual contributions, which grow tax-deferred, are limited to $2,000. Caveats to carefully consider: the amount you can contribute to an ESA is determined by your income level, and the funds must be used by the time the student turns 30, or the earnings become taxable and a penalty is applied.

As a supplement to your savings, encourage your child to apply for as many grants and scholarships as possible. Check out local organizations that sponsor scholarships such as your church and community groups (YMCA, 4-H Club, Kiwanis, Jaycees, Chamber of Commerce, Girl Scouts, Boy Scouts). Remember, scholarships are awarded based on a variety of criteria, including need, merit, residency, family history, skills, hobbies, and athletics. Check out the scholarship search function at OkCollegeStart.org to learn more.

Also, don’t forget about the best deal in town - Oklahoma’s Promise, formerly known as OHLAP. If you meet certain income requirements and your child meets certain academic requirements and stays out of trouble, Oklahoma’s Promise will pay tuition at an Oklahoma public two-year college or four-year university. Students must apply in the 8th, 9th or 10th grade, so don’t miss the boat! Get the details at OkPromise.org.

Is it better to have all your money in one place? (posted Jan. 26, 2007)

Assuming you’re talking about savings - not disposable income - the old saying “don’t put all your eggs in one basket” holds true. It’s just too risky to invest all of your savings in one company or industry. The idea is to create a blend of assets that provides the most return for your money. Calculated diversity is the key.

Not sure where to start? Most experts recommend a simple investment mix that can be achieved with the following steps.

1. Start an emergency account to cover unexpected expenses that would otherwise find their way onto a credit card. Experts recommend saving 10% of your income each month until you have enough money to cover 3 to 6 months of expenses. If 10% seems impossible, start at a lower monthly percentage and work your way up. Since an emergency is never planned, put your money somewhere easily accessible, like an interest-bearing savings account or money market account.

2. Whether you’re 25 or 55, retirement should be on your mind. Take advantage of an employer’s 401(k) or other sponsored investment program, especially if they offer matching funds. At minimum, contribute enough to get the full company match - that’s free money!

3. In addition to maximizing your contributions to a matched savings program, make regular contributions to a traditional or Roth IRA. Learn more about these and other investment options and access calculators and other planning tools at CNN's Money site.

4. Got kids? Consider monthly contributions to the Oklahoma College Savings Plan (OCSP), our state’s 529 plan, for each child. Participation in the OCSP offers several savings perks, including an Oklahoma income tax deduction on contributions and tax-free growth and withdrawals. Visit Ok4Saving.org for more information.

In short, you must create a customized savings plan to fit your long-term goals. A certified financial planner can help you strike the right balance.

What’s the best way to start an emergency fund? (posted Dec. 29, 2006)

First, congratulations! You’ve recognized the value of taking a very important step to manage credit debt: funding an account to cover unexpected expenses that would otherwise find their way onto a credit card. Although creating an emergency fund takes discipline – and therefore, isn’t easy – the process is simple. Figure out how much you need to save and commit to set aside money each month to reach that goal. Experts recommend saving 10% of your income each month until you have enough money to cover three to six months of expenses. If you can’t save 10% right now, don't be discouraged; commit to save as much as you can and work your way up to 10%. (The key word is "commit." See the pattern here?) As with any savings plan, consistency is the secret to a healthy “rainy day” fund … save a predetermined amount each month and add any “windfall” money, like bonuses, tax refunds or birthday gifts so you can reach your goal faster.

An emergency is never planned, so put the money where you can reach it quickly, such as an interest-bearing savings account or money market account. Building an emergency fund may seem like a daunting task, but it will allow you the freedom to forego credit should something go awry. Now that’s peace of mind!

Which is more important, saving or paying off credit card debt? (posted July 27, 2007)

To answer this question, let’s turn to our good friend, mathematics (please don’t stop reading!). If you’re earning 2% interest on your savings and paying 18% interest on your credit card debt, you’ve got a 16% problem.

If the interest you’re paying on credit card debt is higher than what you’ll earn in a savings account, pay off your debt first. That said, don’t completely neglect your savings! While several factors affect how your money grows, one of the most important elements is time. Simply put, the earlier you start saving, the more you’ll earn through the magic of compound interest. Also, a cushion in your account will keep you from relying on credit cards or payday loans in a crisis.

Here’s the bottom line: it just doesn’t make sense to pay more interest than you can earn. Use the bulk of your extra money to pay off those pesky credit cards, but make sure you contribute something to savings each month, even if it’s only $50. Once the debt is paid, shift those monthly payments to savings. Since you’re already living without the extra money, you won’t miss it!

Spending

Should I use all of my savings to purchase a new car with cash, or should I finance some or all of it? (Dec. 30, 2011)

That’s a good question and like most financial situations, there’s no cookie cutter answer. As a general rule, it’s best to remain as debt-free as possible. However, there are pros and cons to using both cash and credit.
If you use cash, you’ll own the car outright and won’t have a monthly payment. You’ll also avoid added expenses in the form of interest fees. However, it’s risky to completely wipe out your savings. In the event of an emergency, you’ll be in a bind and could find yourself having to rely on credit at a higher interest rate.
If you choose to finance, your emergency fund stays intact, but you’ll have the routine expense and hassle of a monthly payment. The car will ultimately cost more due to interest charges and if you’re unable to make your payments down the road, you risk defaulting on the loan and ruining your credit. On the other hand, if you shop for a good interest rate and handle the loan responsibly, timely payments will help boost your credit score.
Thankfully, there are several payment options worth considering. You could:

continue your current saving habits until you’ve saved enough money for the car without depleting your emergency fund.
buy the car with cash and continue saving until you’ve rebuilt your emergency fund.
consider purchasing a less expensive used car with a smaller portion of your savings.
use part of your savings to make a sizable down payment and finance the rest at the lowest possible interest rate.
finance the vehicle and use the money you’ve been putting in savings to make extra loan payments. This strategy will pay the loan off quicker and reduce your overall interest expense. (This option is only recommended if you’ve already established an emergency fund large enough to cover at least 3-6 months’ worth of living expenses.)

To learn more about purchasing a new vehicle, check out our online self-paced learning module Auto Loans 101 or crunch the numbers with this calculator to see if cash or credit is the better buying option for you.

This summer I'm planning to propose to my girlfriend of four years. Unfortunately, I feel bad because we don't have a lot of money and I'm afraid she won't say yes if I choose a cheap ring. What should I do? (Feb. 26 2010)

First of all…congratulations! Secondly, there’s no need to feel bad because there are many options to purchase a ring for a reasonable price. You should never go into debt for an engagement ring. It just doesn't make sense; why start your life together with debt? To reduce the cost of an engagement ring, mull over these alternatives.

Do Your Research – If you’re willing to put in the time, you can find a great deal. Jewelers usually offer seasonal savings around holidays, so even if you only have a short time to search, go to a few stores and shop online to compare price and quality.

Consider an Heirloom – Using a family ring as an engagement ring can be very sentimental, not to mention it symbolizes a close family connection. It’s a great way to get a beautiful stone, and in some cases a beautiful ring, at no cost.

Buy it Used – Buying a used engagement ring can be a great solution for couples on a tight budget. People sell wedding jewelry for various reasons. If a divorce or break-up prompts the sell, you could possibly snag a great ring at a super low price.

Choose a different stone – Diamonds may be a girl’s best friend, but there's something to be said for going the nontraditional route. Rings set with colored gemstones are very trendy right now — and very affordable.

Go Faux – Consider delaying the purchase of an expensive ring until you can afford the one you truly want. There’s a wide selection of believable, quality faux diamond rings, such as a high-end cubic zirconia or moissanite stone.

Don’t overlook the metal – You can cut your total cost considerably by selecting cheaper metals for your engagement ring such as silver, gold or white gold. These metals are significantly less expensive when compared to platinum.

These are only a few tips you can use to save money on an engagement ring. Remember, the value of a ring doesn’t only depend on its price!

What is the easiest method to track your spending, especially outside the home?
(posted Oct. 27, 2006)

If only our wallets could talk! If they could, we’d truly know where our money goes and how it’s spent. Unfortunately (or fortunately?), that’s not the case. Tracking day-to-day spending takes diligence, but it’s a critical stepping stone to financial happiness and a building block for other important processes, like creating a budget. Keeping track of purchases allows us to curb wasteful spending and direct our money to true needs and priorities.

While the methods below aren’t one-size-fits-all, they are tried and true tips to help plug the leaks. Find the one that fits your lifestyle and stick with it!

Retain receipts. Drop your receipts in a jar or box nightly (after balancing your checkbook, of course) for a month. At the end of the month, tally those slips and list them in assigned categories; you’ll see some obvious spending patterns emerge.

Put pen to paper. Carry a little notebook and write down everything you spend, down to the penny. This captures even the smallest expenses, such as trips to the vending machine and travel tolls, which can add up quickly.

Go green. Take a cue from past generations and use cash whenever possible. While it’s easy to go overboard with debit or credit cards, we have an emotional attachment to dollars. Create envelopes for your expense categories (i.e. groceries, movies, gas, clothing, eating out) and put a pre-set amount of cash in each envelope. When the envelope is empty, you’re done spending. Period. This system not only helps you monitor outflow, but also helps you stick to the plan!

Save with software. Technically inclined? Computer programs like Quicken and Microsoft Money can help you balance accounts and track expenses electronically. You’ll still need to keep bills and receipts, but these programs compute category spending for you and offer graphs and charts to illustrate where your money goes, among other helpful features. Most programs are relatively inexpensive and user-friendly, too.

Regardless of which tracking method you choose, the key is staying the course long enough to identify spending trends and shift your financial focus to more important goals, like debt deduction or savings.

Taxes

Is there anything I should know about being audited by the IRS? Together, my husband and I make a substantial amount of money. I’ve heard the more money you make, the higher the chance is of being audited. (posted April 30, 2010)

Many taxpayers worry about being audited, but actually, the IRS audits only a small percentage of the millions of tax returns filed each year. If you’re one of those few to be selected, here are some tips to help you prepare.

Get organized. Your first step should be to take a good look at the details of your return to refresh your memory. Once you have a thorough understanding of the contents of your tax return, you'll need to organize your records to support the items questioned by the IRS.

Don’t delay. Be sure to take any action required within the time frame allotted. Otherwise, the dispute could become a final assessment and move to the collections department with no grace period. If you’re not given enough time to adequately respond or prepare, request an extension or postponement.

Consider hiring a pro. While many taxpayers handle audits on their own, if your situation is complicated, you may want to request help from a professional, such as a CPA. Most audits are conducted by mail, with the IRS simply requesting documentation to verify a specific part of the return. If the audit requires an in-person meeting, the review will probably get into greater depth on certain issues. In that scenario, hiring a professional with audit experience might be a smart move.

I heard that filing my taxes online is better than hiring a tax professional because it provides me with more opportunities for savings and maximizes my refund. Is this true? (posted Jan. 30, 2009)

Maybe. While it’s true that tax preparation software and online services can cost less money than hiring a professional to tackle your taxes, you could be losing out on important deductions a professional would recognize.

To determine the best choice for you, ask yourself some important questions:

Do I understand my tax situation? Before you decide to fly solo, think about your familiarity with your current tax situation and industry lingo. For example, do you know your filing status? Do you know which credits and deductions you’re eligible for? Do you speak the language? If you’re uncomfortable navigating these questions alone, you’ll probably want to hire assistance.

Do I have the time and knowledge to get it right? Filing state and federal tax returns takes time. Do you have the patience to complete the forms yourself? What will you do if you encounter a question or option you don’t understand? When hiring a CPA or other tax professional, you’re not only paying for their time - you’re paying for their knowledge, as well. A pro may be able to quickly identify deductions (or obligations) you might otherwise miss. If you decide to prepare your own returns, educate yourself before starting your forms. Bookmark the IRS website, IRS.gov, as a resource.

Are my taxes complicated? If you started a business last year, had a child, enrolled a child in college, bought or sold a house, or experienced any other major financial event, you may want to consider seeking the aid of a tax professional. Conversely, if your financial situation is simpler or comparable to last year, doing your taxes on your own might be the right fit for you this year.

Here’s the bottom line: the complexity of your financial life really determines the best approach to tax preparation, and you should review your circumstances each year and make the best choice for your current situation. If you do choose to prepare your own taxes, consider consulting with a tax professional, such as a CPA, at least once every three to five years. Visit KnowWhatCounts.org for a helpful listing of CPA’s and services.

I’ve heard that it’s better to have a mortgage for the tax deduction than to pay off a mortgage early. My husband and I have worked very hard to pay off our mortgage in four years. We took out a 30 year note, but plan to pay off this note in April of this year. I’m concerned about the loss of the tax deduction in coming years. Is this going to hurt us in the long run? (posted Jan. 26, 2007)

If you asked three different financial planners this question, you would probably get three different answers. Several variables determine the best course, such as how long you plan to remain in the home, expected growth (or decline) in property values in your area, and your long-term financial goals, to name a few. While your best move is to discuss your specific situation with an accountant or financial planner, we can offer some information that may be helpful.

Generally, it's always a good idea to minimize your tax liability to the extent legally possible. You want to pay only what you're responsible for - no more and no less. The tricky thing is, like many deductions, a mortgage interest deduction isn’t a "dollar-to-dollar" savings. In other words, if you claim $5,000 per year in mortgage interest, you don’t get to subtract $5,000 directly from your tax liability.

Ultimately, how this decision affects your tax liability depends on the makeup of your tax deductions. If mortgage interest is your biggest deduction, then you may need to earmark some savings specifically for taxes or have additional money withheld from your check to compensate. (A financial professional can help you figure out how much to save. Remember, your goal is to break even ... you don’t want to owe Uncle Sam and you don’t want to get a big refund (which is, essentially, a free loan to the IRS). In most cases, even if you have to set aside tax savings or have more money withheld each month, the money you can save in the long run on monthly mortgage payments and interest will more than make up for it.

Here's the bottom line - a home is most folks' largest asset. Assuming that you plan to stay put for the long haul, owning your home outright is an excellent financial position. No monthly mortgage payment will allow you to save much more for retirement and other long-term goals. The more you save and the sooner you save it, the more compound interest you can earn!

Don’t	Do
Keep your Social Security card in your wallet or purse, and don’t have your SSN printed on your checks.	Keep documents containing personal information in a fireproof lockbox.
Throw away mail or documents containing personal information. This includes junk mail!	Invest in a cross-cut paper shredder to destroy mail and other documents containing personal information.
Give out your SSN or other personal information in email or over the phone if you didn’t initiate the inquiry.	Monitor your credit report. You can order a free credit report each year at AnnualCreditReport.com. Monitor your kids’ credit as well. For requirements to check activity on your child’s credit report, contact Equifax (800.525.6285), Experian (888.397.3742) and TransUnion (800.680.7289).
Leave a paper trail. Switch to paperless billing or use online bill pay whenever possible.	Opt out of receiving pre-approved credit offers in the mail. Call 888.567.8688 or visit OptOutPrescreen.com. You will be required to provide your SSN.
Use your pet’s name (spouse’s name, birthday, etc.) as a password. Use both characters and numbers. Then use the Microsoft.com password checker to check the strength of your password.	Make sure Web addresses start with "https://" rather than "http://" when you are shopping or banking online. The "s" indicates that the site is secure.
Put personal information on social networking sites. Make sure your kids understand why it’s important to keep certain things private online.

Creditor	Account Balance	Minimum Payment Due
Target	$450	$25
Chase	$1,200	$100
Bank (auto loan)	$9,500	$375

Credit Score Effects
	Effect on a 680 score	Effect on a 780 score
Maxed-out card	-10 to -30	-25 to -45
30-day late payment	-60 to -80	-90 to -110
Debt Settlement	-45 to -65	-105 to -125
Foreclosure	-85 to -105	-140 to -160
Bankruptcy	-130 to -150	-220 to -240