Month: December 2013

Spend Less or Make More….It’s Up To You

By Vincent Mortensen

Many people wonder how to get out of debt and get ahead in life.  It’s not a terrorizing concept by any means but sometimes we feel we’ll be financially helpless for the rest of our lives.  There are two main ways to get out of debt:  spend less than you earn or make more money.  Here are a few tips to make some extra money to find financial peace once and for all.

Spend Less:  You’d be surprised how much money you spend by not giving all your dollars a destination.  Here are the best ways to save by not spending.

CREATE A BUDGET:  If you know where every dollar is going, you’ll know what to cut back on.  Many of us believe living on a budget means we’ll have fun ever again.  That’s simply not the case.  You’ll have fun when you are financially at peace and have properly allotted money for an activity, like a vacation or a new TV.

CUT DOWN ON DISCRETIONARY PURCHASES:  It’s easy to have a $3 coffee every day and then wonder where all your money went at the end of the year.  Instead, purchase your coffee only three times a week.  Adding that up in one year, and you’ll have saved $312.  That’s a lot of scratch.

FIND FREE FUN:  To quote Eric Cartman from the hit TV series South Park, “Anything that’s fun costs at least eight dollars.”  Of course this isn’t true.  You would be surprised how many free activities are in your local area or online.  This can include free concerts, dusting off a favorite board game, or playing the thousands of free games online.

Make More:  If you enjoy your current lifestyle and don’t wish to change anything about it financially, you will need to take the road of making more money.  This can be done by:

GET A SIMPLE PART-TIME JOB:  Retailers are often hiring so give them a ring.  There are other ways to make extra income from home such as working online.  There is money out there for anyone who is willing to work for it.

SELL ITEMS YOU DON’T USE ANYMORE:  We all love our “stuff” but human nature usually causes us to get bored of that “stuff” sooner or later.  Why not hold a nice yard sale and make some extra money? 

One day, I decided to clean out my closet of items I didn’t use anymore.  This included a pair of ice skates, a series of computer games, and old college textbooks.  In total, I earned about $150 effortlessly by selling items I no longer used.  Give it a try!


Buyer Beware: Pre-Paid Gift Cards


As you shop this holiday season you may consider purchasing gift cards. Gift cards might seem great for that hard-to-shop-for person and may seem more personal than giving cash. General pre-paid gift cards issued by companies like Visa and American express may be even more tempting since they can be used anywhere Visa or American Express are accepted, including online, but buyer beware! You may want to reconsider giving cash after reading this article. After all, it never expires!

I was recently given a $50 gift card from a family member. The card was a pre-paid non-reloadable gift card from Visa. To purchase this card, they likely had to pay a small one time fee of $1-$2 in addition to the $50 value on the card. I received the card in June, it expired in November, which I didn’t realize until I tried to use… yesterday. There is nothing I can do; The money is just gone. Too bad, so sad. I kept this card in my wallet and I thought of it as cash. It will be there when I need it. I was wrong.

I do a fair amount of online shopping and tried several times to use it on websites like Old Navy and Amazon. Unfortunately, you cannot use these cards online unless the total of your purchase is less than the amount on the card (because you usually cannot pay with a combination of cards online). I rarely spend less than $50 when I buy something online. Using the card in store can result in similar hassles and if you don’t keep an accurate tally of the money left on the card, you may have a hard time using it at all.

With general pre-paid cards there are far fewer protections when shopping online compared with bank issued debit and credit cards. With traditional debit and credit cards, the bank is required by The Credit Card Act of 2009 to refund the money if your card is stolen. If your pre-paid debit card number is stolen while shopping online, it is likely that you will never see that money again. If you want to return an item bought on a pre-paid card, there are another set of hoops to jump through. I’ve found that when purchase something on your bank issued debit or credit card and then return it, they typically issue the funds back to your card. In most cases you cannot issue money back to a prepaid debit card. The store may offer you in-store credit or not issue a refund at all.

My advice is to avoid these cards whenever possible. If you do use them, use the balance as soon as possible. Put a reminder on your phone for the week before and the day of the expiration to remind you to use your card. Many pre-paid cards charge activation, reload, random service and inactivity fees. If you choose to use these, ALWAYS read the fine print and do whatever you can to minimize fees. Many credit unions and banks offer no-fee debit and credit cards which have more consumer protection regulations and can even help you improve your credit score. If you are using pre paid cards to help you budget, save the fees and consider the cash envelope method (which you can learn more about in our previous blog post).. If you like the convenience of a debit card but are concerned with overspending, get a traditional debit card but decline over draft protection and your card will be rejected if you try to spend more money than you have. If you are set on giving gift cards, choose a retailer specific gift card which are less likely to have expiration dates due to new consumer protection laws. However, if the company goes out of business or files bankruptcy, your gift cards will be forfeited (learned that one first hand from Blockbuster)

We hope you take this into consideration before purchasing gift cards. Remember, cash doesn’t expire! And if you have questions about budgeting, credit or debit cards or any financial matters, call us or come in for a free financial counseling session.

The University of Utah. Olpin Student Union Building, 200 S. Central Campus Drive, Room #316. Salt Lake City, UT 84112. 801-585-3886

Pay With Cash & Save Some Scratch

By Vincent Mortensen

Credit is everywhere.  Credit is also very convenient.  We pull out Imageour VISA cards, swipe it for our purchase and get along with our lives.  We also use credit to purchase items we want now such as fancy clothes, video game systems, and new cars. 

It is noted on average that consumers will spend 12 to 18 percent more on purchases with credit and debit cards versus using cash.  Why exactly does this happen?

Studies have been performed that show it is mentally painful to spend cash.  Receptors in the brain fire when you pass on that twenty dollar bill you worked so hard for to a complete stranger behind a register.

For example, you just had a nice $10 meal at a restaurant and it’s time to pay upfront.  With ‘plastic’, we hand over our card, they swipe it, we sign the receipt, and that’s it.  Sometimes, we barely realize we just spent money.  Now switch the cards with cash.  You pull that nice, crisp ten dollar bill out of your wallet and give it to the person behind the counter.  A frown hits your face as you say farewell to “Uncle Alexander Hamilton” forever.  Maybe next time, you won’t order the $3 hot chocolate because you want some “George Washington’s” back.

Naturally, it’s easier to use direct deposit programs offered by banks for bills like rent and utilities, but everything else like entertainment, groceries, clothing, hygiene products, etc. can be paid for in cash.

If I’ve convinced you to give cash a try, I recommend the Envelope System.  The Envelope System is simple.  Create different categories such as those mentioned above and put cash in each envelope.  For example, put $50 in your monthly entertainment envelope.  If your friends invite you to a concert, the tickets are $20 but you only have $11 left in that envelope, you’re not going to the concert.  It’s that simple.

Cards are convenient but cash will always be king.  If you would like any more information on the Envelope System, check out the website below.  Good luck!